LINDENHURST, N.Y. — August 17, 2026 — Healthcare providers are claiming a major victory after a federal appeals court ruled that health insurers cannot manipulate reimbursement calculations by using rates for services that were never performed or by excluding bonus and incentive payments when determining what providers should receive for out-of-network care.

The U.S. Fifth Circuit Court of Appeals in New Orleans ruled August 12 that insurers had improperly calculated payments under the federal No Surprises Act, partially upholding a lower-court decision that found fault with the government’s approach to determining reimbursement rates.

The dispute centers on how insurers calculate the rates used to reimburse out-of-network physicians and hospitals through the No Surprises Act’s independent dispute resolution process. According to the ruling, insurers had relied on so-called “ghost rates” — rates for services that were never actually performed — and, in some cases, failed to account for bonus or incentive payments when calculating provider reimbursement.

Rob Neuner, General Counsel for Patriot Group, said the decision could have significant consequences for physicians and hospitals seeking fair compensation for out-of-network services.

“The insurers used underhanded tactics and a flawed formula that left healthcare providers grossly underpaid,” Neuner said. “This ruling is an important step toward making sure the independent dispute resolution process reflects what providers are actually paid in the marketplace — not artificial rates that were never used.”

The No Surprises Act, administered in part by the U.S. Department of Labor and the Centers for Medicare & Medicaid Services (CMS), was enacted primarily to protect patients from unexpected out-of-network medical bills. Rather than involving the patient, payment disputes are handled between the insurer and provider through the law’s independent dispute resolution system.

The issue has become increasingly important as the number of No Surprises Act disputes has surged. CMS reported that out-of-network providers were awarded $14.9 billion through the federal arbitration process in 2025, more than three times the $4.1 billion awarded in 2024.

“The goal of the No Surprises Act was never to give insurers a way to underpay providers,” Neuner said. “It was designed to create a fair system for resolving payment disputes while protecting patients. This decision helps move that process closer to what Congress intended.”

For more information, call (631) 870-4040 or visit patriotcompli.com.

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About Patriot Group
Based in Lindenhurst, New York, Patriot Group brings together legal, compliance, and revenue support for healthcare providers under one roof. Our integrated team delivers hands-on guidance, strategic defense, and practical solutions designed to protect revenue and strengthen compliance in a constantly evolving healthcare landscape. For more information, call (631) 870-4040 or visit patriotcompli.com.