Answers / QPA methodology

How the QPA is calculated: 45 CFR 149.140 in plain language

That is the whole machine in one paragraph. The rest of this page takes each part slowly. If you only need the inflation step, the factors are on the complete factor table page and the QPA calculator applies them.

Step 1: the median contracted rate

The plan starts with every rate it had under contract on January 31, 2019 for the item or service, arranges them from least to greatest, and takes the middle value. If the count is even, it averages the two middle rates. Three details control what goes into that list:

• Each contract counts once. A single contract covering a 500 physician group contributes one rate. Two separate contracts contribute two rates, even if the dollar amounts are identical. This means one large system contract and one solo practice contract carry equal weight in the median.
• Bonuses and incentives are out. The rates exclude risk sharing, bonus, penalty, and other incentive-based or retrospective payments or adjustments. The median is built from base negotiated rates.
• Specialty can split the list. If the plan's contracted rates for a service vary by provider specialty, the plan calculates a separate median, and therefore a separate QPA, for each specialty.

Step 2: same or similar item or service

Rates only enter the median if they cover the same or a similar item or service. In practice this means the same service code under the same fee schedule type: the same CPT, HCPCS, or DRG code, including the modifier when the modifier changes the rate. A rate for a comparable code under a different coding system can qualify as similar. The plan cannot blend unrelated codes to move the median.

Step 3: one median per insurance market

Medians are calculated separately for each insurance market: the individual market, the small group market, the large group market, and self-insured group health plans. A claim under a self-insured employer plan gets the self-insured QPA, not a blended one.

Self-insured plans have a practical shortcut written into the rule. A self-insured plan may let its administering entity, usually a third party administrator, calculate the median across all self-insured plans that entity administers, instead of plan by plan. Most large administrators do exactly that, which is why QPAs from different employers with the same administrator often match.

Step 4: one median per geographic region

The default geographic regions are one region for each metropolitan statistical area (MSA) in a state, plus one region covering all portions of the state outside any MSA. The median only uses rates from the region where the service was furnished.

A plan needs at least three contracted rates in a region to have sufficient information. With fewer than three, the regions widen: one region for all MSAs in the Census division and one for the non-MSA portions of the Census division. Still fewer than three, and the plan turns to an eligible database instead.

Step 5: indexing for inflation

The January 31, 2019 median does not stay frozen. For each later calendar year, it is multiplied by the percentage increase in the consumer price index for all urban consumers (CPI-U). The IRS publishes each year's factor: the average CPI-U for the 12 months ending August 31 of the prior year, divided by the same average one year earlier, rounded to 10 decimal places. For items and services furnished in 2026, the annual factor is 1.0265311701 (IRS Notice 2025-65) and the combined factor from the standard 2019 base is 1.2805070065 (IRS Notice 2025-65). Every published factor from 2022 through 2026, with its source notice, is on the factor table page.

Two rounding rules sit here. The factors themselves are rounded to 10 decimal places when published. And the plan is permitted to round the final indexed QPA to the nearest whole dollar, which is why a disclosed QPA can sit up to 50 cents away from the unrounded arithmetic.

New plans: eligible databases

A plan that did not exist in 2019, or that has insufficient rate information for an item or service, cannot take a 2019 median. Instead, for the first year the coverage is offered, it sets the rate from an eligible database. An eligible database is either a state all-payer claims database or a third party database that has sufficient data, is not affiliated with any plan or issuer, and is free of conflicts of interest. The database rate for that first year becomes the base, and it is indexed forward by the same CPI-U factors starting the following year. This is why the IRS factor tables carry base years of 2021 through 2025 alongside 2019, and why there is no 2020 base year in the tables.

New service codes: the Medicare ratio method

When a brand new service code appears, nobody has 2019 rates for it. The rule solves this with a ratio. The plan identifies a reasonably related existing service code, takes that code's QPA, and scales it by the ratio of Medicare's rate for the new code to Medicare's rate for the related code. If Medicare has not priced the new code, the plan uses the same ratio from an eligible database. The first year the new code is covered becomes its base year for indexing.

What the plan must tell you

With each initial payment or notice of payment denial on a protected out-of-network claim, the plan must state the QPA for each item or service and certify that it was calculated under this methodology. On request, it must also say whether the QPA came from an eligible database, whether a related service code was used, and whether the rates include risk sharing or bonus arrangements that were excluded. Providers cannot audit the underlying contracts. The indexing arithmetic is the one step anyone can check against public numbers, which is what this site is for.

Keep the QPA in context

The QPA controls patient cost sharing and anchors the payer's first offer. It does not decide the dispute. Providers win 85.8 percent of federal IDR disputes that reach a decision, and the median award is 4.7 times the qualifying payment amount, based on 3.39 million disputes in the federal public use files. The comparison between the QPA, billed charges, Medicare, and actual awards is laid out in QPA vs billed charges vs Medicare vs IDR awards.