Do Medicaid Capitated Rate Structures Impact NEMT Quality

Ankit Mathur
Ankit Mathur
quality concept handwritten on blackboard

Here at Roundtrip, we are obsessed with quality, and we are always looking for ways to incentivize better patient care and quality non-emergency medical transportation. Because Medicaid NEMT payment structures vary by state, we can examine if certain models encourage quality.

Medicaid is an integral part of NEMT, as it is estimated that $3 billion is spent annually on Medicaid-eligible trips.[1] States have flexibility in how they implement NEMT transportation, and many opt to use some form of a brokerage model in its execution. Brokers provide centralized trip servicing, including building the transportation provider network, trip scheduling, dispatch, and providing call center support.

The most common form of payment to these brokers is a capitated rate. The state pays the broker a pre-determined rate based on the number and mix of Medicaid enrollees and assumptions about NEMT needs. The broker then reimburses providers for the actual cost of transportation and keeps anything leftover to cover their administrative costs.

Virginia Case Study

Virginia studied its Medicaid NEMT and found that the capitated rate structure that Virginia pays its third-party broker can discourage high-quality transportation.[2] Predetermined rates can vary dramatically from actual transportation costs, and in Virginia, the rates have not been high enough to cover the transportation and administrative expenses. As a result, there is a concern that brokers and providers will cut quality and services to cover these losses. In 2015, the rates had to be renegotiated and resulted in substantial changes.

The commission recommended including a financial risk corridor, which limits the broker’s profits and losses, to limit risk to the broker and the state as well as implementing a way to verify transportation costs independently.

RoundTrip’s Findings

While there are great financial benefits to the state to have transportation costs be known and fixed, capitated rates can increase risks to NEMT quality. Underpaying for services is as serious as overpaying, as brokers and providers may face undue financial pressures and attempt to cut services. State NEMT contracts often cover multi-year periods, and trying to change contract terms mid-contract could lead to service disruptions.

Payment models that both cover reasonable trip and administrative costs and update in a timely way can allow high-quality transportation while still encouraging cost-effective services.

[1] Transportation Research Board, “Impact of the Affordable Care Act on Non-Emergency Medical Transportation (NEMT): Assessment for Transit Agencies.”
[2] Joint Legislative Audit & Review Commission, “Performance and Pricing of Medicaid Non-Emergency Transportation.”