In part 2 in our series on Using Technology to Coordinate NEMT and Transit Services, we will look at how NEMT brokers and transit agencies can negotiate a mutually beneficial rate for services. If you haven’t already, check out part 1 here.
Let’s take a look at some rough numbers for our sample negotiation.
|Fixed Route Bus||ADA Paratransit |
|Negotiated NEMT |
Rate ADA Paratransit/
|Avg cost/per passenger trip |
|Avg fare box recovery |
Though transit receives government funding, it does not receive additional funding to pay for the more costly ADA paratransit trips. This is known as an “unfunded mandate”. This means that if more NEMT paratransit trips are passed along to transit at the standard fare rate, transit agencies are not able to cover their costs for these additional trips due to the low fare box recovery rate.
The second common negotiating snag is the full risk, capitated rate model that is becoming more common with states and MCOs. “Capitated rate” means a fixed rate based on the total number of Medicaid members, typically paid per month. For example, for 10,000 members a broker would pay $8 per member, per month for a transit agency to provide all the trips their members require. A “full risk” contract would require the transit agency to absorb any financial losses, if it cost them more than the $80,000 to provide all the necessary trips that month. As public transit, these agencies are not able to use their public dollars to cover costs for services not provided to the general public, such as Medicaid.
In contrast, transit most commonly operates on a “fee for service” model, where they receive payment for each trip they perform.
Medicaid does not allow transit to be reimbursed more than the published fare for their fixed route services. But the regulations do allow for some flexibility when it comes to paratransit services.
CFR §440.170 (a) (4) (ii) (B) (4) (iii) allows the possibility of negotiating rates with transit under certain circumstances:
(iii) The broker documents that the Medicaid program is paying no more for fixed route public transportation than the rate charged to the general public and no more for public paratransit services than the rate charged to other State human services agencies for comparable services.
So, given all of these restrictions and funding model differences, how can MCOs and transit agencies reach an agreement?
With transit’s existing infrastructure and mandate to provide paratransit services, NEMT could be a much needed source of revenue for transit agencies. There are an increasing number of contracts in place were both parties agreed to a mutually beneficial rate: higher than the standard fare, but lower than the fully allocated cost. Some agreements are a capitated rate with limited or no risk, a sweet spot for transit so they can recover any loses.
TripSpark’s software can help organizations track trip volume and costs, and service demands in specific regions. With this information, transit agencies can run forecasts examining if they can accept a lower payment, while brokers can determine if they could afford to pay a slightly higher rate. Software can help both parties gather the metrics they need to make these important decisions and agree on an acceptable negotiated rate.
A higher rate for transit agencies is a valuable source of funding, while NEMT brokerages still save on costs. It all comes down to some good data and some flexible negotiating.