Factsheet: Medicaid Transportation Services

Title XIX of the Social Security Act and accompanying regulations require that in their state Medicaid programs, states cover health care services and fulfill administrative requirements necessary to operate the Medicaid program efficiently. Among these requirements is the mandate that a State plan ?specify that the Medicaid agency will ensure necessary transportation for recipients to and from providers and describe methods that the agency will use to meet this requirement.?1 The federal requirement is based upon recognition from past experience in Medicaid operation that unless needy individuals can actually get to and from providers of services, the entire goal of a state Medicaid program is inhibited.2 In order to claim federal matching funds, states may cover ?necessary? transportation either as an administrative expense, an optional service, or as both. 
How a state will meet its federal mandate to assure necessary transportation, is determined, in part, by its definition of the term ?necessary.? According to the Non-Emergency Transportation Technical Advisory Group3, states consider the following components in deciding whether the transportation service is ?necessary:"
transportation to and from Medicaid-covered services; the least expensive form available and appropriate for the client; to the nearest qualified provider; and no other transportation resource is available free of charge.4
This fact sheet discusses states? coverage of transportation services as an administrative expense and as an optional medical service and the provisions in the Deficit Reduction Act and accompanying regulations that enable states to establish transportation brokerages without a waiver. It also examines judicial enforcement of the federal mandate and outlines the best state practices in ensuring Medicaid recipients transportation to and from medical providers. 
States can provide transportation as an administrative expense or optional Medicaid service. Provision of transportation as an administrative expense offers states a great deal of flexibility, in part, because the freedom of choice provision does not apply. When the State does claim transportation services as an administrative cost, proper and efficient operation of the plan requires an attempt by the State to use any available free services, as well as the least costly means.5 States do not have to make direct payment to a provider when furnishing transportation as administrative cost, but can choose the most efficient and appropriate means of transportation for the Medicaid recipient, including the option of volunteers, gas vouchers, bus tokens, or quasipublic/private transportation companies.6 Whatever costs are incurred are federally matched at the fifty percent administrative services rate, which is typically lower than the rate at which medical services are matched.7
Rather than covering transportation as an administrative expense, some states provide it as an optional medical service. In order to be recognized as such, transportation assistance must be furnished by a provider to whom a direct vendor payment is made by the State. Transportation covered as an optional medical expense is within the free choice rights of the recipient, meaning that the client can obtain services from any qualified Medicaid provider.8 While the provision requires states to give Medicaid recipients a choice of providers, it does not require states to provide transportation to a recipient?s personal choice of provider at an exceptional cost. If the number of choices to a particular type of provider is significantly limited, states may authorize transportation to allow a reasonable selection of appropriate providers.9
Because Medicaid is the payer of last resort, when transportation is provided as an optional service, states are obligated to utilize all available sources of free transportation services before authorizing Medicaid payment. State authorized transportation costs claimed as an optional service are matched at the state?s federal medical assistance percentage.10 These include expenses for transportation and ?other related travel expenses? necessary to secure medical examinations and treatment for a recipient, such as:11
  • cost of transportation for the recipient by ambulance, taxicab, common carrier or other means,
  • cost of meals and lodging to and from medical care,
  • cost of attendant to accompany the recipient, and
  • cost of attendant?s transportation, meals, lodging, and, if the attendant is not a family member, salary. 
Travel related expenses are intended to cover situations when needed transportation is other than routine. This includes circumstances in which the Medicaid recipient requires a particular medical service only available in another city, county or state. 
EPSDT, the Early and Periodic Screening, Diagnostic and Treatment Program designed by the federal government to provide comprehensive medical services for children receiving Medicaid, requires that services listed in 42 U.S.C. §1396d(a) be covered if needed ?to correct or ameliorate? an illness, disease or defect.12 Among those services are preventive, rehabilitative care and treatment services recognized by the state.13 Regulations implementing these provisions mandate coverage of transportation to and from medical care for Medicaid-enrolled children who would not otherwise be able to access these services.14 Even if the state does not cover transportation as an optional service for adults, it must do so for children when it is medically necessary. 
EPSDT requires transportation to be offered ?prior to each due date of a child?s periodic examination.?15 Additionally, the state Medicaid agency must provide information stating that necessary transportation and scheduling assistance are available to EPSDT-eligible individualsupon request16 and must offer the family or recipient necessary assistance with scheduling appointments for services.17

States participating in EPSDT can provide transportation services to EPSDT beneficiaries through Medicaid or cooperative agreements with public or volunteer organizations or with the beneficiary?s friends or family members.18 Transportation costs covered by Medicaid may also include related travel expenses determined to be necessary by the state agency to secure medical examinations and treatment services which are only available in another city, county or state.19
The Deficit Reduction Act of 2005 (DRA) addresses a wide range of issues from housing and education to Medicare, Medicaid, and the State Children?s Health Insurance Program (SCHIP).20 In the Medicaid context, it creates the state option to establish a non-emergency medical transportation brokerage program to help states ensure provision of Medicaid transportation services.21 The purpose of this program is to ?more cost-effectively provide transportation for individuals eligible for medical assistance under the State plan who need access to medical care or services and have no other means of transportation . . . .?22
Under the DRA?s transportation brokerage option, transportation services may include wheelchair vans, taxis, stretcher cars, secured transportation, and/or bus passes or tickets.23Services can be conducted under contract with a transportation broker selected through a competitive bidding process.24 The broker will monitor beneficiary access and complaints and ensure that personnel providing transportation are licensed, qualified, competent and courteous.25 Under the DRA, traditional Medicaid requirements of statewideness, comparability and freedom of choice of providers may be ignored as states set up brokerage systems.26 This section of the statute became effective on February 8, 2006 when the DRA was enacted. 
A March 31, 2006, Dear State Medicaid Director letter offers additional guidance to states on establishing brokerage systems.27 The letter explains that prior to enactment of the DRA, states were required to obtain a § 1915(b) waiver in order to use a broker to provide nonemergency medical transportation as an optional medical service. As stated above, states may now use a brokerage system to provide transportation as medical assistance without a waiver. With the letter, the Centers for Medicare & Medicaid Services (CMS) made available a preprint for states to use when submitting a state plan amendment.28 Additionally, CMS issued draft regulations on August 24, 2007 to formalize the guidance; the regulations affirm the statute?s declaration that states can establish a transportation brokerage system without adhering to traditional Medicaid principles of comparability, freedom of choice and statewideness.29
A number of states had already been using non-emergency transportation brokers, as a response to the pressures of rising costs and lack of efficiency in providing transportation, and obtaining federal financial participation for the administrative expense even before the DRA was enacted. The states that had previously used 1915(b) transportation waivers to use brokerages were Arkansas, Florida, Georgia, Kentucky, New York, Oregon, and Utah.30 Other states that

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