Medicaid Cuts and NEMT: What Providers Need to Know

Medicaid-funded non-emergency medical transportation (NEMT) services help millions of Americans get to life-saving healthcare appointments every year.

But with federal talks of slashing Medicaid budgets, many NEMT providers are left wondering what will happen if that funding starts to disappear.

This article explores how federal Medicaid cuts could impact NEMT businesses. It outlines actionable ways providers can adapt, stay resilient, and continue delivering critical transportation to those most in need.

The Backbone of Medical Access

For decades, NEMT services have been a lifeline for Medicaid recipients who need transportation to medical appointments, treatments, pharmacies, and hospitals.

These services aren’t a luxury—they’re often the difference between preventative care and preventable emergency room visits.

According to Medicaid.gov, in December 2024,  71.2 million Americans were enrolled in Medicaid, many of whom rely on NEMT to stay healthy.

Medicaid is the largest payer of NEMT services nationwide.

Each state administers its own Medicaid program, but most reimburse NEMT providers through managed care organizations (MCOs) or brokers like Modivcare, SafeRide Health, or Verida.

What Federal Medicaid Cuts Could Mean

Federal Medicaid cuts can take many forms, including reduced federal matching funds (FMAP), block grants, or tighter eligibility rules.

According to an interview by Johns Hopkins, Congress is considering policy changes toward eligibility and coverage that could cut $600-$800 billion from the program over the next ten years.

“In order to continue offering the same levels of coverage they have now, states would have to put up a lot more money, which most states don’t have,” said Gerard Anderson, PhD, professor of health policy and management. “Otherwise, they have to either cut out a lot of existing enrollees [through eligibility changes] or offer those people a lot fewer services.”

NEMT is an “optional benefit” under federal guidelines. That makes it particularly vulnerable in times of budget tightening. Some states may respond to cuts by:

• Eliminating or limiting NEMT services,
• Reducing reimbursement rates,
• Increasing provider administrative requirements, or
• Narrowing the eligibility pool.
  
  

This isn’t the first time we’ve seen this happen, however.

In 2018, states like Iowa and Indiana proposed cuts or restrictions to NEMT access. While some efforts were later reversed after public outcry, they revealed a harsh reality: NEMT providers can’t afford to be unprepared.

The Effect on NEMT Providers

Sadly, big cuts on the federal level reach the companies that rely on this funding the most. Here are a few of the effects potential funding changes could have on NEMT providers.

1. Financial Pressure

Lower Medicaid reimbursement rates can severely impact profit margins, especially for providers with large fleets and high fuel costs. Cash flow becomes inconsistent, and providers may struggle to scale or maintain operations.

2. Operational Disruption

Cuts could mean fewer trips to schedule, which means less predictable work for drivers and dispatchers. This can hurt morale, reduce driver retention, and lead to service disruptions.

3. Reduced Access for Patients

Patients suffer when providers cut routes or shut down due to budget issues. Missed appointments often worsen health conditions, increasing long-term healthcare costs—a lose-lose scenario for everyone.

How NEMT Providers Can Adapt and Overcome

While potential cuts are alarming, proactive providers can take steps now to mitigate risk and strengthen their business operations.

A. Diversify Your Revenue Sources

Relying solely on Medicaid is risky. NEMT providers should explore:

• Private-pay customers (e.g., senior centers, adult day programs).
• Medicare Advantage partnerships, especially for dual-eligible members.
• Contracts with hospitals, rehabilitation centers, or VA clinics.
• Transportation for school systems, veterans’ programs, or community organizations.

A more balanced income stream can help stabilize revenue even if Medicaid funding is reduced.

B. Strengthen Internal Operations

Efficiency is key. The more optimized your workflow, the more resilient your business will be. Using NEMT software like Tobi can help providers:

• Automate trip scheduling and route optimization,
• Minimize no-shows and delays,
• Submit cleaner claims to reduce denials and get paid faster.
  
  

Tools like Tobi also allow operators to track performance metrics, helping identify cost-saving opportunities across the board.

C. Advocate for the Industry

NEMT providers shouldn’t sit on the sidelines while policy changes unfold. Get involved by:

• Joining industry organizations like NEMTAC or United Medical Transportation Providers Group (UMTPG).
• Educating your local representatives and Medicaid officials on the importance of NEMT access.
• Sharing patient stories and data that highlight the return on investment of preventive transportation services.

When providers speak up together, policymakers listen.

D. Improve Medicaid Claims Processes

Even without cuts, denied or delayed claims can ruin cash flow. Now is the time to:

• Conduct billing audits to ensure clean claim submission,
• Work with clearinghouses to minimize errors,
• Follow up regularly on outstanding reimbursements,
• Stay in good standing with brokers to remain on preferred provider lists.

An organized claims process reduces revenue leakage and helps providers weather funding delays.

E. Plan for Different Scenarios

Use financial modeling to simulate how various Medicaid funding changes impact your business. Ask:

• How would a 10% cut to reimbursement rates affect your bottom line?
• What would happen if one of your most significant contracts ended?
• Could you scale back routes or consolidate trips to stay profitable?

These plans empower you to respond with strategy, not panic, if the time comes.

Looking Ahead: Innovation Amid Uncertainty

The future of Medicaid funding may be uncertain, but the demand for NEMT is not. As the U.S. population ages and chronic conditions increase, the need for reliable, affordable transportation will only grow.

Providers who embrace technology, diversify their services, and build stronger partnerships will be best positioned to succeed—regardless of policy changes.

Even now, companies are experimenting with:

• Mobile apps for patient ride booking,
• AI-assisted dispatch systems,
• Partnerships with rideshare services,
• Hybrid fleets, including EVs, to cut fuel costs.

Staying ahead of the curve boosts efficiency and demonstrates your value to payers, brokers, and community partners.

Keeping On

Federal Medicaid cuts could pose serious challenges to NEMT providers—but they don’t have to be a death sentence.

Providers who start preparing now can protect their operations, support their drivers, and continue delivering care to patients who rely on them.

When the future is uncertain, the most successful operators are those who adapt quickly and serve boldly.

In times of uncertainty, the best NEMT providers won’t wait for change—they’ll drive it.

Are you ready to future-proof your NEMT business in the face of Medicaid reform? Sign up for a quick demo to see how Tobi can enhance your business.