Medicaid NEMT rate increases: how rates change and how providers make the case for a raise

A Medicaid trip rate is not set once and left alone. It moves when a legislature funds a raise or orders a cut, when the Medicaid agency changes a payment method, when a formula such as the IRS mileage rate moves, and when a broker renegotiates. Each path has its own rules, its own notice, and its own point where a transportation company can be heard. This guide walks through them with changes from 2025 and 2026.

Three places a NEMT rate is set

Who sets your rate depends on who pays for the trip.

• The state fee schedule. For trips the state pays directly, the rate comes from the Medicaid fee schedule, written into the state plan. CMS gives states wide room: they can adopt Medicare rates or a share of them, write a fee schedule of their own, or pay a provisional rate settled later against actual costs. When rides are covered as a medical service, payments must also be “consistent with efficiency, economy, and quality of care” and enough to draw providers (SMD 23-006). The Medicaid fee schedule entry explains how to read one.
• The broker contract. Where a broker runs NEMT, the broker usually sets what it pays you. New York’s policy manual says the broker negotiates with network providers and the negotiated rates supersede the state fee schedule. Florida’s NET coverage policy pays nonemergency ground and air ambulance at Medicaid rates and every other NET service at a rate the state’s broker and the provider agree on.
• The health plan. Plans that cover rides pay under their own provider agreements.

The state still answers for broker pay. Under CMS’s 2023 guide, a state keeps its duty to assure rides when it hires a broker, may tell the broker which payment methods to use, and should oversee the broker closely enough that its rates never drive local transportation companies out of the network. Our guide to NEMT broker rates compares what brokers pay in practice, and the guide on how states run NEMT shows the model used where you operate.

The budget decides first

Most fee schedule raises start as money in a state budget. Without an appropriation, the agency usually has nothing to pass on.

• North Dakota, raise funded. The 2025 Legislative Assembly authorized a 2 percent inflation raise for most Medicaid providers and appropriated the money for it. For services on or after July 1, 2026, the raise reached NEMT too, apart from private vehicle mileage and lodging, at an estimated $50,000 in added spending over 12 months.
• Nebraska, no money, no raise. Nebraska’s NET fee schedule dated July 1, 2026 tells providers up front that its rates are unchanged from the prior schedule, and gives the reason: the state fiscal year brought no appropriation for a rate increase.
• Colorado, a raise taken back. Most providers got a 1.6 percent across-the-board increase on July 1, 2025. After the governor issued executive orders D 2025 014, D 2025 020, and D 2025 022 during a budget shortfall, the increase was removed on October 1, 2025. For fiscal year 2026-27, the General Assembly enacted further cuts through HB 26-1410: taxi (A0100) and ambulatory vehicle (A0120) trips were cut to $12.40 and mileage codes S0215 and S0209 to $2.80 a mile, and a separate 2 percent across-the-board cut came on top. The fee schedule effective July 1, 2026 pays $12.15 a trip and $2.74 a mile, down from $36.40 and $3.00. The Colorado rate guide shows the resulting fee schedule.
• North Carolina, a cut to fit the appropriation. The state’s notice for state plan amendment 25-0026 cut NEMT 3 percent from October 1, 2025 so the program could operate within the funding the General Assembly appropriated, and said the cuts could change if the legislature added money.

The lesson for providers is timing. When the agency announces a rate, the money behind it was often settled months earlier in budget hearings.

Public notice before a rate changes

Federal rules require a state to give public notice of any significant proposed change in its methods and standards for setting payment rates (42 CFR 447.205). The notice must:

1. describe the proposed change
2. estimate the expected increase or decrease in annual aggregate spending
3. explain why the agency is making the change
4. name a local agency in each county where the proposal can be reviewed
5. give an address where written comments can be sent
6. give the place, date, and time of any public hearing, or say how to find them

It must be published before the effective date, in a state register, the newspaper of widest circulation in each city of 50,000 or more, or a clearly titled public notice page on the state agency’s website. Three kinds of change need no notice: one that conforms to Medicare methods or levels, one ordered by a court, and drug price changes in a cost-plus system.

Real notices show how this plays out:

• Arizona. AHCCCS posted its preliminary rates notice on July 24, 2026 for rates effective October 1, 2026, citing 447.205, and took comments at FFSRates@azahcccs.gov until 5:00 p.m. on August 24. It estimated about $6,337,038 in added fee-for-service payments for the year. For NEMT, it proposed rural per-mile pay (S0215 with the TN modifier) of $1.63, naming unmaintained or dirt roads, long drives out to members, and too few providers in the area.
• North Carolina. The SPA 25-0026 notice was posted on September 29, 2025 for cuts effective October 1, 2025. It listed every affected program with its percentage, estimated the state fiscal impact for state fiscal year 2026 at a reduction of $240,258,955, put copies at county social services departments, and took comments by email.

After a change is approved, the published fee schedule has to catch up within a month of approval or the effective date, whichever is later, under 42 CFR 447.203. The state plan amendment entry covers how to look up the amendment itself.

The extra test for a rate cut

Since the 2024 access rule (89 FR 40542), a state plan amendment that cuts or restructures provider payments in a way that could reduce access has to clear a federal test (42 CFR 447.203(c)).

The quick path requires three things. After the cut, aggregate Medicaid payments for each affected benefit category must stay at or above 80 percent of the most recent Medicare rates for the same or comparable services. The cut, together with every other cut that state fiscal year, must reduce aggregate fee-for-service spending in the category by no more than 4 percent. And the public process must have raised no significant access concerns, or the state must be able to answer them. The first test can be hard for transportation to pass. Colorado’s 2026 rate reduction fact sheet lists NEMT among the services already paid below 85 percent of Medicare rates.

A cut that misses any of those needs a fuller analysis. The state must report the number of actively participating providers in each affected category for each of the three prior years, by area, along with counts of members served and services furnished, and respond to every access complaint it received. Before submitting any rate reduction, the state must weigh input from members, providers, and others on how the cut will affect access (42 CFR 447.204). CMS may disapprove an amendment that lacks that documentation or leaves access concerns unresolved.

The rule also keeps the door open after a cut. States must run ongoing channels for member and provider input on access, such as hotlines, surveys, or an ombudsman, and keep a record of what they heard and how they responded. When an access problem is found, the state has 90 days to submit a corrective action plan.

Courts can undo a cut too. North Carolina restored rates to their September 30, 2025 levels after court rulings required it, announcing the reversal on December 10, 2025. For NEMT, new prior authorizations from December 17, 2025 carried the restored rates, claims for dates of service from that day were paid without the 3 percent cut, and earlier claims were to be reprocessed once their authorizations were corrected. Our guide to Medicaid mass adjustments explains how that reprocessing reaches your remittance.

Rates that follow a formula

Some rates move in step with an outside number instead of a budget fight. Michigan’s fee-for-service mileage is the clearest case. Its January 1, 2026 schedule paid commercial and nonprofit carriers up to $0.725 a mile, the IRS business rate for the first half of the year. Its July 1, 2026 schedule pays $0.76, the IRS rate that took effect the same day. Our Michigan rate guide shows how closely the two have tracked since 2021.

CMS points states toward anchors like this. When a state sets rates for unloaded miles or waiting time, it may rely on existing structures, and CMS names the IRS mileage rate and Medicare’s ambulance mileage rate as examples. A change that conforms to Medicare methods or levels needs no public notice under 447.205, and a rate that changes under an approved method must be updated on the state’s rate page within a month of taking effect.

For providers, a formula changes the argument. Instead of asking for a raise every year, ask the agency to tie a code to an index, or to add a modifier for the trips that cost more, the way Arizona did for rural mileage.

When the broker or plan sets the number

A change in the state fee schedule does not reprice a broker contract on its own. Where the broker negotiates, as in New York and Florida, your rate changes when your contract does. The state can still step in: CMS expects states to watch whether broker pay is driving providers away, and states may direct how brokers pay.

So the broker case is made in two places. Negotiate with the broker using your cost per trip and your on-time record. Then tell the state, in writing and with numbers, when a broker rate leaves counties without enough rides. The access-to-care channels described above exist for exactly that kind of report.

Ways providers move a rate

Rate decisions reward providers who show up early with specific numbers.

1. Know your costs. Work out your cost per trip, per loaded mile, and per vehicle hour before you ask for anything. The guides on pricing NEMT trips and wheelchair van operating cost show the math.
2. Watch the notice venues. Check your state register and the Medicaid agency’s public notice page every week. Notice can come only days before a change, as North Carolina’s did.
3. Comment in writing before the deadline. Federal rules require every notice to give an address for comments. Cite trips you turned down, counties you stopped serving, and what fuel, insurance, and wages cost you now. Arizona’s rural mileage change shows the kind of reasons agencies act on.
4. Report access problems as they happen. States must keep a record of access input and their responses, and that record follows any future cut to CMS.
5. Attend the Medicaid Advisory Committee. Under 42 CFR 431.12, every state’s committee meets at least quarterly. Twice a year at minimum, a meeting must be public, include a period for public comment, and be announced at least 30 days ahead. The committee’s topics include access to services and changes to services, and its members include clinical providers and health plans.
6. Use a formal rate review where one exists. Colorado’s Medicaid Provider Rate Review Advisory Committee meets at least quarterly, takes public comment on whether rates should be reviewed out of cycle, and reviews rate increase proposals or petitions. NEMT and emergency medical transportation are on its schedule for the 2027 review cycle.
7. Show up in budget season. Raises in North Dakota and the absence of one in Nebraska both came down to appropriations. A state transportation or ambulance association can coordinate testimony so legislators hear from more than one company. Keep the group work aimed at the government. The FTC treats speaking to legislators and agencies as normal association work, but competitors who agree together to turn down trips until a payer meets their price risk an illegal group boycott. Turning down a rate you cannot run at is still each company’s own call.

Seeing what each rate change costs you

A comment built on your own trips is harder to dismiss than a general complaint. HealthRide invoicing prices every trip from the rate schedule of the payer behind it, and the payers report in reports shows what each program brings in. That makes it straightforward to show an agency what a proposed cut would take out of your month.