Medicaid recoupment for NEMT: why paid trips get taken back and how to contest it

A recoupment is money Medicaid already paid you coming back out, usually subtracted from your next payments. For a transportation company working on thin margins, an unexpected recoupment can take a large bite out of a payment before anyone in the office knows why. This guide explains where recoupments come from, how states and brokers collect them, why states move quickly, and how to contest one, as of September 2026.

Recoupment, offsets, and holds

In federal terms, an overpayment is whatever Medicaid paid you above the allowable amount for a service. Recoupment is the state, or the contractor that pays its claims, getting that money back by shrinking your future payments, and it does not require advance official notice (42 CFR 433.304). In practice, several different actions reduce what you are paid, and they carry different rights.

A payment suspension is not a recoupment. States can suspend without notifying you first, must send notice within five days in most cases, and must send the case to the MFCU within one business day. If one arrives, get a health care attorney on the phone before replying.

Where recoupments come from

Recoupments come from several directions.

1. Audit findings. A state audit, recovery audit contractor, CMS contractor, or federal review found trips that the records did not support. See Medicaid audits of NEMT providers.
2. Claim corrections. When a paid claim is adjusted downward, the difference is recovered. Indiana’s manual gives the plain example of a provider paid for two units that later finds only one was delivered. The overpaid amount comes out of future payments through an accounts receivable.
3. Retroactive eligibility changes. When a rider’s coverage changes after the trip, the payer that should not have paid takes the money back. North Carolina’s August 2026 bulletin describes health plans recouping claims when a member is moved back to NC Medicaid Direct retroactively.
4. Another payer paid later. Indiana’s other example is a provider that receives a late payment from another insurer after Medicaid paid.
5. Duplicate payments from a broker. Broker agreements can allow offsets. The WellTrans in-network agreement lets the broker offset duplicate payments and overpayments against a provider’s future payments.
6. Errors you report yourself. Once you identify one, federal law sets a 60-day deadline to report it and send the money back. See the 60-day overpayment rule.

The first cause is the most serious. The others are routine, but they still need tracking, because a recoupment you do not notice looks like a short payment you never follow up on.

How the money is collected

States recover in three main ways: offsets against future payments, a lump sum, or a repayment plan. The rules differ by state, so read your notice closely.

Sources: Florida section 409.913, 18 NYCRR 518.4 and 518.6, and North Carolina G.S. 108C-5.

New York can also waive interest, in whole or in part, when charging it would be unjust, would unduly burden the provider, or would significantly delay resolving an open audit.

The state’s one-year deadline with CMS

States move fast because of their own deadline with CMS. After it discovers an overpayment, a state gets one year to collect. When that year ends it owes CMS the federal share, collected or not (42 CFR 433.312).

Discovery starts that clock. When fraud is not involved, discovery happens on whichever of these comes first (42 CFR 433.316):

• The day a state official first notifies you in writing of the overpayment with a dollar amount.
• The day you first admit, in writing to the Medicaid agency, that you were overpaid a stated amount.
• The day the state starts recouping a specific amount without notifying you first.

Fraud follows other timing. There, discovery happens when the state issues its final written notice, and if an appeal holds up the amount, CMS does not adjust the state’s federal funds until 30 days after a final judgment. CMS’s own contractors work to the same deadline. When a Unified Program Integrity Contractor finds a Medicaid overpayment, the report sent to the state comes with a letter reminding it to remit the federal share within one year.

Filing an appeal leaves the discovery date where it was (42 CFR 433.316), so the state’s year keeps running during a dispute.

The practical effect is simple. From the state’s side, every month an overpayment goes uncollected is a month closer to paying the federal share out of its own budget. Expect firm dates, short windows, and collection that continues during appeals.

The exceptions are narrow. A state does not have to refund the federal share when it cannot collect because the provider is in bankruptcy or out of business, and it must meet documentation conditions to use that exception (42 CFR 433.318).

Recoupment by health plans and brokers

Many NEMT companies are paid by a broker or health plan rather than the state, and then recoupment follows the contract. Federal rules require each managed care contract to spell out how the plan treats recoveries of provider overpayments and how it reports them (42 CFR 438.608). Plans also need a process that lets a network provider report an overpayment, pay it back within 60 calendar days of identifying it, and give the reason in writing.

Each broker contract sets its own rules on top. The WellTrans agreement allows offsets against future payments for duplicate payments and overpayments. It also lets WellTrans hold back a provider’s pay during an audit into possible fraud, waste, or abuse, and then pay out the balance with a breakdown of anything recouped. Read the dispute section of each broker contract so you know the deadline for challenging a recoupment. Our guide to appealing a denied NEMT claim covers payer appeal steps.

How to contest a recoupment

A recoupment is a claim against you, and you can dispute it. Work through it in order.

1. Read the notice. Find the amount, the claims or trips involved, the reason for each, the rule cited, the response deadline, and the appeal route.
2. Match it to your payments. Find the negative adjustments on your remittance advice and tie each one to a trip.
3. Gather the proof for each trip. Trip logs for both legs, signatures, authorizations, the driver’s qualification file, and proof the van was registered and insured that day.
4. Object in writing, item by item, before the deadline. New York gives 30 days from receipt of a draft audit report (18 NYCRR 517.5), and a later hearing is limited to issues you raised then (18 NYCRR 519.18).
5. Challenge any projection. If the demand was extrapolated from a sample, the sample size, the universe of claims, and the math can all be contested. North Carolina gives limited and moderate risk providers a formal way to redo the error rate.
6. Request a hearing in time. New York allows 60 days from the written determination (18 NYCRR 519.7). In Florida, a hearing must be held within 90 days after an administrative law judge is assigned. North Carolina’s Office of Administrative Hearings has 180 days from filing to rule (G.S. 108C-12).
7. Plan for collection during the appeal. Set up a repayment plan if you need one so payments keep flowing while you argue the amount.

Expect the evidence rules to favor the state. Florida bases findings only on contemporaneous records, and a provider cannot later use records it failed to hand over when they were requested. In New York and North Carolina, the provider carries the burden of proof at the hearing.

If a no-fault recoupment moved the trip to another payer, rebill that payer. In North Carolina, a trip a health plan recouped because the member moved back to Medicaid Direct goes to Medicaid Direct within 180 days of the recoupment date, along with evidence of the recoupment and of an on-time first claim.

What happens if you do not pay

An unpaid overpayment follows the company.

• Termination. Florida ends a provider’s participation if it has not repaid an overpayment or fine within 30 days after a final order, unless a repayment agreement is in place.
• Suspension across related companies. North Carolina can stop paying all providers under the debtor’s EIN or parent company, once it gives 30 days’ notice.
• Blocked enrollment. New North Carolina applicants sign a statement that no final overpayment, assessment, or fine is outstanding to North Carolina Medicaid or any other state’s Medicaid program (G.S. 108C-9).
• Higher screening. Federal rules move a provider with an existing Medicaid overpayment into the high risk category (42 CFR 455.450), which brings fingerprinting and site visits at its next screening.

Keeping recoupments from surprising you

The best defense is catching problems while the trips are recent.

• Reconcile every payment against the trips billed. A weekly trip reconciliation catches offsets and short payments while the trips are fresh.
• Book negative adjustments as receivables you are working, not as lost revenue, until you have checked each one.
• Report and return your own errors within 60 days, which is cheaper than an auditor finding them.
• Keep a cash cushion. A recoupment arrives without regard to payroll. See managing NEMT cash flow.
• Fix the cause behind any recurring adjustment, such as a wrong procedure code, a mileage rounding habit, or authorizations that expire before the trip.

Seeing what each payer actually paid

A recoupment is easier to answer when the trip record and the payment record sit side by side. In HealthRide, each trip holds its own proof: GPS-recorded miles, pickup and drop-off times, and the signature. Its invoicing keeps card payments, recorded checks and ACH transfers, and refunds in one ledger, which shows what every payer has sent you.