Adding a fuel surcharge to NEMT rates: when it is allowed and how to set one

Where a surcharge is allowed, and where it is not

A fuel surcharge can only go on a price you control. That rules out most Medicaid work and leaves private riders, facilities, and some contracts.

Two federal and contract rules close the Medicaid door. Under 42 CFR 447.15, a Medicaid provider must take the state’s payment, together with any copay or other cost sharing in the state plan, as the full amount. Broker agreements repeat the point. Pennsylvania posts the MTM provider agreement, which says the provider will look only to MTM for payment and may not seek money from a member, even if MTM or its client fails to pay.

Your usual charge still matters. South Dakota’s fee schedule, for example, tells providers to bill their usual and customary charge and treats the listed fee as the most it will pay. If your private price includes a surcharge, that total is your usual charge, but it never lifts Medicaid’s payment above the schedule. The usual and customary charge entry explains the lesser-of rule.

Why fuel deserves a formula in 2026

Fuel costs jumped over the past twelve months. In EIA’s weekly survey dated September 28, 2026, regular gasoline averaged $4.465 a gallon nationally, up $1.347 from a year before. Diesel for on-highway use sat at $6.382, up $2.628 over the same stretch. Regions differ widely: the Gulf Coast averaged $3.924, the West Coast $5.724, and California $6.189.

The IRS moved too. It raised its business rate per mile by 3.5 cents, to 76 cents, for business driving from July 1, 2026, and said the change resulted from recent increases in fuel prices. The IRS rate stands in for the cost of running a vehicle, so the jump is a quick check on your own numbers.

A private rate set a year ago, when regular gasoline averaged about $3.12, now carries fuel costs it was never priced for. A surcharge written as a formula covers the difference without renegotiating the whole price each time the pump moves. The fuel cost guide covers the other half of the problem, burning fewer gallons.

How Minnesota’s Medicaid program indexes fuel

Minnesota shows the mechanics in statute. Paragraph (w) of Minn. Stat. 256B.0625, subdivision 17, adjusts the per-mile NEMT rate at the start of each calendar quarter in which gasoline tops $3.00 a gallon:

• Index: EIA’s average price of all grades of gasoline for Minnesota, the most recent available.
• Base: $3.00 a gallon.
• Step: 1 percent of the per-mile rate for every 10 cents of change.
• Direction: up or down.
• Timing: quarterly.

An illustration of the formula, not a payment Minnesota has announced: at an all-grades average of $4.40, the adjustment would be 14 steps of 10 cents, or 14 percent. The statutory stretcher mileage rate of $2.40 would become $2.74, and the lift or ramp rate of $1.70 would become $1.94.

The dates matter. A 2025 law set these rate paragraphs to expire for fee-for-service trips on July 1, 2026. Minnesota Laws 2026, chapter 121, signed May 27, 2026, changed that so they last until the state’s new transportation administrator is in place. Subdivision 18h, which requires Minnesota’s Medicaid health plans to give a fuel adjustment on NEMT rates when fuel tops $3 a gallon, is repealed by the same 2025 law, and chapter 121 moved that repeal to the same point: the day the new administrator takes over.

Five choices that make a surcharge fair

A surcharge holds up when a customer can check the math. Settle these five points before you write it down.

1. The index. Use an EIA weekly retail series. Choose regular gasoline or diesel to match your fleet, and the national, regional, or state series closest to where you buy fuel. A fleet whose local prices move differently from the national average is better served by its regional series.
2. The base price. Use the fuel price built into your current rates, usually the index value when you last set them. Everything below the base is already in the rate.
3. The form. A charge per loaded mile tracks fuel use most closely. A flat charge per trip is simpler for facilities to budget. A percentage of the fare is easy to apply, but it also marks up the base rate, which has nothing to do with miles.
4. The step and the cap. Steps of 10 or 25 cents keep the surcharge from changing every week. A cap protects the customer from a spike, and a floor of zero protects you from owing money back.
5. The reset schedule. Monthly resets balance accuracy against paperwork. Use a fixed rule, such as the index value for the first Monday of the prior month, so there is never a question of which week counts.

Working out the amount

The fuel cost per mile is the price per gallon divided by miles per gallon. The surcharge covers only the part of that price above your base. Because a van also drives empty miles between riders, spread the empty miles over the loaded ones.

Example, with hypothetical numbers: a wheelchair van gets 14 miles per gallon and drives 0.5 empty miles for every loaded mile, so each loaded mile burns fuel for 1.5 miles. The base price is $3.50.

On a 10-mile trip at that late-September price, the surcharge comes to about $1.00. The number looks small, which is the point. Fuel is one cost among many, and a surcharge only has to cover the change. Use your own miles per gallon and empty-mile ratio. The cost per mile calculator helps find both.

A stepped version is easier to read on an invoice. In the example above, each 25 cents above the base adds about 2.7 cents per loaded mile, so a clause could add 3 cents per loaded mile for each full 25 cents. At $4.465, that is three full steps, or 9 cents a mile.

Sample contract language

Put the surcharge in the agreement itself, not in a side letter. The clause below is an example to adapt with your own numbers and your lawyer’s review, not a standard form.

Fuel adjustment. Rates in Schedule A assume a fuel price of $3.50 per gallon. For each calendar month, Provider will add a fuel adjustment of $0.03 per loaded mile for each full $0.25 by which the Index exceeds $3.50. “Index” means the U.S. Energy Information Administration weekly retail price for regular gasoline, all formulations, for the [region], in dollars per gallon including taxes, for the first Monday of the previous month. The adjustment is zero when the Index is $3.50 or less and will not exceed $0.15 per loaded mile. Each invoice will show the Index value used and the adjustment as a separate line. If EIA stops publishing the Index, the parties will agree on a comparable public series within 30 days.

What the example gets right: it names the exact series and date, states the base, step, and cap, moves to zero on its own, shows the math on every invoice, and says what happens if the index disappears. The facility transportation agreement template shows where a clause like this fits among the other rate terms.

Government contracts work differently. Federal fixed-price contracts with economic price adjustment revise the price up or down based on established prices, actual labor or material costs, or cost indexes of labor or material (FAR 16.203-1). Use the adjustment clause the contract gives you rather than adding your own.

Telling customers and quoting the price

How you announce a surcharge matters as much as the formula.

Facilities. Follow the agreement’s terms for changing rates. If it is silent, add the clause at renewal or by signed amendment, and send written notice with the effective date and the formula to the person who signed and to accounts payable. The price increase guide covers notice periods and a letter outline.

Private riders. Quote the total. California’s consumer law, Civil Code 1770(a)(29), bars advertising, displaying, or offering a price that leaves out mandatory fees, apart from government taxes and fees and certain shipping charges. Minnesota’s deceptive trade practices law (325D.44, subdivision 1a) does the same for fees and surcharges that must be paid to buy the service. The federal fee rule in 16 CFR Part 464 covers only live-event tickets and short-term lodging, so state law is where these rules sit for rides. Check your own state before you publish a price.

A practical approach for private work:

• Put the current surcharge on your rate sheet with the index value and the date it was set.
• Include it in every phone and written quote as part of one total.
• Show it as a line on the receipt, so a rider paying from an HSA or a family comparing invoices can see what changed.
• Keep card fees separate. A card surcharge follows different rules. The card payments guide covers them.

Keep a record of every reset

A surcharge is only as defensible as its paper trail. Keep a simple log with the reset date, the index value, the source link, the calculated surcharge, and the invoices it applied to. When a facility’s accounts payable team questions a charge, you can answer with the index figure and the clause in two minutes.

Review the base price whenever you reset the underlying rates. Once a new rate already reflects higher fuel prices, move the base up to match, or the customer pays for the same fuel twice.

Keeping surcharges in the right rates

In HealthRide, fares are set for each payer, so an adjusted rate you agree with one facility applies only to that facility’s trips, while Medicaid and broker trips keep their own rates. Every finished trip turns into an invoice priced from its payer’s rates. See invoicing.