What is a PAHP, and why are some NEMT brokers one?
A prepaid ambulatory health plan (PAHP) is a Medicaid managed care contractor paid by capitation, or by another method that does not use state plan rates, that has no responsibility for inpatient hospital or institutional care and no comprehensive risk contract. A broker that covers only rides on those terms is a NEMT PAHP, and only the federal rules listed in 42 CFR 438.9 apply to it.
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The federal definition
Federal managed care rules sort Medicaid contractors by what they are responsible for. Under 42 CFR 438.2, a prepaid ambulatory health plan is an entity that meets three tests:
- It serves enrollees under a contract with the state, paid by capitation or another method that does not use state plan rates.
- It is not responsible for any inpatient hospital or institutional care.
- It does not hold a comprehensive risk contract, the kind a full health plan signs.
CMS describes prepaid plans like these as covering a limited set of benefits, and names dental and transportation among its examples. A broker that handles only rides gets its own name in federal rules: the NEMT PAHP, defined in 42 CFR 438.9.
When a broker counts as a NEMT PAHP
The label turns on money and scope, not on what the broker calls itself. A broker is a NEMT PAHP when it contracts with the state, provides only NEMT, and is paid by capitation or by rates other than the state plan’s. CMS describes these arrangements as full-risk and capitated, with the broker forming a network of transportation companies for its members.
Arkansas shows how it looks in practice. Since 1998, members there have arranged rides through the single PAHP contracted for their region. The state pays each one a monthly capitated rate based on how many eligible members live in the region. The current waiver runs from April 1, 2023 through March 31, 2028.
A capitation payment arrives whether or not a member rides that month. So a PAHP broker’s income per member is fixed, and every trip it pays a transportation company comes out of that amount.
What the label changes
Only the rules listed in 42 CFR 438.9 apply to a NEMT PAHP. Everything else in part 438 does not.
| Applies to a NEMT PAHP | Does not apply |
|---|---|
| Contract terms in 438.3, with a few exceptions | Numeric network adequacy standards in 438.68 |
| Rules against provider discrimination, with written reasons for rejections (438.12) | Documentation of capacity under 438.207 |
| Keeping and monitoring a sufficient network (438.206(b)(1)) | The managed care grievance and appeal system in subpart F |
| Provider selection and credentialing (438.214) | Parity rules for mental health and substance use care |
| Subcontract rules (438.230) and confidentiality (438.224) | |
| Health information systems and encounter data (438.242) | |
| Enrollee rights in subpart C, and the state fair hearing | |
| The ban on excluded or debarred affiliates (438.610) |
For a transportation company, three items matter most. The broker must run a documented credentialing process. It must explain in writing why it declines you. It must also collect service data on every trip for the state, which is why it asks for so much detail. The encounter data page explains that last part.
PAHP, health plan, or state broker
The same trip can sit under three different rule sets. When NEMT is carved into a health plan, the plan’s full network duties apply and its broker is a subcontractor. North Carolina’s policy, for example, makes a plan’s ride subcontractor carry out every duty the policy places on the plan. When the state pays a broker at state plan rates, the broker is not managed care at all. See network adequacy for how each setup handles a full network.
Staying credentialed
A PAHP broker must recredential its network on a set process, and broker contracts tie pay to current credentials. MTM’s standard agreement, for one, says it will not pay for trips run by uncredentialed drivers or attendants. In HealthRide, each driver’s and each van’s licenses, insurance, registrations and certifications sit in one registry with their expiry dates. Reminders go out before anything lapses, and an expired item is flagged at assignment. See fleet and credentials.
Frequently asked questions
- Is every NEMT broker a PAHP?
- No. A broker is a NEMT PAHP only when it contracts with the state, covers nothing but rides, and is paid by capitation or rates other than the state plan's. CMS tells states not to report non-risk brokers paid fee-for-service at state rates as managed care. A broker hired by a health plan works as the plan's subcontractor, under the plan's own contract duties.
- Do riders appeal to a NEMT PAHP or to the state?
- To the state. The federal grievance and appeal system for managed care, subpart F of 42 CFR 438, is not on the list of rules that apply to NEMT PAHPs. Riders keep the right to a state fair hearing under 42 CFR 431 subpart E, along with the enrollee rights in subpart C of part 438. States may still run a separate grievance process. Arkansas mails every new enrollee a postcard explaining how to file a grievance against a broker, handled through the state's oversight vendor.
- Does a NEMT PAHP have to credential my company?
- Yes. 42 CFR 438.214 applies, so the broker needs written policies for choosing and keeping network providers and a documented credentialing and recredentialing process. It may not contract with a company excluded from federal health programs, and it must give written reasons if it turns you away.
- Which states pay NEMT brokers as PAHPs?
- Arkansas is a clear current example: each region has one broker, and the state pays it a capitated amount every month that rises and falls with how many eligible members live in the region, under a 1915(b) waiver approved from April 1, 2023 through March 31, 2028. In the CMS managed care report, 15 states and the District of Columbia reported enrollment in a NEMT program as of July 1, 2024. Read a state's waiver or broker contract to see how its broker is paid.
