Brokers and Medicaid
What Is Fee-for-Service Medicaid? How It Changes Who a NEMT Provider Bills
Fee-for-service Medicaid is the model where the state Medicaid agency pays for each covered service itself, at rates on its fee schedule. In managed care, the state pays a health plan a monthly amount per member and the plan pays providers. For a NEMT company, the rider's model decides who approves the ride and where your claim goes: the state, a state broker, or a plan.
- Fee-for-service means the state pays per service at its fee schedule rate. Managed care means a plan is paid per member and pays you.
- Fee-for-service does not always mean you bill the state. Indiana, Virginia, and Louisiana send fee-for-service rides through a broker.
- Even in managed care states, new members, some waiver members, and groups left out of plans stay fee-for-service.
- Since July 1, 2026, every state must post its fee-for-service fee schedule rates on a public website.
- Check eligibility on the date of each ride. It shows whether the rider is fee-for-service or in a plan, and who pays.
Every Medicaid rider you drive is covered one of two ways. Either the state pays for their care service by service, or a health plan does. Knowing which one applies before the trip tells you who approves the ride, what rate you get, and where the claim goes.
What fee-for-service Medicaid means
Under fee-for-service, the state Medicaid agency pays a provider for each service it gives. CMS’s 2024 managed care enrollment report defines it as a delivery system in which the state reimburses providers directly for each individual service rendered. The state sets the price in its fee schedule. It pays claims through its Medicaid Management Information System, or MMIS, which a private contractor called a fiscal agent may run for the state.
For rides, federal rule 42 CFR 440.170(a)(2) says transportation covered as a medical service comes only from a provider the state can pay directly. The exception is a broker program under 440.170(a)(4). There, a NEMT broker chosen by competitive bid arranges the rides and pays the ride companies.
Fee-for-service rates are public. Under 42 CFR 447.203(b)(1), every state had to post all of its fee-for-service fee schedule rates on a public website by July 1, 2026, linked from its Medicaid agency’s site. Each change must be posted within one month.
Fee-for-service vs managed care
In managed care, the state pays a health plan a set amount per member each month, called capitation, and the plan pays for that member’s care. Under 42 CFR 438.2, the state makes the payment whether or not the member uses any services during the period it covers. As of July 1, 2024, CMS counted about 87 million Medicaid enrollees, and 84.8 percent got some or all of their care through a managed care plan.
| Fee-for-service | Managed care | |
|---|---|---|
| Who pays your claim | The state’s claims system, or a broker the state hires for fee-for-service riders | The health plan, or the transportation broker the plan hires |
| How your rate is set | The state fee schedule, or the state broker’s contract rate | Your contract with the plan or its broker |
| Who approves the ride | The state, its authorization vendor, or its broker | The plan or its broker |
| What you sign up for | Medicaid enrollment, plus a broker agreement where the state uses one | Medicaid enrollment, plus the plan’s or broker’s network agreement |
| Where the rules are written | The state plan and the state provider manual | The plan contract, the broker’s provider manual, and 42 CFR Part 438 |
The state stays responsible either way. CMS guidance SMD 23-006 (September 28, 2023) says that even when a state hands parts of the job to outside entities, it is ultimately responsible for making sure members can get to covered care. States may also carve rides out of their health plans, which is covered in NEMT carve-out. For how plans work from the provider’s side, see Medicaid managed care organization.
Who you bill under fee-for-service
Fee-for-service does not always mean you bill the state. Many states hire a broker for their fee-for-service riders, and you bill the broker.
| State program | Who approves the ride | Who pays you |
|---|---|---|
| New York Medicaid (manual effective August 25, 2023) | Medical Answering Services, the statewide broker since 2023, authorizes each ride | The state’s eMedNY claims system. Mainstream managed care members’ rides have been paid this way since December 1, 2015 |
| Texas fee-for-service (handbook, September 2026) | The Medical Transportation Program authorizes every fee-for-service ride | TMHP, the state’s claims administrator. Health plans approve rides for their own members |
| Illinois fee-for-service (handbook, March 11, 2024) | Transdev, the state’s authorization vendor | The state. Rides for HealthChoice Illinois plan members are billed to the plan |
| Indiana Traditional Medicaid (module published August 19, 2025) | Verida books most rides. Stretcher, ambulance level, hospital-to-hospital, some nursing facility, and waiver service trips are booked with you directly | Verida for brokered trips, the state for trips exempt from the broker |
| Virginia fee-for-service (MTM Health handbook, approved August 10, 2026) | MTM Health | MTM Health |
| Louisiana, members outside managed care (chapter issued July 14, 2025) | Verida | Verida |
Indiana spells out the split: a ride company contracts with Verida for Traditional Medicaid members, or with the health plan’s broker for plan members. See the Verida, MTM Health, and Medical Answering Services broker guides.
Who is still fee-for-service in a managed care state
Most Medicaid members are now in health plans, but some riders stay fee-for-service.
- New members. Texas enrolls every new Medicaid client as fee-for-service first. The health plan gets its own start date, and in most cases that enrollment is not retroactive.
- Members not yet assigned to a plan, and some waiver members. MTM Health’s Virginia handbook says that as of July 2024, about 94 percent of members got rides through managed care and about 6 percent through fee-for-service. The fee-for-service group includes new members not yet assigned, members receiving home and community based waiver services, and FAMIS members not in a plan.
- Groups left out of plans. Louisiana’s manual sends rides for its excluded populations to fee-for-service, and non-ambulance rides for nursing home residents are part of the facility’s daily rate.
- Rides carved out of the plans. New York took rides out of its mainstream managed care benefit on December 1, 2015, so those members’ rides go through its state program.
Some fee-for-service members have no ride benefit at all. Indiana’s transportation module (August 19, 2025) lists seven fee-for-service benefit plans without NEMT, including Emergency Services Only, the Family Planning Eligibility Program, and QMB-only and SLMB-only coverage. See Medicaid eligibility verification.
How to tell which one a rider has
- Check eligibility for the ride date. The response names the rider’s health plan, if any. Indiana’s portal marks members whose rides go through Verida as Fee for Service + NEMT.
- Send the claim to the payer on that response. New York denies claims sent to Medicaid for members whose plan covers transportation, and tells the provider to bill the plan.
- Recheck before repeat rides. A rider can move from fee-for-service into a plan between trips, and the payer moves with them.
For the claim itself, see how to bill Medicaid for NEMT and how to bill NEMT brokers.
Frequently asked questions
Is fee-for-service Medicaid the same as traditional Medicaid?
Usually, yes. States name it differently. Indiana calls its main fee-for-service program Traditional Medicaid, Texas says fee-for-service, and CMS defines fee-for-service as a delivery system where the state pays providers directly for each service. The name on the eligibility response is what counts for your claim.
Do I bill the state myself for fee-for-service riders?
Only in some states. New York, Texas, and Illinois have you bill the state's claims system after the ride is authorized. Indiana, Virginia, and Louisiana hire a broker for fee-for-service rides, and you bill the broker. In Indiana, stretcher, ambulance level, hospital-to-hospital, and some nursing facility and waiver trips skip the broker and go to the state.
Do I need Medicaid enrollment if I only drive health plan members?
Yes. Under 42 CFR 438.602(b), the state must screen and enroll every network provider of a Medicaid managed care plan, and the rule says this does not require you to serve fee-for-service members. Illinois, for example, requires both plan and fee-for-service transportation providers to enroll in its IMPACT system.
Can a rider be fee-for-service one month and in a health plan the next?
Yes. Texas enrolls every new Medicaid client as fee-for-service first and gives the health plan its own start date, which in most cases is not retroactive. Virginia's fee-for-service riders include new members not yet assigned to a plan. Check eligibility for each ride date, because the payer can change between trips.
Are fee-for-service rates the same as health plan rates?
Not necessarily. Fee-for-service rates come from the state fee schedule, or from a broker's contract where the state uses a broker. A health plan or its broker pays the rate in your contract with it. Compare the state's posted rates with each contract before you sign.