What Is a Prepaid Ambulatory Health Plan (PAHP)? When a NEMT Broker Is One

Many brokers are paid for the trips they arrange. Some states pay their broker a set amount for every member each month instead, and let it keep what it saves or absorb what it loses. Federal rules call a broker paid that way a prepaid ambulatory health plan, and that label decides which rules sit between you and the broker.

What a prepaid ambulatory health plan is

Federal rule 42 CFR 438.2 defines a PAHP as an entity that meets three tests:

1. It serves members under a contract with the state, paid by capitation or another method that does not use state plan payment rates.
2. It does not provide, arrange, or answer for any inpatient hospital or institutional care.
3. It does not hold a comprehensive risk contract, the kind a full health plan holds.

Medicaid.gov gives dental and transportation plans as examples, and notes that a PAHP may be paid on a risk or non-risk basis. Capitation is a payment the state makes periodically for each enrolled member, whether or not that member uses any service in the period. Under a risk contract, the plan takes a loss when the cost of services runs above its payments.

42 CFR 438.9 adds a narrower category. A NEMT PAHP is an entity that provides only NEMT to members under a state contract, paid by prepaid capitation or another method that does not use state plan rates.

The same company can sit in a different box in each state. What matters is how the state pays it.

How the state set it up	How the ride manager is paid	Main federal rules	How CMS counts the trips
NEMT PAHP	A fixed amount per member, or another method not based on state plan rates	The managed care rules listed in 42 CFR 438.9	As managed care encounters, under plan type 15 (transportation PAHP)
Non-risk broker	State plan rates, on a fee-for-service basis, under the state plan	The broker rule in 42 CFR 440.170(a)(4)	Not reported as managed care
A health plan’s ride vendor	By the health plan, under a subcontract	The plan’s own contract. The plan stays fully responsible to the state (42 CFR 438.230).	As part of the plan’s encounter data

CMS’s data rules for states, updated December 20, 2024, describe NEMT PAHPs as full-risk, capitated arrangements that contract with transportation providers to form a network. The same rules say non-risk brokerages paid at the state’s rates should not be reported as managed care. For how a broker works day to day, see what a NEMT broker is.

Which states run NEMT as a prepaid plan

CMS’s 2024 managed care report counted 10,572,828 people in NEMT managed care programs on July 1, 2024, or 12.2 percent of all Medicaid enrollees. Fifteen states and the District of Columbia reported one. The plans below are the ones CMS listed for that date.

State	Plans CMS listed on July 1, 2024	Enrollees
Arkansas	Area Agency on Aging of Southeast Arkansas, Central Arkansas Development Council, Southeast Trans (now Verida)	777,129
Delaware	Modivcare	236,213
District of Columbia	MTM	25,938
Florida	MTM (Regions B to F), Modivcare (Regions A, G, H, I)	165,577
Georgia	Modivcare (Central, East, Southwest), Verida (Atlanta, North)	1,908,368
Idaho	MTM	308,110
Kentucky	Kentucky Transportation Cabinet	1,449,651
Maine	MidCoast Connector, Modivcare, Penquis CAP	366,314
Missouri	MTM	244,150
Nevada	MTM	761,092
New Jersey	Modivcare	1,556,565
Oklahoma	SoonerRide (Oklahoma Health Care Authority)	1,040,358
Pennsylvania	Modivcare (Philadelphia)	646,232
Rhode Island	MTM	312,709
Utah	Modivcare	318,323
West Virginia	Modivcare	456,099

Brokers change when states rebid their contracts, so confirm the current one on your state’s page in NEMT brokers by state.

Arkansas and Kentucky run theirs under 1915(b) waivers, which let a state require members to enroll in managed care or otherwise limit their choice of providers. CMS approves 1915(b) waivers for two years at a time, or up to five years when the program covers people with both Medicare and Medicaid (SMD 23-006, September 28, 2023). The federal rule requiring a choice of at least two plans, 42 CFR 438.52, is not on the NEMT PAHP list, so a state can give each region a single broker.

Two waivers show how it works:

• Arkansas. CMS first approved its NET waiver on August 26, 1998. The current one, approved for April 1, 2023 through March 31, 2028, names each regional broker a PAHP. Members are enrolled automatically with the one PAHP for their region, and the state pays each PAHP a monthly capitated rate based on the number of eligible members in the region. The state cut its regions from 11 to 7 in 2018. See the Arkansas guide.
• Kentucky. Its Human Service Transportation Delivery waiver renewal, for April 1, 2025 through March 31, 2027, marks the program as a PAHP paid on a risk basis. The Department for Medicaid Services contracts with the Transportation Cabinet, which contracts one broker per region. See the Kentucky guide.

Which federal rules apply to a NEMT PAHP

Under 42 CFR 438.9(b), no rule in the managed care regulations applies to a NEMT PAHP unless the section lists it. These listed rules touch your company most:

Rule	What it requires	What it means for you
42 CFR 438.12	No turning away a provider solely for its license or certification, and written notice of the reason when the plan declines a provider	You can ask for the reason in writing
42 CFR 438.106 (in subpart C)	Members are never liable when the state does not pay the plan or the plan does not pay a provider	You may not bill the rider when the broker denies or shorts your invoice
42 CFR 438.206(b)(1)	A network of providers, supported by written agreements, big enough to give all members access	Gaps in a service area or service level are a reason for the broker to add you
42 CFR 438.214	Written selection and retention policies, a documented credentialing and recredentialing process, and no excluded providers	Expect a credentialing file and repeat checks. See NEMT broker credentialing.
42 CFR 438.230	Any subcontract that delegates the broker’s duties must spell them out, and the state, CMS, and the HHS Inspector General may audit it for 10 years	Applies when the broker hands off part of its own job, such as a call center
42 CFR 438.242	A data system that collects data on every service, verifies what providers report, and shares it with the state and CMS	Your trip records become the broker’s encounter data
42 CFR 438.610	No affiliations with people debarred or excluded by federal agencies	Screen owners and managers against the OIG exclusion list

The list also carries most of the standard contract terms in 438.3, the information rules in 438.10, coverage and authorization rules in 438.210, and confidentiality in 438.224. It keeps the member’s right to a state fair hearing.

What the list leaves out matters just as much:

• The network adequacy standards in 438.68 and 438.207.
• The managed care grievance and appeal system in subpart F. Members go to a state fair hearing instead.
• The state’s duty to screen and enroll every network provider in 438.602(b). Whether you must enroll with Medicaid is up to your state.
• The 85 percent medical loss ratio standard in 438.4(b)(9). Rates must still be actuarially sound.

What changes for you when your broker is a PAHP

1. The broker’s money is fixed, so it watches every trip. It keeps what it saves, which makes it strict about approvals and quick to send trips to the lowest-cost fit. The state watches the other side: Arkansas’s waiver says the state reviews denials and helpline complaints to make sure its brokers are not denying rides to game the capitation system.
2. Your trip records feed the state’s data. Under 438.242, the broker must collect data on every trip and check what its providers report. Kentucky’s rule, 603 KAR 7:080, makes each subcontractor collect and keep encounter data on each trip, and requires brokers and subcontractors to keep records for five years. See NEMT trip documentation.
3. The state can check your vans, not just the broker. Arkansas’s oversight vendor inspects subcontracted providers’ vehicles on scheduled and unscheduled visits. It also visits their business locations, announced and unannounced, to review records and written policies.
4. Your rate comes from the broker unless state law sets it. The state pays the broker per member, and the broker sets what it pays you. Kentucky is the exception: the Transportation Cabinet sets uniform subcontractor rates for each certificate type and area, with 45 days’ notice before a change (603 KAR 7:080). KRS 281.875 then requires brokers to pay subcontractors within three business days of being paid by the Cabinet.
5. A full network is a real answer. The broker does not have to add providers its members do not need, but it must tell you in writing why it said no. See what to do when a broker network is full.

How to tell whether your state’s broker is a PAHP

1. Look up your state in CMS’s managed care enrollment report. A NEMT program listed there is run as managed care. The 2024 report gives enrollment as of July 1, 2024.
2. Read the waiver. Search medicaid.gov’s waiver list for your state’s NEMT or transportation waiver. The 1915(b) form marks the plan type, such as PAHP, and whether it is paid on a risk or non-risk basis.
3. Read your provider agreement. Look for the sections that pass state contract terms down to you, and for the data you must report after each trip.
4. Ask the state Medicaid agency. It can tell you which federal rules and state contract terms govern its broker.

How states run NEMT explains each model state by state, and federal rules for NEMT brokers covers what a state plan broker must do.