Federal Rules for NEMT Brokers: What the Law Requires and What Providers Can Hold a Broker To

A broker sits between you and the Medicaid money for most trips you run. Federal law sets only a short list of rules for it, and most of your day-to-day protection comes from the state’s contract with the broker and your own provider agreement. Knowing which rule lives where tells you what to ask for, and who to call when a broker falls short.

Where the federal NEMT broker rules come from

Every state must ensure necessary transportation to and from providers, and describe how in its state plan (42 CFR 431.53). A broker is one way to do it. The rules for brokers came in layers:

Source	Date	What it does
Deficit Reduction Act of 2005, section 6083	Signed February 8, 2006	Added section 1902(a)(70) to the Social Security Act, letting a state run a broker program under its state plan without a waiver
CMS letter SMDL #06-009	March 31, 2006	Told states brokers must be chosen by competitive procurement and broker contracts must be approved by CMS
Consolidated Appropriations Act, 2021, section 209	December 27, 2020	Wrote the ride guarantee into law, added minimum provider and driver standards in section 1902(a)(87), and let states consult providers when they set up a broker program
CMS Medicaid Transportation Coverage Guide, SMD 23-006	September 28, 2023	CMS’s full guide, with sections on broker bids, conflicts, government brokers, and broker payments to providers
42 CFR 440.170(a)(4)	Last amended October 2, 2024	The federal broker rule itself: bidding, oversight, audits, and conflict of interest

The broker option lets a state skip three usual Medicaid rules: the benefit does not have to work the same way statewide, members do not get free choice of any qualified provider, and services do not have to match for every group. That is why a broker can limit which companies get trips.

Which rules apply depends on how your state hired its broker

The same company can be a broker in one state and a health plan’s ride vendor in another, and different federal rules apply to each.

How the state set it up	Main federal rules	Example
State plan broker	Section 1902(a)(70) and 42 CFR 440.170(a)(4)	Wisconsin’s NEMT manager, whose 2021 provider notice cites section 1902(a)(70)
NEMT-only plan paid a fixed amount per member (a NEMT prepaid ambulatory health plan)	Selected managed care rules listed in 42 CFR 438.9	Arkansas’s regional brokers, which Pennsylvania’s June 25, 2026 study describes as prepaid ambulatory health plans under a waiver in place since 1998
A health plan’s ride vendor	The plan’s managed care contract. The plan stays responsible, and the subcontract must spell out delegated duties (42 CFR 438.230).	Blue Cross and Blue Shield of Texas moves its Medicaid rides from Modivcare to MTM Health on October 1, 2026
Rides run as an administrative activity	50 percent administrative match. Free choice of provider does not apply.	Most Pennsylvania counties, which claim the 50 percent administrative match

Money explains why states care. A state plan broker’s costs are matched at the state’s regular federal medical assistance rate, not the 50 percent administrative rate. Pennsylvania’s study estimated an effective 60.2 percent match for a broker, against the 50 percent its county-run program gets.

The setup also changes the conflict rule below. It is a condition of the state plan broker option, and waiver programs can differ. Pennsylvania’s study says Arkansas’s waiver lets its regional brokers give trips directly, and Arkansas’s June 19, 2026 bid for Region G lets the winner work as the sole provider. How states run NEMT shows which model your state uses.

The four duties in the federal NEMT broker rule

Under 42 CFR 440.170(a)(4)(i), a state may contract with a broker that meets four conditions.

Federal duty	What the rule says	What it means for you
1. Competitive bid	Selected through bidding consistent with 2 CFR 200.317 through 200.327, based on experience, performance, references, resources, qualifications, and costs	The state posts a public solicitation before each new contract. See how NEMT broker RFPs work.
2. Oversight procedures	Monitors member access and complaints, keeps rides timely, and makes sure transport staff are licensed, qualified, competent, and courteous	The broker credentials your drivers, checks your vehicles, tracks on-time rides, and handles complaints about you
3. Regular state audits	The state audits the broker for quality, timeliness, and members’ access to care	Audit findings flow down. The broker checks your trip records to prove its own compliance.
4. Written contract	The contract carries the conflict of interest rules and makes the broker liable for the full cost of any prohibited referral	If the broker sends trips to a company it has a tie to, the broker pays for those trips

The oversight duty is why credentialing and audits never stop. See NEMT broker credentialing and how to pass a NEMT broker audit.

States do not always get the audit duty right. The HHS Office of Inspector General found on July 5, 2016 that New Jersey did not adequately oversee its broker, and estimated that 2,538,674 claims totaling $64.7 million did not meet contract and state requirements. On August 4, 2017, it found the same for Oklahoma, where 42 of 100 sampled claims failed and the broker paid an estimated $6.9 million for improper claims. In both reports it told the state to write contract terms that let it recover money from the broker. On May 28, 2026, the Inspector General announced a new audit series on whether selected states met Medicaid payment requirements for NEMT.

The conflict of interest rule

The broker’s contract must bar the broker from giving rides itself, or referring or subcontracting trips to a transportation company it has a financial relationship with (42 CFR 440.170(a)(4)(ii)). The bar covers the broker’s contractors, owners, investors, board, corporate officers, and employees. It also applies when an immediate family member has the tie: a spouse, parent, child, sibling, step or in-law relative, grandparent, grandchild, or the spouse of a grandparent or grandchild (42 CFR 411.351).

A financial relationship means any ownership or investment interest, such as stock, partnership shares, LLC membership, or a loan secured by the company’s property or revenue, or any compensation arrangement (42 CFR 411.354).

There are four exceptions, and each needs documentation:

Exception	When it applies
Rural area	The trip is in a rural area, meaning outside a metropolitan statistical area (42 CFR 412.62(f)), and no other Medicaid or qualified provider is available
Specialized rides	The ride is so specialized that no other available provider can do it
Too few providers	Other available providers are not enough to meet the need
Government broker	Pay does not exceed the broker’s actual costs as a separate unit with separate books, each ride is documented as the most appropriate and lowest cost option, and Medicaid pays no more than the public fare for fixed route transit and no more than other state human services agencies pay for paratransit

CMS says a state that wants one of the first three exceptions must submit a state plan amendment with precise, up-to-date data for each county where it applies. It also says the state should make the broker use its own vehicles only for trips no contracted provider can take (SMD 23-006, September 28, 2023).

States apply the rule in their own words. Georgia’s NEMT manual, version dated July 1, 2026, says the broker shall not itself be a provider of transportation, but requires it to keep backup “shooter vans” for times when the scheduled provider is unavailable or no qualified provider exists. Colorado’s HB26-1328, in effect July 1, 2026, bars its broker from operating, owning, or controlling any NEMT provider in Colorado. See Colorado’s new NEMT law.

If you see a broker’s own vehicles taking trips your company is credentialed and available for, ask your state Medicaid agency whether it approved an exception for your county.

Federal rules that bind you as a provider

Some federal broker rules point at you, not the broker.

• No payments for trips. A transportation provider may not offer or pay any remuneration, including a kickback, rebate, cash, gift, or service in kind, to a broker to influence referrals or subcontracts (42 CFR 440.170(a)(4)(ii)(C)).
• Minimum provider and driver standards. For services on or after December 27, 2021, section 1902(a)(87) requires states to ensure each provider and driver is not excluded from federal health programs or on the OIG exclusion list, each driver has a valid license, and each provider has a process for drug law violations and for sharing each driver’s driving history with the state. Public transit authorities are exempt. See NEMT driver requirements.
• No billing the rider for the balance. Medicaid providers must accept Medicaid’s payment, plus any copay the state plan sets, as payment in full (42 CFR 447.15). CMS lists the ban on billing members for the balance among the rules for every transportation provider, and South Carolina’s 2026 draft contract makes brokers write it into provider agreements.
• No federal money for no-shows. Federal matching funds do not pay for a trip when the member does not show up, or when the provider does not show up (SMD 23-006). States may build no-show costs into their rates. Georgia’s manual requires its broker to pay the provider for the “A” leg of the trip when a member fails to board within the pickup window.

What you can hold a NEMT broker to

Federal law gives you a few protections directly. State contracts, state manuals, and your agreement add most of the rest.

Protection	Where it comes from	What to do
No withholding needed rides, and no costlier or less appropriate ride for financial gain	42 CFR 440.170(a)(4)(ii)(D)	Report patterns to the state Medicaid agency
Pay high enough that local providers take part	SMD 23-006 (September 28, 2023). CMS’s July 12, 2021 bulletin adds that NEMT payments must be enough to enlist enough providers.	Give the state and its advisory groups your cost per trip
A written reason if you are turned away	42 CFR 438.12 for NEMT-only plans paid per member. South Carolina’s 2026 draft contract for its broker.	Ask for the reason in writing
A documented credentialing process	42 CFR 438.214 for NEMT-only plans. South Carolina’s draft requires recredentialing at least yearly and timelines for reviewing a complete application.	Ask for the policy and the expected timeline
Timely payment	State contracts. South Carolina’s draft: at least weekly, with undisputed invoices paid within 30 calendar days. Georgia: within 15 business days unless your agreement says otherwise.	Put the payment terms in your agreement and keep an aging list
A review before you are cut off	Georgia’s manual (July 1, 2026) gives a provider 15 calendar days from a written termination notice to ask the broker, the state, or both to review the decision	Request the review in writing inside the deadline
An agreement that survives the broker	Georgia’s manual (July 1, 2026) and South Carolina’s draft pass agreements to the state on the same terms if the broker defaults	Keep signed copies of every agreement
A dispute process	Georgia requires appeal and dispute resolution terms in every service agreement. South Carolina’s draft requires dispute resolution procedures.	Use it first, in writing
State law extras	Colorado’s HB26-1328: software at no cost, no limits on your number of vehicles, sole authority over driver scheduling and dispatch, and published trip assignment rules	Know your state’s statute

Broker payment terms and dispute steps are in how to bill NEMT brokers and how to negotiate better rates.

What federal rules do not promise you

Knowing the gaps saves time.

• No federal rate. Nothing in federal law sets what a broker pays per trip or per mile. South Carolina’s 2026 draft contract lets its broker negotiate with each provider and not follow the state fee schedule, as long as the rate is written into the agreement.
• No guaranteed network spot. A NEMT-only plan does not have to contract with more providers than it needs (42 CFR 438.12(b)).
• No federal fair hearing for providers. The Medicaid fair hearing right belongs to applicants and members (42 CFR 431.220). Provider disputes go through your agreement’s process and the state.
• No federal floor on how much goes to rides. Health plan rates must be set so the plan would reasonably spend at least 85 percent of what it is paid on care (the medical loss ratio), but that standard does not apply to NEMT-only plans (42 CFR 438.9 leaves out 42 CFR 438.4(b)(9)). Some states set their own limits in the contract. Delaware capped broker administrative fees at 15 percent in its 2025 bid, and Arkansas’s 2026 bid makes the broker pay back the difference if its ride spending falls below 95 percent of the actuary’s target.

How to raise a broker problem, step by step

1. Find the rule. Check your provider agreement, the state NEMT manual, and the state’s contract with the broker. Some states post the draft contract with the bid, as South Carolina did on June 26, 2026.
2. Write to the broker’s provider relations team. Give trip IDs, dates, amounts, and the exact rule you are relying on.
3. Use the dispute process in your agreement. Meet every deadline in it.
4. Escalate to the state Medicaid agency’s NEMT program office. Send your paper trail. Federal rules make the state responsible for overseeing its broker.
5. Speak at public meetings. Some states run open NEMT advisory meetings where providers can raise program problems.
6. Report fraud to the right place. Requests for kickbacks, self-dealing, or billing for rides that never happened go to the HHS Office of Inspector General hotline or your state’s Medicaid Fraud Control Unit.

Our guide on how to escalate a problem with a NEMT broker covers each step in detail, and what a NEMT broker is explains the broker’s day-to-day role.