Microtransit vs Paratransit in 2027: What Transit Agencies Buy and Where a NEMT Company Fits

Transit agencies are adding on-demand zones where a fixed bus route carries too few riders. Riders book in an app or by phone, and a van comes. Someone has to drive those vans, and a company that already runs wheelchair vans, trained drivers, and dispatch has most of what the work takes.

Microtransit vs paratransit vs Medicaid NEMT

Microtransit is shared, on-demand public transit in vans or small buses. TCRP Synthesis 183, a 2025 Transit Cooperative Research Program report, describes it as demand response service scheduled by software in real time, for pickups right away or within 1 to 2 hours, usually shared with other riders and often at common pickup points. Agencies run these zones in suburbs, small towns, and rural areas, open to the general public or to a group the agency names.

ADA paratransit is a duty, not a choice. Every agency that runs fixed routes, other than commuter bus, commuter rail, and intercity rail, must offer it to riders whose disability keeps them off the buses (49 CFR 37.121). Medicaid NEMT is a third program again: each state must ensure Medicaid members get to and from providers (42 CFR 431.53). The paratransit vs NEMT guide compares those two in depth.

The three side by side, as of October 2026:

Feature	Microtransit	ADA paratransit	Medicaid NEMT
Who rides	The public, or a group the agency names	Riders certified as ADA eligible	Medicaid members going to covered care
When to book	Same day, often within 1 to 2 hours	By the day before	Set by the state or broker
Where it goes	Inside a set zone, often to common stops	Origin to destination, within 3/4 mile of bus routes	To and from covered medical care
Who pays	The agency, plus rider fares	The agency, plus fares up to twice the bus fare	Medicaid, through the state, a broker, or a plan

The paratransit column comes from 49 CFR 37.129 and 37.131. Capacity is where the two transit services differ most for an operator. Paratransit may never cap trips, keep waiting lists, or show a pattern of late pickups or denials (37.131(f)). FTA’s ADA circular (C 4710.1, November 4, 2015) says other demand response service may use waiting lists, trip caps, and first come, first served booking, as long as riders with disabilities are not waitlisted, capped, or denied more often than other riders. Wake County, North Carolina, planned a monthly trip cap for its East Wake zone in fiscal 2025 so the budget would last all 12 months.

Microtransit also does not replace paratransit. Nashville’s WeGo Public Transit said in its September 2023 request for proposals that the on-demand options it offers paratransit riders must meet the ADA but would not be used to meet its paratransit obligations.

How transit agencies buy microtransit

TCRP Synthesis 183 sorts agencies into three models, and contracts in the field show two more:

• The agency runs it. Agency drivers drive agency vehicles, and the agency licenses the scheduling software.
• Turnkey. One contractor supplies the software, drivers, vehicles, and maintenance, and runs the service day to day.
• Companies that take trips in their own vehicles. Taxi, rideshare, and van companies take overflow trips, or all of them, in vehicles that also do other work. Nashville buys its WeGo Link zones this way and pays per trip.
• Operations and software bought separately. LA Metro moved to this model with an operations award effective December 16, 2024, and a separate software award in January 2025. Metro reported that its first-year combined rate fell from $101.80 per revenue service hour ($98.13 for operations plus $3.67 for software) to $82.35, and its cost per passenger from $29.94 to $24.22.
• Added to an existing county program. Wake County runs its East Wake zone through GoWake Access, its human service transportation program, which operates it itself or through its approved contractor and folds the software cost into the hourly rate. The Wake County page covers that operator contract.

An agency that spends FTA money on the contract follows federal grant rules and FTA’s Third Party Contracting Guidance, Circular 4220.1G, which replaced Circular 4220.1F on March 20, 2025. The ADA paratransit contractor guide explains the buying thresholds and what each method means for you, and the government NEMT contracts guide covers where bids are posted.

Most of these contracts pay by the revenue hour, so read how each one defines it. For vans that serve only its trips, WeGo counts from the first pickup to the last drop-off, minus breaks of 30 minutes or more, and does not pay for driving to and from the garage. Maple Grove, Minnesota, counts from the first scheduled pickup to the last scheduled drop-off of a run, including layovers, but not pre-trip inspections or fueling. Those unpaid deadhead minutes belong in your rate.

What three agency contracts asked for and paid

These three show the range of what agencies hand an operator and what they pay:

Agency and contract	Vehicles and drivers	Pay
WeGo Link, Nashville (RFP 2023131, September 2023)	Yours, and they may do other work in the same shift. Drivers hired under your own rules	Rider pays $2, WeGo pays up to $8 more, plus $30 per wheelchair van trip
Metro Micro, LA Metro (RFP OP122943, April 2024)	You supply, fuel, maintain, and store the vehicles and hire the drivers	Per revenue service hour. The winning North region offer was $81.62
My Ride, Maple Grove, Minnesota (2025 to 2027 agreement)	The city supplies buses and software. You store them indoors, maintain them, and staff them	$40,123.19 a month plus $52.79 per revenue hour in 2026, plus fuel, minus fares

Nashville: open to companies with their own vehicles

WeGo Link is a general-public, first and last mile service in set zones, and under the 2023 request every trip started or ended at a bus stop in the zone. WeGo wanted several providers so riders could choose. Riders book directly with the provider by app or by phone, and each provider must offer a call-in option for riders without smartphones. Trips are exclusive rides, and a shared-ride option is up to you.

Drivers are hired under each company’s own standards or its regulator’s, and WeGo did not require them to meet its paratransit driver rules or give door-to-door help. A company running vehicles only for WeGo bills a rate per revenue vehicle hour instead, which may be higher for wheelchair vans and earns no $30 incentive. The contract runs five years. Invoices go in twice a month, within 5 business days of each period, and WeGo pays within 30 days of a complete invoice. Read the insurance terms closely: the scope set a $500,000 combined single limit, while the draft contract checked $1 million in auto liability.

LA Metro: a large prime contract

LA Metro’s minimum qualifications set a high bar: three earlier on-demand or commercial transit projects, at least one for a transit agency, three years leading a similar project, and a similar launch within five years. Price was 20 percent of the score, and the approach to the work was 31 percent. Ninety-eight firms downloaded the request, and four firms sent seven proposals. North region offers ranged from $81.62 to $118.34 per revenue service hour, against $98.13 under the old contract.

The request also carried a 20 percent disadvantaged business enterprise goal, the opening for a small company. Read the result too: the winning North region offer committed 0.73 percent after Metro accepted its good faith efforts.

Maple Grove: operations only

Maple Grove’s My Ride is a curb-to-curb dial-a-ride open to the general public and booked by phone or app. The city supplies the buses and the scheduling and fare software, and the contractor supplies drivers, dispatch, reservations, heated indoor storage, and maintenance. It asks $5 million in general liability and $5 million in auto liability, so get a quote for those limits before you bid. See NEMT insurance requirements.

The agreement also shows the penalties to price in. A trip more than 50 minutes late counts as a total missed trip, and the city takes back the scheduled service hours for it at your hourly rate. A trip more than 40 minutes late is a partial miss, credited back by the minutes late. The contractor must certify an FTA drug and alcohol testing program within 30 days of signing and send its annual testing report by February 15.

ADA rules that come with an on-demand contract

A public agency running demand response service for the general public must buy accessible vehicles, unless its system, viewed in its entirety, already gives riders with disabilities equivalent service (49 CFR 37.77). Equivalent means service in the most integrated setting that matches on seven points: response time, fares, service area, hours and days, trip purpose limits, information and reservations, and any limits on capacity. A private company’s own demand response service faces a near twin of that test (37.105), which the demand response glossary entry explains.

An agency that buys a vehicle that is not accessible must certify equivalent service first, and each certificate lasts at most one year (37.77(d)). As a contractor, you meet the same rules the agency would (49 CFR 37.23), and a vehicle you buy for the contract must be accessible whenever the agency’s would have to be.

FTA’s circular says the test compares riders with and without disabilities, not the zone with the bus routes. A fleet can mix wheelchair vans and other vehicles, as long as wheelchair users wait no longer and pay no more. That is why wheelchair vans are in demand. WeGo’s request said riders who need a wheelchair van must get about the same response times as other riders and pay the same fare, and it added the $30 per trip incentive for companies taking trips in their own vehicles. Wake County’s agreement calls for accessible vehicles seating at least 8, with automatic vehicle location.

Drug testing, labor terms, and federal clauses

FTA’s drug and alcohol testing rule covers every contractor of an agency funded under 49 U.S.C. 5307, 5309, or 5311 (49 CFR 655.3). A contractor includes an informal, ongoing arrangement, and the covered work includes driving a revenue vehicle, even empty, and dispatching it (655.4). Maple Grove’s agreement writes that testing in.

The one gap is the taxicab exception, and it is shrinking. The preamble to FTA’s 2001 rule said testing applies when an agency contracts for taxi service, but not when a rider with a subsidized voucher picks the taxi company. FTA’s 2016 online answers let agencies skip testing when they contract with two or more companies and the rider chooses among them, and WeGo’s 2023 request relied on that reading. On December 30, 2024, FTA called that answer an error. Its proposed policy would apply the exception only when the agency has no contract or informal arrangement with the company and the rider picks the provider for each trip. Comments closed February 13, 2025, and FTA had issued no final policy as of October 2026. Under that reading, a company under contract, as WeGo’s providers are, would need FTA testing.

So set up a testing program before the first trip, and ask the agency in writing which rule it applies. The ADA paratransit contractor guide lists what an FTA program needs, and NEMT driver drug testing shows how it fits beside your broker program.

Federal transit grants also carry the worker protections of 49 U.S.C. 5333(b), still called Section 13(c), which the ADA paratransit contractor guide explains. LA Metro negotiated with its operators’ union before contracting out Metro Micro. Its current operators could apply with the new contractor at a slightly higher wage or move to bus and rail, and the winning offer proposed driver pay $3.55 an hour above Metro’s living wage rate. Ask what labor terms cover the current workers before you price your bid.

Expect the federal clauses too. WeGo attached full exhibits of FTA and state contract clauses, and the government NEMT contracts guide covers the registrations to finish before you bid.

Where a small NEMT company fits

A big-city prime contract like LA Metro’s asks for experience a company with one to ten vans rarely has. These openings fit better:

• A small zone. Wake County’s fiscal 2025 agreement assigned four vehicles to its East Wake zone, serving Wendell, Knightdale, Zebulon, and nearby unincorporated areas, Monday to Friday, 6 a.m. to 7 p.m., fare free. It budgeted $427,183.20: $353,706.20 for operations, $23,477 for technology, and $50,000 for fuel. The zone began as a pilot under an FTA Integrated Mobility Innovation grant awarded in 2020. Trips rose from 14,666 in fiscal 2024 to 23,469 in fiscal 2025, and in December 2025 the county put the expected fiscal 2026 cost at $1,342,000.
• Trips in your own vehicles. Programs like WeGo Link pay per trip for vans that also carry your other work.
• Wheelchair capacity. Equivalence rules give wheelchair vans extra value, as WeGo’s $30 incentive shows.
• Subcontractor to the prime. Large requests carry small business goals, such as LA Metro’s 20 percent in 2024. DOT changed how firms qualify as disadvantaged in 2025 and 2026, as the ADA paratransit contractor guide explains.

You can also run Medicaid trips in the same vans where the broker allows it. Citibus in Lubbock, Texas, carries broker-sent Medicaid trips on its microtransit vehicles, usually booked 3 to 4 days ahead. It first matched Medicaid trips only to its Medicaid-credentialed drivers, which kept trips from moving between vans in real time, so it credentialed every driver. TCRP Synthesis 183 says a provider mixing trips from different programs must track passenger miles and hours for each trip under each program’s rules. Bill each trip only to the program that ordered it.

How to go after microtransit work, step by step

1. Find the zones near you. Read your transit agency’s board agendas and plans for on-demand pilots, and ask its planning staff what is coming.
2. Register as a vendor. Sign up on each agency’s bid portal for demand response, on-demand, and paratransit work.
3. Read who supplies what. Note whether you supply vehicles and software, and whether your vans serve only this contract or carry other work too.
4. Price from your costs. Match the agency’s pay unit, revenue hour or trip, and build unpaid time such as garage deadhead and missed-trip credits into the rate.
5. Get insurance quotes early. Limits ran from $500,000 in Nashville’s scope to $5 million at Maple Grove.
6. Set up FTA testing before the first trip, unless the agency confirms in writing that it does not apply.
7. Show your wheelchair capacity. Equivalent service is the agency’s duty, and your vans help it meet it.
8. Keep each program’s records apart, for microtransit, paratransit, and Medicaid.

For federal grants that can pay for vehicles and rides, see Section 5310 grants. For programs where one broker books trips for several human service agencies, see human service transportation.