NEMT Fraud: The Schemes Auditors Look For and How to Stay Clear

Transportation is one of the Medicaid services fraud units prosecute most. In fiscal year 2025, state Medicaid Fraud Control Units reported 52 fraud convictions of nonemergency transportation providers, according to the HHS Office of Inspector General’s annual report of March 2026. Among the provider types OIG ranked, that tied nurses for third place.

The cases fall into a few patterns, and each pattern has a simple control. This guide covers what investigators look for, what the penalties are, and what an honest company does to stay clear of both.

What counts as NEMT fraud

Federal Medicaid rules define fraud as an intentional deception or misrepresentation made by someone who knows it could bring an unauthorized benefit (42 CFR 455.2). Abuse is different. It means provider practices that are inconsistent with sound fiscal, business, or medical practices and cost Medicaid money it should not have spent. A plain mistake is neither, but the money is still an overpayment you have to return.

Knowledge is what separates them in court, and the legal bar for knowledge is low. OIG explains that the civil False Claims Act needs no specific intent to defraud. “Knowing” includes acting in deliberate ignorance or reckless disregard of whether a claim is true. An owner who never looks at what drivers write on trip logs cannot rely on not knowing. See the False Claims Act for how the law works.

	What it looks like	What usually follows
Mistake	A typo in the miles, a wrong modifier, a leg billed twice by accident	You refund the overpayment. If you keep it more than 60 days after you identify it, it becomes a False Claims Act obligation (42 U.S.C. 1320a-7k(d)).
Abuse	Billing patterns that waste Medicaid money without proof of intent	A warning letter, recovery of payments, or suspension or termination from the program (42 CFR 455.16)
Fraud	Knowingly billing rides that never happened, faking logs, paying for referrals	Referral to the state fraud unit (42 CFR 455.15), payment suspension, criminal charges, civil penalties, and exclusion

The schemes investigators find most often

For a May 28, 2009 report (OEI-06-07-00320), OIG collected NEMT case data from state fraud units. Forty-two units reported 509 cases from 2004 to 2006. Some cases fit more than one type, and the same patterns run through the cases announced from 2024 to 2026.

Scheme	What it looks like in NEMT	Cases, 2004 to 2006
Billing for rides not given	Phantom trips, billed no-shows, an attendant billed who never rode	104
Other overbilling	Deceptive billing to collect more than the ride earned	93
Upcoding	A wheelchair or stretcher rate for a rider who walks, an attendant who was not needed, an ambulance when a van would do	57
Missing or forged records	No trip log, or forged logs, medical necessity forms, or vouchers	32
Excess mileage	Billing a 30-mile trip when the ride was 15 miles	31
Nonmedical trips	Taking a rider to the grocery store or on errands and billing it	25
Unlicensed or unqualified providers	Drivers who are unlicensed, have bad driving records, failed drug tests, or felony convictions	23
Double billing	A second claim for the same ride with the date changed	21
Kickbacks	Paying riders or facility staff for referrals, or free rides to win a nursing home’s residents	19
Ineligible or deceased riders	Rides for family members who do not qualify, claims for riders who had died	15

Phantom trips and billed no-shows

The biggest group is billing for rides that never happened. CMS’s NEMT booklet for providers (April 2016) says claiming loaded miles when the rider was a no-show is a common form of NEMT fraud. If the rider does not show, the trip generally cannot be billed.

Recent cases show the range. Florida’s Medicaid Fraud Control Unit announced the final arrest in a case over a NEMT service that billed Medicaid for thousands of trips never provided, a loss of over $5 million (April 28, 2025). In Oregon, two owner-drivers were convicted in September 2026 for claims on rides for people who had already died. The restitution was $6,420 in one case and $12,695.34 in the other, and both men are barred from running any business that receives Medicaid money.

Padded miles and fake tolls

Medicaid generally pays loaded miles only, with the rider on board. New York’s Office of the Medicaid Inspector General (OMIG) measures a trip from the first pickup to the last drop-off and takes back anything billed above that. Tolls and parking must be billed at their actual cost. Since August 25, 2023, a toll paid by mail is repaid only at the E-ZPass rate.

In July 2024, New York’s attorney general charged the operators of a Hudson Valley company with adding tolls of $15 to $50 to rides that crossed no toll, and with billing fictitious trips from April 2018 to March 2023. The alleged overcharge was more than $2.3 million. OMIG’s 2026 work plan says its transportation audit protocols will add a focus on improperly claimed tolls. See NEMT mileage billing for how miles are measured.

A higher service level than the rider needed

Pay follows the rider’s assessed level of service, not the van you sent. Minnesota’s Department of Human Services put it plainly to legislators on March 2, 2026: payment is based on the rider’s assessed mode of transportation, not the type of vehicle used. Sending a wheelchair van to a rider approved for an ambulatory ride does not make it a wheelchair trip.

CMS’s booklet describes a New York ambulette owner who changed taxi authorizations to ambulette authorizations, a ride four times as expensive, for four years. He was sentenced to 6 months in jail and repaid $200,000.

Drivers billing rides for themselves or their families

On July 20, 2026, a New Mexico driver pleaded guilty to conspiracy to commit health care fraud. According to the Department of Justice, she and the company submitted trip records naming herself or her children as the Medicaid riders, claiming trips that had not occurred, and claiming she rode as her children’s attendant. Drivers also signed trip forms saying they had driven each other, to hide that they drove themselves. The company billed each passenger in a vehicle as a separate trip, submitted about $3,957,788 in claims for her and her children’s trips, and paid her about $980,901 over four years. She faces up to 10 years in prison.

Separately, federal and state officials announced on June 23, 2026 a civil forfeiture complaint against a New Mexico NEMT provider, seeking more than $2 million. It alleges drivers billed for driving themselves, trips that did not occur, duplicate trips, inflated mileage, and falsified records. These are allegations, not findings.

Kickbacks to riders, facilities, and staff

Paying for referrals is a crime in Medicaid, even where it is ordinary in other businesses. The Anti-Kickback Statute covers both the person who pays and the person who takes the payment. OIG’s 2009 review listed these NEMT kickbacks:

• Free rides for a nursing home to win the business of its Medicaid residents.
• Paying riders to use a particular company.
• Paying anyone with influence over which company a rider uses, including caseworkers, nursing home and hospital transportation coordinators, dialysis center employees, and rehabilitation center employees.

The New York case from July 2024 also charged kickbacks to riders, with some passengers paid thousands of dollars each. A gift to a rider stays clear of the inducement penalty if it is within OIG’s nominal value limits: $15 or less per item and $75 or less per rider per year, and never cash or a cash equivalent (policy statement of December 7, 2016). See anti-kickback rules for NEMT for referral deals and facility contracts.

Unqualified drivers and borrowed vans

Since the Consolidated Appropriations Act of 2021, federal law sets a floor for every NEMT provider and driver paid by Medicaid, except public transit (Social Security Act section 1902(a)(87), described in CMS’s coverage guide SMD 23-006):

• Neither the provider nor any driver is excluded from federal health programs.
• Each driver has a valid driver’s license.
• The provider has a process to address any violation of a state drug law.
• The provider has a process to disclose each driver’s driving history, including traffic violations, to the state.

States add more. New York disallows a claim when the van was not owned, leased, or registered in the provider’s name and insured to it, when the ride was subcontracted, or when an ambulette driver employed more than 10 days was not on the company’s DMV Article 19-A roster (OMIG protocol, revised July 22, 2026). Check every hire against the OIG exclusion list and keep a complete driver file.

How NEMT fraud gets caught

Cases often start with data, a tip, or a routine audit. Knowing the checks helps you see your own claims the way an auditor will.

• Matching rides to medical claims. A NEMT claim with no medical service that day stands out. In OIG’s 2009 report, 23 states said they used prepayment edits written for NEMT claims, such as denying a claim when the rider had no other Medicaid service that day. In January 2021, OIG told Massachusetts to match every NEMT claim to a medical claim on the same day.
• Death and eligibility checks. New York disallows any ride dated after the rider’s date of death.
• Billing analytics. OIG’s evaluation OEI-02-25-00360, announced October 15, 2025, will use “key indicators of concerning billing” to target NEMT claims for review. OMIG’s 2026 work plan says its fraud analytics draw on several data sources, including the state transportation manager’s trip data and electronic visit verification data.
• Asking the rider. Federal rules require every Medicaid managed care plan to verify, by sampling or other methods, whether services its network providers billed were actually received (42 CFR 438.608). New York’s OMIG sends benefit statements to members as an investigative tool, and Florida law lets its Medicaid agency send them to a sample of members.
• Referrals and tips. Both Oregon cases from September 2026 came from a health plan referral. Coworkers, riders, and competitors can file False Claims Act cases and share 15 to 30 percent of what the government recovers (31 U.S.C. 3730(d)).
• Prepayment review. OMIG holds aberrant claims for review before paying them. Florida can put any provider on prepayment review for up to a year without any suspicion of fraud. Minnesota told legislators on March 2, 2026 that NEMT is under enhanced prepayment review.

Penalties for NEMT fraud

One false trip can carry several penalties at once, under several laws.

Law	What it covers	Maximum penalty
Civil False Claims Act (31 U.S.C. 3729)	Knowingly submitting false claims, or keeping an overpayment	Three times the government’s loss, plus $14,308 to $28,619 per claim (penalties assessed after July 3, 2025)
Civil Monetary Penalties Law (enforced by OIG)	False claims, gifts that sway riders, employing an excluded person, not returning overpayments	Up to $25,595 per claim or act (HHS adjustment of January 28, 2026)
Civil Monetary Penalties Law, kickbacks	Paying or taking anything of value for referrals	Up to $127,973 per kickback (January 28, 2026), plus three times the remuneration
Anti-Kickback Statute (42 U.S.C. 1320a-7b(b))	The same kickbacks, as a crime	A felony: fines up to $100,000 and up to 10 years in prison
Health care fraud (18 U.S.C. 1347)	Any scheme to defraud a health care program	Up to 10 years in prison
Exclusion (42 U.S.C. 1320a-7)	A conviction for a crime related to Medicare or Medicaid	Barred from all federal health programs for at least 5 years

The state can act before any court does. Once it finds a credible allegation of fraud, the state Medicaid agency must suspend all Medicaid payments to the provider unless it has good cause not to, and it need not warn you first (42 CFR 455.23). A provider terminated by Medicare or by another state’s Medicaid program must be denied or terminated in yours (42 CFR 455.416). Minnesota’s March 2, 2026 NEMT briefing listed 71 open investigations and 14 payment suspensions in 2025 and 2026.

Controls that keep an honest company clear

Every scheme above has a control a small company can run. CMS’s booklet puts it in three steps: document completely, verify that the service matched the record, and bill only what you verified.

Risk	Control	What to keep
Rides not given, billed no-shows	Bill only from a completed trip record for each leg. A no-show gets no trip claim.	Trip logs, no-show reports
Padded miles	Record odometer readings or GPS at every pickup and drop-off, and compare billed miles to the route	Odometer and GPS data
Upcoding	Bill the level on the approval or order, not the vehicle you sent	Approvals and orders
Nonmedical stops	Confirm each destination is a covered medical visit. Never bill errands.	Appointment confirmations
Fake tolls and parking	Bill actual costs only, from receipts or toll statements	Receipts, toll statements
Self-dealing by drivers	Review any trip where the driver and rider share an address or a last name, and check your state’s rule	Review notes
Unqualified drivers and vans	Check licenses and exclusion lists before hiring and monthly, and keep registration and insurance in the company’s name	Driver and vehicle files, screening log
Kickbacks	No payments or gifts for referrals. Rider gifts stay within $15 an item and $75 a year, never cash.	Gift log
Double billing	Check for duplicate legs before each claim batch	Claim register
Deceased or ineligible riders	Check eligibility for the date of service, and stop standing orders when a rider dies or is admitted	Eligibility checks

Verification is its own step, separate from documenting. CMS suggests that management make random calls to riders listed on trip records, and to staff at the appointment location, to confirm the rider arrived and was seen. Training matters too. CMS advises written policies that make falsifying a trip record grounds for discipline up to termination, and it tells owners to teach drivers not to embellish their records.

OIG’s General Compliance Program Guidance (November 2023) has a section for small entities. A company too small for a compliance officer should name one compliance contact who, where possible, does not bill claims. That person reports to the owner at least quarterly. The company should also have an open door for concerns and a written rule against retaliation for good faith reports. See a NEMT compliance program sized for a small company and the trip documentation guide.

What to do if you find a problem

Finding a problem yourself is the best case, because you still control what happens next.

1. Stop billing the affected trips. Hold any claim you cannot support.
2. Find the scope. Work out which dates, drivers, and claims the problem touched.
3. Refund within 60 days. Report and return an overpayment within 60 days after you identify it, with a written reason (42 U.S.C. 1320a-7k(d)). Use your state’s or broker’s refund process. New York, for example, requires it through OMIG’s Self-Disclosure Program under 18 NYCRR Subpart 521-3.
4. Get legal advice if it looks like fraud. If someone falsified records or paid for referrals, a refund alone may not settle it. OIG’s Self-Disclosure Protocol (November 8, 2021) resolves potential fraud with a minimum multiplier of 1.5 times the loss. The minimum settlement is $20,000, or $100,000 for kickbacks. OIG presumes it will not require an integrity agreement for good faith disclosures. Plain billing errors go to the payer’s refund process instead.
5. Fix the cause. Retrain, change the process, or remove the employee, and write down what you did.
6. Protect the person who told you. The False Claims Act protects employees from retaliation for trying to stop a violation (31 U.S.C. 3730(h)).

If a fraud unit or investigator contacts you

Medicaid Fraud Control Units operate in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Each is usually part of the attorney general’s office and separate from the Medicaid agency. The Medicaid agency must refer suspected provider fraud to the unit (42 CFR 455.15). See Medicaid Fraud Control Units for how cases start.

If payments are suspended, the state must send notice within 5 days, unless law enforcement asks it to wait, for no more than 90 days in total. The notice gives the general allegations, says the suspension is temporary, tells you that you may submit written evidence, and explains how to appeal. When a letter comes from a fraud unit, federal agents, or includes a subpoena, call a health care attorney before anyone at your company gives an interview. Keep every record exactly as it is.

An audit is a different thing from an investigation. See how to prepare for a Medicaid audit for records requests and sampled claims.

What is changing in 2026 and 2027

• Federal NEMT reviews. OIG’s targeted review of NEMT claims (OEI-02-25-00360, announced October 15, 2025) is still in progress. A new OIG audit series of state NEMT payments (SRS-A-26-028, announced May 28, 2026) is expected to finish in fiscal year 2028. See the OIG NEMT reviews.
• A possible federal anti-fraud rule. CMS’s request for information of February 27, 2026, with comments closed March 30, 2026, named NEMT among service areas identified as high risk for fraud in certain states. It asked whether high-risk providers should revalidate more often than every 5 years. It is a request for information, not a rule. See the CMS fraud request for information.
• Minnesota’s freeze. Minnesota stopped enrolling new NEMT providers in the seven-county Twin Cities metro on January 27, 2026. On July 23, 2026 it extended the freeze to January 27, 2027. See the Minnesota enrollment freeze.
• New York’s audits. OMIG revised its ambulette and taxi and livery audit protocols on July 22, 2026, covering service dates through July 16, 2026.