# Kentucky HB 2 Lets Hospitals and Nursing Facilities Give Medicaid Rides and Tightens Broker Rules

Canonical URL: https://nemtguide.com/news/kentucky-hb2-nemt-changes/ · Updated 2026-09-28

Kentucky's House Bill 2, a broad Medicaid law, became Acts Chapter 179 on April 14, 2026, when the General Assembly overrode Governor Andy Beshear's line-item vetoes. Its transportation section lets hospitals and skilled nursing facilities give Medicaid rides to their own patients and residents and get paid by the regional broker. It also requires a GPS device in every vehicle that carries Medicaid riders, sets rising spending floors for brokers, and adds a vehicle registration check to NEMT eligibility reviews.

## What HB 2 changed for NEMT

Kentucky runs Medicaid rides through the Human Service Transportation Delivery (HSTD) program. The Department for Medicaid Services (DMS) pays the Kentucky Transportation Cabinet (KYTC) a monthly capitation rate for each member, and KYTC contracts one broker in each of 15 regions. HB 2 puts the regional model into statute and changes how it runs.

| Change | What the law says | Where |
|---|---|---|
| Delivery model | The program must use regional brokers paid by capitation | Section 14(2) |
| Hospitals and nursing facilities | May give covered rides to their own patients and residents, paid by the local broker at the broker's mileage rate | Section 14(5) |
| GPS | Every vehicle used for Medicaid NEMT needs a GPS device that shows the broker its exact location at all times on NEMT trips. The cost falls on the broker, not the state. | Section 14(2)(c)3 |
| Broker spending floor | A medical loss ratio of 85% in the state fiscal year that began July 1, 2026, rising to 90% by July 1, 2029 | Section 14(3) |
| Performance pay | 2% of each broker's capitation is withheld, and the broker earns it back by meeting performance measures | Section 14(2)(c)4 |
| Eligibility | DMS decides whether a member qualifies for NEMT at each Medicaid determination and redetermination | Section 5(2)(c) |
| Vehicle data | Eligibility staff review KYTC vehicle registration data at least quarterly for changes that affect NEMT eligibility | Section 7(5) |
| Reviews | A legislative evaluation of NEMT by December 31, 2026, then a DMS review every year from 2027 | Sections 29 and 14(7) |

Section 14 applies to the regional broker program. It does not apply to NEMT, including stretcher transport, that a Medicaid managed care plan covers.

## Hospitals and nursing facilities can now bill the broker

A 2025 law, Senate Bill 27 (Acts Chapter 85, signed March 25, 2025), created KRS 311A.172. It let a hospital or skilled nursing facility with its own transportation service carry residents who qualified for NEMT, including by stretcher. The broker had to get the first chance to schedule the ride, and the facility could not be paid for it by DMS or a Medicaid health plan.

HB 2 repealed KRS 311A.172 and replaced it with a new section of KRS Chapter 205.

| | Under KRS 311A.172 (2025) | Under HB 2 (April 2026) |
|---|---|---|
| Who may give the ride | A hospital or nursing facility that runs a NEMT service | A hospital or skilled nursing facility |
| Which riders | Residents who qualify for NEMT, including newly admitted residents who need a ride from a hospital to the nursing facility | Its own residents or patients, when the ride would be covered if a broker's driver gave it |
| Broker first | The broker had to be given the chance to schedule the ride first | No such step in the new section |
| Payment | None from DMS or any Medicaid health plan | Paid by the local regional broker at the same mileage rate the broker would pay a contracted driver for the same service |
| Other riders | Nothing stopped a facility from becoming a contracted NEMT provider | No duty to carry anyone who is not its own patient or resident |

KYTC sets the rates brokers pay their subcontracted providers, DMS and KYTC told lawmakers on November 5, 2025.

If you carry riders for a hospital or nursing home, that facility can now drive its own patients or residents and be paid by the broker. See [how to get NEMT facility contracts](https://nemtguide.com/guides/how-to-get-nemt-facility-contracts/) and [hospital discharge rides](https://nemtguide.com/guides/hospital-discharge-transportation/) for how to stay the provider a facility calls.

## New rules for the regional brokers

HB 2 sets a minimum medical loss ratio for each broker, the share of its capitation that goes to services rather than administration and profit. HB 2 does not define how the ratio is counted; the federal method for Medicaid health plans is in 42 CFR 438.8. A broker that misses the floor in a state fiscal year must pay the excess capitation back to the state.

| State fiscal year starting | Minimum medical loss ratio |
|---|---|
| July 1, 2026 | 85% |
| July 1, 2027 | 87% |
| July 1, 2028 | 89% |
| July 1, 2029 and after | 90% |

Each broker must also work with DMS on a performance pay model that withholds 2% of its capitation, which the broker earns back in full or in part on measures built for its region. The measures include utilization, trips completed, trips canceled or rescheduled, delayed trips, average trip time, average miles per trip, time to schedule a ride, and rider satisfaction.

Capitation must be actuarially sound, set by an actuary DMS contracts, and figured separately for each region. It counts only members DMS finds eligible for NEMT, not all Medicaid members, and weighs each region's trip times, distances, terrain, and population density. A broker officer must attest, to the best of their knowledge, that every report sent to the state is true, accurate, and complete. For scale, DMS paid $174,953,006 in NEMT capitation in state fiscal year 2025 (July 2024 to June 2025), for 3,363,272 trips.

The governor vetoed the spending floor, the withhold, and the hospital and nursing facility section. His April 13, 2026 message said they would create "an unsustainable economic model" for NEMT vendors and could leave gaps in service, especially in rural areas. The House voted 80 to 18 and the Senate 32 to 6 to override on April 14, 2026. The GPS requirement was not vetoed.

## Who qualifies for a ride now

Under 907 KAR 3:066, effective June 18, 2024, a member qualifies when the trip is to or from a Medicaid-covered service, the service is medically necessary, and the member does not own a vehicle. A member who owns one can still qualify with a note from a clinician, employer, school, mechanic, or transportation authority saying the vehicle is not operable or not usable for them.

DMS and KYTC summarized the rule for lawmakers on November 5, 2025: a member who owns a vehicle also qualifies when it does not run, when a medical condition keeps them from driving, or when another household member is using it for work, school, or a medical visit. In October 2025, 76% of Kentucky's 1,308,652 Medicaid eligibles had a vehicle and 24% had no registered vehicle, and the same slide notes that a member with a license or a registered vehicle may still qualify.

HB 2 has DMS make the NEMT decision at every Medicaid determination and redetermination. It also has eligibility staff check KYTC vehicle registration data at least every quarter.

The governor vetoed the vehicle data check, writing that all Medicaid members are eligible for NEMT and that medical necessity is decided at the time of the service. The legislature overrode that veto too. Under 907 KAR 3:066, a provider may not self-refer or solicit a member who owns or has access to suitable transportation, and a provider that does can be excluded from NEMT for a time or for good.

## When each part takes effect

HB 2 carries an emergency clause, so it took effect as soon as it became law.

| Date | What happens |
|---|---|
| March 25, 2025 | The governor signs SB 27, which created KRS 311A.172 (unpaid facility rides) |
| April 13, 2026 | The governor vetoes parts of HB 2, including the facility, spending floor, and vehicle data sections |
| April 14, 2026 | Both chambers override the vetoes, and the full act, including the repeal of KRS 311A.172, is filed as Acts Chapter 179 |
| July 1, 2026 | First state fiscal year under the 85% floor |
| December 31, 2026 | The Medicaid Oversight and Advisory Board's NEMT findings are due to the Legislative Research Commission |
| July 1, 2027 | First yearly DMS NEMT review due, and the floor rises to 87% |
| July 1, 2029 | Floor reaches 90% and stays there |

Two caveats apply. Kentucky ran NEMT under a federal 1915(b)(4) waiver as of November 2025, and if DMS finds a part of HB 2 needs federal approval, Section 27 required it to ask within 90 days and lets it hold only that part until approval comes. And the Legislative Research Commission may move the December 31, 2026 study to another committee and set a new date.

The board's study must review the regional broker system and capitation, look at other states' models, and suggest ways to cut costs and improve reliability and rider satisfaction.

## What providers should do now

1. **Ask your broker about GPS.** Every vehicle you use for Medicaid trips needs a device the broker can track, and the law puts the cost on the broker. Ask which device it will use and when. See GPS tracking for NEMT vans.
2. **Keep trip records clean.** Brokers now earn part of their pay on cancellations, delays, trip times, and miles, and their officers attest to the data. Accurate pickup and drop-off times protect you. See [NEMT trip documentation](https://nemtguide.com/guides/nemt-trip-documentation/).
3. **Talk to your facilities.** If a hospital or nursing home sends you steady work, ask whether it plans to run its own rides under HB 2, and what service would keep your contract.
4. **Never recruit riders.** A member who owns a working vehicle does not qualify without a note, and soliciting riders can get you excluded.
5. **Watch the December 31, 2026 report.** The oversight board must review the broker system and explore other states' models.

If you want to join the HSTD network, KYTC's steps are: form your company, get Taxi or Disabled Persons Vehicle (DPV) authority from the Division of Motor Carriers (502-564-1257), then contract with the broker for your county. DPV authority requires every vehicle to have a wheelchair lift or ramp. The broker inspects vehicles, collects insurance and workers' compensation proof, and walks you through drug and alcohol testing and training. It then signs your Medicaid enrollment form (MAP 811, provider type 56), which you submit in the Kentucky Medicaid Provider Enrollment Portal. As of September 2026, a new provider must keep at least three approved drivers and three working vehicles in the program.

## Kentucky's regional brokers

KYTC lists these brokers for the 15 HSTD regions as of September 2026. The KYTC Office of Transportation Delivery takes program questions and complaints at 888-941-7433.

| Broker | Regions | Toll-free |
|---|---|---|
| GRITS (Audubon Area Community Services) | 1, 3, 4 | 844-575-9676 (Region 1), 800-816-3511 (Region 3), 844-870-4646 (Region 4) |
| PACS (Pennyrile Allied Community Services) | 2 | 800-467-4601 |
| LKLP Community Action Council | 5, 13, 15 | 800-245-2826 |
| FTSB (Federated Transportation Services of the Bluegrass) | 6, 9, 10, 11 | 888-848-0989 |
| BGCAP (Bluegrass Community Action Partnership) | 8 | 800-456-6588 |
| RTEC (Rural Transit Enterprises Coordinated) | 12 | 800-321-7832 |
| SVTS (Sandy Valley Transportation Services) | 14 | 800-444-7433 |
| LVCAP (Licking Valley Community Action Program) | 16 | 800-327-5196 |

Our [Kentucky state guide](https://nemtguide.com/states/kentucky/) covers licensing, insurance, and vehicle rules, and how states run NEMT explains how Kentucky's regional model compares with statewide brokers.