How to Justify Your NEMT Rates
Business owners are aware of the impact their rates have on their clients and the industry as a whole. NEMT rates matter for three key reasons: they impact the quality of care patients receive, influence the sustainability of NEMT providers, and set the standard for all other businesses.
Let’s take a closer look.
- Why NEMT Rates Matter
- Interstate NEMT Rates
- NEMT Transportation Rates
- How To Set Rates for Your NEMT Service
- Create a Structure for Billing
- Final Thoughts
Why NEMT Rates Matter
NEMT Rates Impact the Quality of Care Patients Receive
In the United States, NEMT rates are set by individual business owners based on the recommendations set by the NTD Uniform System of Accounts (USOA). This can lead to a patchwork of specific rates across the country, impacting the quality of care patients receive.
Some states have very high rates, which allows providers to offer a higher level of care. Other states have lower rates, which may lead to service limitations, such as distance and scheduling.
All providers are obliged to meet industry requirements and regulations. But if they have limited resources, some NEMT companies may only cater to specific clients or passengers and may not be able to cover patients with high-level needs.
This also means that the reimbursement rate for providers could trend even lower. The lack of revenue in a particular area can lead to consolidation and a decrease in the number of providers available to provide services for patients.
NEMT Rates Influence the Sustainability of NEMT Providers
Medicaid NEMT rates vary considerably, and this variation significantly impacts the sustainability of NEMT as a whole.
In general, Medicaid programs reimburse NEMT providers at lower rates than private payers. The difference between Medicaid and private payer rates is even greater for trips that are longer or involve more complex care.
This variation in reimbursement rates creates a financial challenge for NEMT providers, who must often choose between providing care at a loss or limiting the number and type of services they offer.
As a result, many NEMT providers are not able to offer a full range of services or serve all Medicaid-eligible clients. This limits access to care for Medicaid beneficiaries and can lead to poorer health outcomes for many patients.
NEMT Rates Set the Standard for the Industry
Non-medical transportation rates are set to ensure that patients have access to the care they need, when they need it. This ensures that providers can offer these services at a fair price for both parties.
Interstate NEMT Rates
For many NEMT providers, the average rate will vary in every state, but most of it depends on a broker. Non-emergency medical transportation rates in California may differ from non-emergency medical transportation rates in Texas.
Aside from considering the operational costs and wage rates in each state, the rates can be determined in two ways across the country:
Setting a Rate Floor
A rate floor is a minimum rate that a provider must be paid for their service. Providers can negotiate the rate floor with their broker, especially if it results in a deficit.
Some states allow providers to set a minimum rate, which means allowing the medical care organization and broker to negotiate for each provider. This ensures that the provider can charge a fair fee for everyone involved.
Aside from these, fuel costs, the demand for NEMT services in the area, and the level of service provided are also considered.
NEMT Transportation Rates
As the NEMT industry continues to grow, transport businesses need to remain competitive by offering affordable rates. NEMT rates are determined by many factors, especially when the trip is not covered by insurance. These include the type of service being provided, the distance traveled, and the number of passengers.
While it may be tempting to cut rates or reduce costs to attract more customers, this can harm your business. If you charge too little, you may not be able to cover your costs or generate profit.
This can lead to many serious problems down the road, and it can also hurt the industry as a whole by driving down prices. Charging a fair price ensures the longevity of a business, as well as the quality and variety of services on offer.
Establishing competitive and sustainable pricing for an NEMT business is a crucial element of success. Your prices must cover the cost of providing services and maintain a healthy profit margin.
When setting rates for your NEMT service, the USOA recommends several points:
- Cost of operating your business, including vehicle maintenance, fuel, and driver salaries
- Demand for transport services in your area
- Price of similar services in your area
- Tax rates in your area
- Additional expenses (utilities, supplies, and indirect costs)
- Miscellaneous expenses
Once you’ve added up all of these elements, you can begin calculating and establishing pricing for your NEMT business.
Review your prices periodically to ensure they are still competitive and in line with the costs of running your business and the overall industry average rate.
How To Set Rates for Your NEMT Service
NEMT rates are based on the average cost of providing services to patients. These rates ensure that transportation companies offer a fair and reasonable price as they generate a healthy profit margin.
If you want to start an NEMT business, here’s how you can set the rates for your services:
Know the Demand
The first thing you should know about your clientele is the type of service they need and the kind of insurance coverage they have. You must understand the level of demand of your target audience and begin calculating costs from there.
You can also research the average market rate in the area for the services you aim to provide. These metrics will help you arrive at a reasonable price.
Consider Your Operational Costs
Aside from vehicle maintenance, fuel expenses, and driver salaries, you must also consider other operational expenses such as insurance, management software, licenses, permits, and more.
You can then set a base rate that covers all of these costs plus a reasonable profit margin.
Include Additional Fees
Additional fees may cover expenses for extra miles, time, or even scheduling that would require additional pay for your drivers or personnel.
You could charge the following fees:
- Weekend rates
- Holiday rates
- Additional distance rate (charge per mile)
- No-show fees
- Late fees
- Special trips
- Deadhead miles
Late fees can be charged per hour or depending on your base rate. For no-show fees, you can set a rate that will cover the inconvenience for your staff and driver for the scheduling. You can reduce no-shows for your NEMT business by using scheduling software that reminds passengers of an upcoming trip.
The price for special trips depends on the number of passengers, distance, the type of equipment needed, and even the time of day.
Some transport companies also charge for deadhead miles, which includes the mileage covered without the passenger in the vehicle. This applies to passengers who may live farther than the company’s usual coverage and will require more time and fuel to get picked up.
Create a Structure for Billing
You must break down how you will charge for your services. Creating a billing structure that accounts for all of the charges and fees involved will give your passengers clarity and understanding of what they’re paying for and the value of your service.
Include the following:
- Load fee – This is the initial charge for the pickup, and it can vary depending on the vehicle and service type.
- Minimum charge/flat rate – This can be implemented for short-distance, to-and-fro trips. A flat rate can also be implemented for clients that require frequent trips.
- Per mile rate – This is added to initial charges (load fees) and minimum charges, especially for medical transportation long distance trips.
- Holiday/Weekend/After-hours rate – These rates can be added for weekends, holidays, or after-hours schedules. If your business runs 24/7 operations, you can apply a surcharge for late-night and early-morning trips.
NEMT providers are businesses that provide a vital service to the healthcare system, and they need to charge rates that are high enough to cover their costs and generate a profit.
Rates in the NEMT industry are set based on the complex costs of providing a variety of high-quality services that help passengers, patients, and medical organizations.
To give your clients the clarity they need to understand your rates, your NEMT business must use the right tools and software to manage your billing structure. RouteGenie automates the billing process from start to finish, which increases your clean claim rate and reduces time spent on billing, all while allowing for faster reimbursement times and overall productivity. Book a demo today, don’t postpone your growth till tomorrow!
About the author
An experienced content writer, Keren Dinkin’s forte is writing well-informed medical transportation, healthcare accounting, and related articles. Her work is backed by months of intensive research and pays meticulous attention to details. In addition to being a writer, she also dons the hat of a content strategist.READ MORE