Educate & Equip Your Medical Transportation Business to Deal with Brokers, Part I

The following is Part I of a two part message on receiving Medicaid reimbursement for your medical transportation business. It is important to note that Medicaid reimbursement is only one of many sources of revenue that your NEMT business can generate. It does not reflect your Private-Pay or contracted revenues, VA work, worker’s comp, or other.

Since launching my Boot Camp Seminar DVD Series I continue to receive a lot of emails and questions regarding Medicaid and the whole broker system. Needless to say, the broker system is a very real “system” that is not going to go away. In fact, with the passage of Obamacare, it is now going to exponentially grow!  So with Obamacare becoming the “law of the land” everyone is going to need to become well familiar with the broker system because if your state or region is not currently using a Medcaid broker now, it surely will to some degree in the future.

As is stipulated in Article 1915 of the Social Security Act, through the Department of Social Services, the government will reimburse transportation providers for Non-Emergency Transportation of Medicaid recipients. And now, even more so with the Affordable Care Act, standards for Medicaid eligibility are changing to increase the overall size of those qualify to receive Medicaid benefits.  However, regardless of the growing size, the reimbursement process can vary significantly by state, county, and even regional municipalities.

In serving as a “middle-man,” these national and regional-based brokers are designed to offer the Department of Social Services a cost-cutting process that will save the government money while overtaking the daily obligations of coordinating and managing suitable non-emergency transportation for their Medical recipients. Although this process is well intentioned, in many instances, for the transportation providers, this broker system can prove to be more harm than good.

It is without question that brokers are well funded! In many instances, individual brokers receive hundreds of millions of dollars in government sponsored grant money and revenue. Logisticare, for example, the largest of all national brokers, boasts annual revenue of half a BILLION dollars and posted more than 40 million dollars in performance and payment bonds for various Medicaid and Managed Care programs. In addition to double digit profit margins, some brokers such as MTM, Medical Transportation Management, boast almost 40% return on invested capital.

Unfortunately, with such high profits and revenues, overall, a disproportionate percentage of reimbursement is awarded to transportation providers. Now, trust me. I am NOT nor will I ever attempt to play “class warfare” as do many politicians and social groups. To the contrary, I am a true capitalist and support everyone’s ability to make money and high profits. However, because I have the pleasure of working with countless transportation providers across the country, I witness first hand how brokers strategically and financially mislead and shortchange providers by encouraging them to commit to disadvantageous contractual agreements. In turn, such Agreements lead to limited profit margins, if any, for the transportation providers which further leads to inadequate customer service.

Now please do not gather the impression that I am suggesting that brokers are “the devil” and that there is some grand conspiracy to prevent transportation providers and entrepreneurs from succeeding. That is definitely not the case.  However, because broker’s first and foremost priorities are earning reports and return on investments, as a result, they operate with extremely “tight fisted” margins with regards to transportation providers reimbursements. However, when dealing with and negotiating with brokers the old adage “the best defense is a good offense” is very much appropriate. And a “good offense” starts with proper education and effective execution.  What you don’t know can hurt you, but what you do know can help you!

[End of Part I, “Educate & Equip Your Medical Transportation Business to Deal with Brokers”]

Check back soon for Part II. Click Here to learn more about Joel’s “Boot Camp Seminar” DVD Series where he discusses in detail how to leverage and position yourself to deal with brokers to get maximum rates of reimbursement.