How Medicaid & Brokers Influence Your Ability to Start Your Ambulette Service

One of the most common misconceptions regarding the non-emergency medical transportation industry is that you need to be Medicaid approved in order to operate.  This could not be further from the truth.  There are many ambulette services that only service Private-Pay and contracted work.  In fact, for the first two years of my business, I was exclusively a Private-Pay transportation provider until I figured out how to gain my Medicaid Provider Number.       

Under the Social Security Act, the Department of Social Services is mandated to reimburse medivan services for the non-emergency medical transportation of approved Medicaid recipients.  However, Medicaid reimbursements rates can vary significantly not only between states, but between counties.  There is no one single universal rate of reimbursement.       

Further, in some counties and regions across the United States, the Department of Social Services outsources their administrative responsibility to brokers.  Rather than work directly with transportation providers themselves, the Department of Social Services will contract with these “middle men” to reduce the burden and hassle to Social Services.  In turn, these brokers are responsible for organizing, contracting with, contacting, and coordinating essential medical transportation for Medicaid recipients.       

As is typical with any form of brokerage system, the broker makes money by taking a percentage of each transport.  For example, using fictitious easy numbers, if the Department of Social Services pays $50 for a one-way wheelchair transport, the money will go to the broker.  The broker will pay you, the transportation provider, $40 and the broker keeps $10.        

Now, what you do with Medicaid transports, either working through a broker or Social Services directly, has NO bearing on what you do with Private-Pay or contracted work.  Once you’ve gained proper operating authority within your state, you’re technically in business.  You can begin soliciting facilities and customers alike to meet the transportation needs of Private-Pay clients as well as begin soliciting and negotiating contracted work.       

Medicaid or brokers have no ability to grant you operating authority or have any influence in what you do with Private-Pay or contracted work.  Again, there are many transportation providers across the country that performs no Medicaid transports.  For them, the Medicaid reimbursement rates might be too low to make it profitable or they’re simply too busy meeting the needs of their Private-Pay and/or contracted clients.        

I typically use the analogy of bricks and motar.  Depending on where you live, either Private-Pay or Medicaid will be the bricks of your foundation and the other will serve as the motar that keeps generating further revenue and keeps your vehicles moving.  Typically, Private-Pay clients will yield a higher profit margin.  Thus, you will want to always focus on your Private-Pay clients and use Medicaid transports to keep your vehicles and drivers moving and generating additional sources of revenue.