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Use Transportation Brokers to Improve the State’s Medical Transportation Program


Texas’ current system for the reimbursement of medical transportation is expensive and ineffective. The Texas Health and Human Services Commission (HHSC) should outsource the management of the Medical Transportation Program to transportation brokers to improve service and contain costs.


The Texas Department of Health’s (TDH’s) Medical Transportation Program (MTP) provides Medicaid and Children with Special Health Care Needs (CSHCN) clients with non-emergency transportation to and from health care facilities. The Transportation for Indigent Cancer Patients (TICP), a subset of the MTP, provides transportation for low-income clients who are not eligible for Medicaid or CSHCN and are diagnosed with cancer or cancer-related illness and meet certain financial eligibility criteria.

In fiscal 2001, more than 106,000 Texans received transportation services through MTP; TDH estimates it will provide these services for more than 112,000 persons in 2002.[1]

MTP purchases medical transportation through contracts issued and managed by TDH. During fiscal 2002, TDH contracted with 45 private, public and nonprofit transportation providers, with contract amounts ranging from $5,000 to $8 million.[2] The fiscal 2002 contracts ran through August 31, 2002, with the option to renew for three additional one-year periods. Volunteer drivers are reimbursed for their mileage at the same rate paid to state employees. MTP also provides reimbursement for meals and lodging if a trip involves an overnight stay at a medical facility. MTP funding for meals, lodging and other expenses is expected to exceed $4 million for fiscal 2002.

MTP administrative costs include salary, travel, rent, operating expenses and special contracts. From fiscal 2000 to fiscal 2002, MTP expenditures rose by 64 percent, while the associated administrative costs rose by 70 percent (Exhibit 1).

Exhibit 1
MTP Service Expenditures and Administrative Costs

Fiscal Year MTP Service Expenditures Administrative Costs Total MTP Expenditures Number of Trips Avg. Cost Per Trip
2000 $29,731,039 $5,120,631 $34,851,670 2,841,928 $12.26
2001 $34,285,948 $7,203,306 $41,489,254 3,302,490 $12.56
2002 $48,858,147 $8,662,125 $57,520,272 3,208,984 $17.92
Source: Texas Department of Health.

MTP employs 153 regional workers as well as a small central office staff. These regional employees serve as “gatekeepers” by providing prior authorization for all non-emergency medical transportation and monitoring transportation providers and clients’ use of these services.

When a Medicaid client or provider calls for authorization, a regional MTP intake specialist verifies the client’s eligibility and determines whether Medicaid covers the requested transportation. The intake specialist does not, however, verify that the Medicaid client actually used the transportation until one or two months after the trip. If MTP later determines that the client did not show up for the appointment, it attempts to recoup the transportation expense from the client. MTP cannot determine the total amount it recoups in this way each year.

Regional MTP workers also attempt to ensure that the client uses the least expensive and closest transportation provider and provide free bus passes to ambulatory recipients who live within three blocks of a bus stop. Bus passes also are provided to recipients who find it difficult to walk if they can take advantage of special transit services that provide door-to-door service for individuals with disabilities.[3]

An April 15, 2002 report by the State Auditor’s Office (SAO) stated that TDH has not managed its MTP contracts adequately. SAO estimated that better negotiation of rates and service areas could have reduced MTP costs by at least $1.7 million in fiscal 2002. The audit also concluded that clients receive “less than the contractually agreed-upon level of service.” Client survey results for three major contractors showed that from 16 to 35 percent of clients who used MTP in fiscal 2001 were dissatisfied with the service. The report also noted that TDH had not consistently referred questionable contractor activities to the appropriate authorities for fraud investigation.[4]

Transportation brokerage

The experience of other states suggests that Texas could improve the MTP’s accountability, quality and cost control; reduce instances of fraud and abuse; cut administrative costs; and make better use of its bargaining power as a major purchaser by contracting with a single statewide broker or a number of regional transportation brokers to manage the program.

Under such an arrangement, the contracted brokers act as gatekeepers to control costs and the usage of services and to assure the consistent quality of and access to care. Such brokers can be nonprofit organizations, public entities or private contractors. The brokers, in turn, subcontract with transportation providers. Brokers:

  • inform clients of available transportation and how to access it;
  • establish a comprehensive network of providers and coordinated transportation resources;
  • ensure that transportation providers meet federal, state, and local qualifications for the safe operation of vehicles, including criminal background checks;
  • verify Medicaid eligibility, medical necessity and the need for transportation assistance;
  • establish call centers to serve as central points of contact for clients;
  • authorize transportation and schedule and assign trips by the least costly and most appropriate mode;
  • contract with and pay transportation providers;
  • monitor the overall system to assure uniform, high-quality service; and
  • track costs and services to provide accountability to the contracting agency.[5]

The current MTP has some of the elements of a brokerage model, in that it contracts for transportation services. But TDH has not taken advantage of the expertise and technology available from transportation brokers and others in the medical transportation industry. This industry has experience in the use of state-of-the-art technologies including advanced telecommunications, computerized scheduling and dispatching software and cost and usage monitoring techniques. Such expertise could improve accountability and provide more cost controls.

The use of transportation brokers has been praised in several recent national studies. The federal agency that oversees state Medicaid expenditures, the Office of Inspector General (OIG), has endorsed the brokerage model. The OIG study found that in addition to saving money, brokerages were effective in controlling fraud and abuse by providers and recipients and promoted the use of the least costly modes of transportation.[6]

In Washington state, Medicaid transportation is coordinated through nine regional brokers that serve the entire state. Each broker must guarantee that Medicaid clients are transported to covered services by the most appropriate and least costly mode of transportation. In 2000, brokers received an administrative fee of $2.80 per trip plus reimbursement for direct trip costs. The brokers reimburse providers for each trip based on a negotiated fee. When the program began in 1985, the average cost per trip was $33.73, and public transit was used only minimally. By fiscal 2001, the average cost per trip had fallen to $17.63 and public transit accounted for 37 percent of all trips.[7]

Twenty-one state Medicaid programs are operating or establishing transportation brokerage programs. Twelve of them use a “capitated” model that pays the contractor a set monthly rate for each Medicaid client served. The rate covers the broker’s administrative and direct service costs. The other nine states use a set administrative fee plus reimbursement for actual provider costs. In recent years, the capitated reimbursement model has become the most common.[8] Regardless of the method used, however, the best arrangements include “stop-loss” provisions, which cap the amount of the contract to protect the state against excessive profiteering and protect the broker against unforeseen risks.[9]

Increasing the use of existing bus services has been a key feature of many transportation brokerage systems and is one of the main factors in reducing individual trip costs. In Oregon’s regional brokerage system, 65 percent of all non-emergency medical trips are taken by public bus. This has helped to lower the average cost of a trip in Portland to $7.50.[10] In Texas, by contrast, in the first half of fiscal 2002, less than 3 percent of MTP trips were made by public transit.[11]

Transportation brokers also significantly reduce the number of state staff needed to arrange for transportation, as well as the administrative costs associated with the recovery of overpayments.


A. The Medical Transportation Program (MTP) should be moved from the Texas Department of Health (TDH) to the Texas Health and Human Services Commission (HHSC).

HHSC oversees the state Medicaid Office, which is responsible for statewide oversight of the Texas Medicaid Program.

B. HHSC should contract with a single statewide broker or several regional transportation brokers to reduce MTP transportation expenditures through improved administration, accountability and cost control.

Moving MTP and adapting it to a brokerage model would require substantial planning and preparation on the part of TDH and HHSC. A competitive procurement would be needed to secure the services of a statewide or regional transportation broker; this process could take up to three months. An additional three months would be needed to complete the transition. Therefore, a new program could not be implemented before March 1, 2004.

Fiscal Impact

Savings from a statewide or regional transportation system would result from reducing MTP regional administrative costs and the use of the state’s purchasing power in negotiating the best price and most responsive proposal for medical transportation services.

Additional savings would result from better oversight and an increased emphasis on using the most appropriate and least costly transportation providers, including public transit. Initial savings would derive from eliminating MTP’s 153 regional positions. Administrative costs are split 50/50 with the federal government, so this recommendation would save the federal government revenue as well.

This would reduce the state’s contribution by more than 12 percent by 2005 (average salary of $29,205 x benefits of 28.28 percent x 153). To realize such savings, HHSC appropriations should be reduced accordingly.

Agency Name FY 2004 General Revenue Appropriations Reduction FY 2004 Federal Funds Reduction* FY 2005 General Revenue Appropriations Reduction FY 2005 Federal Funds Reduction*
Texas Department of Health $1,117,000 $1,433,000 $2,234,000 $2,866,000
ERS (20.63%) $231,000   $461,000  
FICA (7.65%) $85,000   $171,000  
Total Savings $1,433,000 $1,433,000 $2,866,000 $2,866,000
*The employee benefits portion of federal funds is reduced directly from TDH, therefore it has been added to TDH total under the federal funds column.

As in other states, Texas should expect an increase in the amount and quality of services as well as reduced costs due to a reduction in fraud and abuse by providers and recipients and the increased use of the least costly modes of transportation.

Fiscal Year Savings to General Revenue Savings to Federal Funds Change in FTEs
2004 $1,433,000 $1,433,000 -153
2005 $2,866,000 $2,866,000 -153
2006 $2,866,000 $2,866,000 -153
2007 $2,866,000 $2,866,000 -153
2008 $2,866,000 $2,866,000 -153


[1]David Autry, Texas Department of Health, MTP Director, September 4, 2002.

[2]Texas State Auditor’s Office, An Audit Report on The Medical Transportation Program at the Department of Health (Austin, Texas, April 15, 2002), p. 1.

[3]Interview with Joey Herrera, program specialist, Texas Department of Health, Austin, Texas, May 24, 2002.

[4]Texas State Auditor’s Office, An Audit Report on The Medical Transportation Program at the Department of Health, p. 1.

[5]Community Transportation Association of America, Medicaid Transportation: Assuring Access to Health Care, by David Raphael (Washington, D.C., January 2001), p. 15.

[6]U.S. Department of Health and Human Services, Office of Inspector General, Controlling Medicaid Non-Emergency Transportation Costs (Washington, D.C., April 1997), p. 11.

[7]Washington State Department of Social and Health Services, Medical Assistance Administration, “The Transportation Services Program,” (Last visited September 16, 2002.)

[8]Community Transportation Association of America, Medicaid Transportation: Assuring Access to Health Care, p. 17. Arkansas, Connecticut, Georgia, Indiana, Kentucky, Maryland, Michigan, Missouri, Oklahoma, Rhode Island, Utah and Virginia use capitated contracts. Colorado, Florida, Massachusetts, New York, Oregon, Pennsylvania, Tennessee, Vermont and Washington use contracts providing an administrative fee plus provider costs.

[9]Community Transportation Association of America, Medicaid Transportation: Assuring Access to Health Care, p. 33.

[10]Tri-County Metropolitan Transportation District of Oregon, MTP Financial and Operating Report for December 1999, by Nancy Thomas (Portland, Oregon, January 2000), p. 23.

[11]Texas Department of Health, Medical Transportation Program, “FY 02 Paid Claims,” Austin, Texas, April 25, 2002.