Questions to consider when thinking about starting a Non-Emergency Medical Transportation
or Senior Transportation service

CTAA has routinely provided guidance to callers looking into how to start a transportation company. It is a difficult market to get into. Before you invest any money or buy any packaged resources, read and review the following Questions and Answers. Only then should you proceed.

Local sources are best for taxicab information

The best place for you to learn about taxi regulations is your state or local taxicab commission or licensing board. These authorities are named differently in various states and localities. For example, Pennsylvania has a Public Utility Commission that regulates taxi services; in Boston, MA, the regulation is by the Boston Police Department, Hack Division; and Montgomery County, Maryland, it is the county government. More than likely the authority will be a city or county government.

What organizations represent taxi operators?

Taxicab, Limousine & Paratransit Association is one such national non-profit organization that can provide prospective passenger transportation companies with valuable industry information. Their website is: www.TLPA.org

A couple of factors about the cost of operations must be considered when developing a business plan for senior and medical transportation. Look at the car that the taxi driver drives. Is it shiny and new or is it an older model that has seen several hundred thousand miles?

Will I be subject to Drug and Alcohol Testing?

Drug and alcohol testing is required for all personnel in "safety sensitive" positions, especially drivers, if there will be a contract for services that receive Federal funding. Taxi drivers typically are not subject to D&A testing because they do not contract with the government.

Can I get government money to buy vehicles?

Capital funding by government for vehicles is extremely limited and is in high competition from non-profit agencies. Typically there are at least twice as many requests as there is funding. Most Federal Transit Administration funding is administered through state DOTs. Contacting your state DOT is where funding issues should be referred. The Small Business Administration may have funds for qualified small businesses. You will have to prepare a detailed business plan and estimate the level of service that you will actually provide.

How is "senior transportation" different from ordinary taxicab service?

Most taxi service is occasional and spontaneous. Many times the customer merely hails the taxi as it drives by. Others you call a dispatcher and the taxi is sent to the pickup address. The rider usually walks out to the taxi and readily gets in. He or she might have a suitcase or some other luggage that needs to be placed in the trunk of the car.

Seniors are much more likely to need more time to appear then walk to the waiting taxi. Older customers are likely to need an assistance to get into and out of the taxi. During the return part of the trip the customer may have several bags of groceries, or be physically weak after a procedure such as dialysis. Additional assistance is required of the driver in such circumstances. The passenger should be assisted getting everything to the door of their destination.

Some older customers may have one of many forms of dementia that limits their cognitive abilities. Older persons are more likely to have hearing and vision loss that makes communicating with them more difficult. Advanced age makes people frail and in need of a gentler ride. All of these factors make senior transportation more labor and time intensive to accomplish.

I have heard that my state has a Medicaid broker to provide non-emergency medical transportation for doctor appointments. How can I do business with that broker?

The term broker is not necessarily the same as what you might think. While some of them do have working relationships with small transportation services, most prefer to contract with one or two large commercial transportation providers. In such cases, the broker merely acts as the call intake, scheduling and billing agent for the separate company that actually does the service. In such arrangements there is little opportunity for a one or two vehicle sized business to be involved.

In states where the broker does work with small local providers, there still is a significant level of regulation. Ordinary private vehicle liability insurance is typically insufficient to meet the broker requirements. Their liability limits may be in excess of $1,000,000 per passenger per incident. Therefore, if you can carry 7 passengers at a time you may need insurance that will cover $7,000,000. This insurance can be very expensive and difficult to get. Because this type of insurance is so expensive, some brokers only require a maximum $3,000,000 limit. This lower limit exposes the transportation provider to very high financial liability. As a transportation provider with no history, the provisional premiums usually start out higher and decrease in proportion to years without claims.

Medical transportation providers have a duty to be well versed in the medical needs of their customers. Drivers will need to be certified in CPR and First Aid at the minimum. Many times the brokers must assure that drivers who work for their contractors are also trained for seizure recognition and blood-borne pathogens.

What kind of trips are medical transportation?

There are many types of medical trips. Not all of them are a straight forward from home to the doctor and back. Many passengers have chronic illnesses for which they are receiving treatment. Some of these illnesses result in a low reliability and timeliness of the passenger. Passengers might be going to a dialysis session and be quite weak and frail on the return trip. They might not be ready to go home when they are scheduled to go. Other people might be going to a clinic for chemotherapy for cancer. Still others may be substance abusers who are going for counseling and/or methadone treatments. Persons with HIV/AIDS are also qualified for medical transportation.

There also is a range of mental illnesses that people need transportation for to receive treatments. Each of these categories of eligibility for medical transportation presents its own challenges to the transportation provider.

How do I determine how much to charge for my services?

There are two schools of thought on that question. The short answers are: I'll get paid what my expenses are plus a profit and I'll get paid what the broker, agency, customer is offering to pay. This first answer is surprisingly difficult to accomplish. The second answer is far more common.

The first answer for how much do I charge is further dependent on two factors: What my expenses are including how much I want to earn. The other factor is how many trips per year I will be able to actually do.

Costs are categorized as fixed and variable. Fuel, tires, brakes, maintenance and repairs are variable and change with the number of trip and the length of those trips. Expenses like insurance, rent, utilities, depreciation of vehicle purchases and licenses will be pretty much the same whether you do one trip per year, one trip per day or one trip per hour. Those fixed expenses change with things like number of vehicles in operation and vehicle type. The spreadsheet at http://www.ctapnet.org/costs.xls presents a simplified budget concept using variable costs for fuel, repairs, tires and brakes. It also shows fixed costs for insurance, vehicle depreciation and your income as the vehicle driver.

The final part of the spreadsheet depicts the impacts of service level in passengers per year on the minimum fare that must be charged in order to cover all of the listed costs.

Can an agency dictate what they will pay for transportation?

Human service agencies must agree to provide their services for compensation that the payer is willing to pay. For example an Adult Daycare business might receive $48 per day for the supervision of a person with Alzheimer's Disease. They must pay their staff, provide a meal and cover their other administrative costs. This rarely leaves much for a transportation business to be paid. One such business was offering $10 per trip for a group of 5 adults that totaled $20 per day for the round trip. That averages out to $2 per person each way. The cost of fuel to do the trips exceeded the fixed price being offered on a take-it-or-leave it basis.

Can I charge a Medicaid passenger an additional amount when paid by an agency?

No. Both you and the agency that is being paid by Medicaid must agree to be paid the agreed upon amount. Charging extra would not be legal. This same principle would typically apply to other non-Medicaid transportation. When the cost of transportation is included in the fees paid to the human service provider, charging the passenger again would not be proper.

Many people who go to Adult Daycare facilities for the day are private pay and are not subject to the compensation restrictions discussed above. If transportation is not included in their fees, you can charge your usual and customary fares.

What is the difference between Medicaid Transportation and Medicare Transportation?

People are determined to be eligible for Medicaid and Medicare by different methods. People who receive Medicaid paid services qualify on the basis of low-income. They are able to see doctors, have diagnostic tests done and have their transportation costs to get there paid for. People qualify for Medicare on the basis of their age. While certain medical costs are covered, transportation is NOT one of them.

In short, seniors must pay their own transportation costs while Medicaid recipients do not. There are many senior citizen human service agencies that also provide transportation services seniors for specific trip purposes. These usually are provided at the county level.

Does Medicare pay for transportation?

The answer is in most cases no. Medicare pays for emergency transportation. Emergencies typically involve an ambulance or other highly specialized vehicle and trained personnel. Medicaid is the main funding source for non emergency medical transportation.

A Few Links you should follow to learn more about this business

Medical Transportation Toolkit and Best practices

CTAP Medical Transportation Forum

Senior Mobility

Medicaid and Medicare

The Final CMS Medicaid Transportation Broker Rule(PDF) (101 KB)

Additional resources may be found on this website using the navigation bar at the top of this page. Please research these resources and become familiar with your intended industry before committing your own money or borrowing capital to purchase equipment. The Small Business Administration is an excellent resource for information on starting a business. Many states have State Transit Associations that you may contact in order to determine who to talk with about what you would like to do. This list is not a complete listing and web addresses are constantly changing. If you find a broken link or do not see your state, do a web search for "{your state} Transit Association".