The operator's publication for non-emergency medical transportation. State licensing guides, broker intel, a 2,000+ provider directory and The Dispatch, our weekly newsletter.
NEMT billing is not grant money. A Medicaid NEMT trip is a claim for a covered service under 42 CFR 440.170(a), paid by a state Medicaid agency, a broker or a managed care plan, and the audits that follow are Medicaid program integrity audits. When the HHS Office of Inspector General (OIG) has pulled samples of NEMT claims, the same five problems keep showing up: no proof the rider got a medical service that day, missing or invalid authorization, driver and vehicle files the provider cannot produce, a higher level of service than was authorized, and trips or miles the trip record does not support. This guide covers who does the auditing, what the audits found, and the controls that close each gap.
Who audits NEMT billing
Federal rules require each state to ensure necessary transportation for Medicaid members. Because the money is Medicaid money, several bodies can review the claims behind it.
| Auditor | What it does | What it can lead to |
|---|---|---|
| HHS-OIG, Office of Audit Services | Audits a state's NEMT claims by drawing a statistical sample and requesting records from the broker, the transportation providers and the medical providers | A recommendation that the state refund the federal share, estimated across the whole claim population |
| State Medicaid program integrity unit and Medicaid RAC | Post-payment reviews of providers. States must contract with Medicaid Recovery Audit Contractors unless CMS grants an exception | Overpayment demands and recoupment |
| CMS Unified Program Integrity Contractors (UPICs) | Data analysis, investigations and audits of Medicaid providers in collaboration with states. CMS named NEMT as a risk-assessment area in its Comprehensive Medicaid Integrity Plan for FY 2024 to 2028 | Overpayments referred to the state for recovery |
| State Medicaid Fraud Control Unit (MFCU) | Investigates and prosecutes Medicaid provider fraud | Criminal charges, civil settlements, exclusion |
| Brokers and managed care plans | Audit their contracted transportation providers under the provider agreement | Recoupment, corrective action plans, removal from the network |
The MFCU numbers show NEMT is a regular target. In fiscal year 2025, MFCUs reported 52 fraud convictions involving nonemergency transportation providers, one of the top five provider types, and 31 civil settlements and judgments involving NEMT, according to the OIG's FY 2025 MFCU data snapshot.
What OIG found when it sampled NEMT claims
OIG's NEMT audits review a state's claims, so the refund recommendation goes to the state. The records OIG asks for, though, belong to brokers and transportation providers, and the gaps it finds are provider gaps.
| State and report | Period reviewed | Sample result | Estimate |
|---|---|---|---|
| New York City, A-02-21-01001 (Sept. 2022) | 2018 to 2019 | 17 of 100 payments complied; 41 unallowable; 42 could not be confirmed | $84.3 million unallowable plus $112.0 million potentially unallowable (federal share) |
| New Jersey, A-02-14-01001 (2016) | July 2011 to June 2012 | 12 of 100 claims complied; 74 did not; 14 could not be confirmed | $64.8 million in broker payments to providers that did not comply |
| Texas, A-06-12-00053 (2014) | FY 2011 | 20 of 90 claims proper; 70 had deficiencies | At least $30.4 million (federal share) |
| Michigan, A-05-16-00021 (2018) | Oct. 2012 to Sept. 2014 | 105 of 200 claims did not comply | $4.5 million (federal share) |
| Los Angeles County, A-09-13-02054 (2015) | July 2010 to June 2011 | 1 of 100 complied; 94 did not | At least $437,896 (federal share) |
| California outside L.A., A-09-13-02033 (2015) | July 2010 to June 2011 | 89 of 100 complied; 6 did not | At least $375,665 (federal share) |
Read the New York headline carefully. The report title says New York claimed $196 million, "over 72 percent of the audited amount," for payments to New York City providers that did not meet or may not have met Medicaid requirements. The audited amount was $269.6 million in federal share. The $196 million combines $84.3 million OIG found unallowable with $112.0 million it could not confirm either way, and the sample was 100 payments, not every claim. It is one city's program over two years, not a national rate.
Also note how the estimate is built. OIG projects sample errors across the full population and, in the New York audit, recommended recovery at the lower limit of a 90 percent confidence interval. A handful of bad files in a sample of 100 becomes a dollar figure across millions of payments.
The 5 audit risks, and the control for each
1. No proof the rider received a medical service on the trip date
NEMT is only covered when the trip gets the member to a Medicaid-covered service. Auditors match the trip date against medical claims for the same member. In the New York audit, OIG could not confirm a Medicaid-covered service on the transport date for 34 sampled payments; 30 of those also had other problems. In Texas, 3 of 90 sampled claims were for trips where the member received no Medicaid-covered service that day. New Jersey's broker program was faulted for the same gap.
Control: record the destination facility and provider name on every leg, not only an address. Keep the appointment confirmation with the trip. CMS's NEMT booklet for providers recommends that management verify trips by calling a random selection of riders and the medical offices they were taken to.
2. Missing, late or expired authorization
Most state programs require prior authorization for NEMT, and some, such as New York, require a medical practitioner's order to justify a mode above the default. In New York, 22 of 100 sampled payments had no valid order or authorization support: 14 had no order at all, 6 had orders dated 2 to 33 months after the trip, 1 had an order that expired 3 months before the trip, and 1 had an order with no approved dates. In Los Angeles County, providers billed 65 of 100 sampled services as hospital-to-nursing-facility transfers that were exempt from prior authorization, which bypassed the authorization process.
Control: no dispatch without an authorization that is valid on the date of service, and the authorization number stored on the trip record. Paperwork created after the trip does not cure a missing authorization; OIG counted those six late orders as unallowable. On remittances, CARC 197 means the precertification or authorization was absent.
3. Driver and vehicle files you cannot produce
Driver and vehicle documentation drove the largest share of findings in the Texas and New York audits. In Texas, providers could not verify current registration and inspection for the vehicle, or could not identify the vehicle, on 51 of 90 claims, and could not show background checks, drug testing and driving history checks for the driver on 18. In New York, 7 payments were unallowable for undocumented driver qualifications, and 31 more could not be confirmed because providers did not produce vehicle records (21 payments) or driver license records (10 payments). Michigan and New Jersey had the same category of findings.
The floor is now federal. Section 209 of the Consolidated Appropriations Act, 2021 added section 1902(a)(87) to the Social Security Act, and CMS's transportation coverage guide (SMD 23-006) describes the minimums: providers and drivers not excluded from federal health care programs, each driver with a valid license, a process to address violations of state drug law, and a process to disclose each driver's driving history to the state. States add their own training, insurance and vehicle rules on top.
Control: keep a credential file for every driver and vehicle, with effective and expiration dates, and put the driver ID and vehicle ID on every trip record so the file for that date can be pulled in minutes. Screen staff against the OIG exclusion list (LEIE) and SAM.gov before hire and monthly, as CMS's booklet advises. CMS notes that all claims for services furnished by an excluded person may be treated as overpayments.
4. Billing a higher level of service than was authorized
State rules, including New York's and California's, pay only for the least costly mode adequate for the member's needs, so the level of service on the claim has to match the authorization. In Los Angeles County, 71 of 100 sampled services were not billed at the lowest-cost mode adequate for the member's needs. In New York, one payment was authorized as a taxi trip and billed as an ambulette. CMS's booklet describes a New York ambulette owner sentenced to 6 months in jail and ordered to repay $200,000 for changing taxi authorizations to ambulette, a mode about four times as expensive.
Control: the billing system pulls the mode from the authorization, not from what the driver selected. A change of mode at pickup (for example, a rider who now needs a wheelchair van) goes back to the broker or plan for a new or amended authorization before the trip is billed at the higher rate.
5. Trips, miles or duplicates the trip record does not support
In New York, 13 sampled payments failed because the provider had no record showing the date, pickup and drop-off locations, driver and vehicle (11 payments) or no record of the trip at all (2 payments), and 2 more were for trips the provider admitted did not happen. In Texas, one claim was for a trip the member had canceled. CMS lists the minimum every state expects: the member's name and Medicaid ID, pickup and drop-off locations, date and time, and the miles traveled with the member in the vehicle. It also calls billing loaded mileage for a no-show a common form of fraud.
Control: build each claim from the completed trip record, never from the schedule. Take loaded miles from GPS pickup and drop-off points rather than driver estimates, block claims for canceled and no-show legs, and check for duplicates on member, date of service and leg before submission. An exact duplicate comes back as CARC 18.
Denial codes are not audit findings, but they point to the same gaps
Remittance denials are an early warning. These claim adjustment reason codes (CARCs) are the ones NEMT billers see most often for the gaps above:
| CARC | X12 description (short form) | Usual NEMT cause |
|---|---|---|
| 16 | Claim lacks information or has submission or billing errors | Missing trip, mileage or modifier data |
| 18 | Exact duplicate claim or service | Same leg billed twice |
| 29 | The time limit for filing has expired | Late billing |
| 50 | Non-covered service, not deemed a medical necessity by the payer | Mode or trip not supported |
| 197 | Precertification or authorization absent | No valid authorization on the date of service |
CARC 149 means the lifetime benefit maximum has been reached. It is not a timely filing denial. On filing windows, federal rules require state Medicaid agencies to have providers submit all claims within 12 months of the date of service; your broker or plan contract can set a shorter window, so bill from the contract, not the federal maximum.
Records: what to keep and for how long
There is no single federal retention period for NEMT providers. The period comes from your state rules and your provider agreements. New York, for example, requires providers to keep records for 6 years from the date of service (18 NYCRR 504.3(a), as quoted in the 2022 OIG report), and Michigan's broker contract required its broker to keep records for 7 years. Set one policy at the longest period any of your payers requires, and keep authorizations, trip records, driver files and vehicle files on the same clock. Our guide to audit trail rules for NEMT software covers how to store and lock those records.
When an auditor or payer calls
- Produce, do not reconstruct. Send the records as they existed. Documents created after the fact did not count in the New York audit, and altering records can turn a billing finding into a fraud case.
- Track the deadline. Records requests come with response dates. In New York, 7 sampled payments went into the "could not confirm" pile because the providers never responded.
- Return what you owe. Under section 1128J(d) of the Social Security Act, a provider that identifies an overpayment of Medicare or Medicaid funds must report and return it within 60 days of identifying it.
- Know the ceiling. Knowingly false claims fall under the False Claims Act: treble damages plus a civil penalty currently set at $14,308 to $28,619 per claim under 28 CFR 85.5. Get a health care attorney involved early if a review looks like it is heading there.
A monthly self-audit
Pull a random set of completed, paid trips each month and test each one against the five checks: medical service on the date, valid authorization, driver and vehicle files current on that date, mode matches the authorization, and a trip record that supports the miles billed. Track the failure rate by check, and fix the process behind any check that fails twice. Recoupments come straight out of margin, so run the cost of the controls against your numbers in the NEMT cost per trip calculator. For the wider billing workflow, see the NEMT billing, claims and cash flow guide.
Frequently asked questions
Is NEMT billing audited like a grant?
No. Medicaid NEMT is a covered service paid as claims or encounters, so the reviews are Medicaid program integrity audits by OIG, the state, CMS contractors, MFCUs, brokers and plans. Grant rules apply only if you also receive a federal or state grant, such as transit funding, which is audited under that grant's own terms.
What do auditors ask for first?
For each sampled trip: the authorization and any practitioner order, the trip record with times, locations and loaded miles, the driver's license and required checks, the vehicle's registration, inspection and insurance for that date, and proof the member had a medical appointment.
Does a missing rider signature make a claim unallowable?
Only if your state, broker or plan requires the signature. CMS notes that some states and brokers require it, and that management still has to verify trips even when it is collected. Check your provider manual and broker agreement.
What does a PR-149 or CO-149 denial mean?
CARC 149 means the member reached the lifetime benefit maximum for that service category. A timely filing denial is CARC 29.
Get weekly NEMT billing and compliance updates in The NEMTrepreneur Dispatch.
Correction, October 2026: an earlier version of this article described NEMT billing reviews as grant audits, misstated the 2022 OIG New York City audit as a finding that 72 percent of sampled claims were non-compliant, described CARC 149 as a timely filing denial, and cited percentages we could not trace to a primary source. Those have been corrected or removed.
