Handbook for Examining the Effects of Non-Emergency Medical Transportation Brokerages on Transportation Coordination (2018)

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35 Human services transportation refers to a range of transportation services designed to meet the needs of individuals who have difficulty providing their own transportation due to age, dis­ ability, or income. The purpose of this chapter is to provide information about human services transportation and public transportation. The information provides a context to better understand the oppor- tunities and challenges for human services transportation providers and public transit agencies wishing to coordinate passenger trips with Medicaid NEMT. This chapter also summarizes the executive and legislative history for the federal transportation policy to encourage coordination of these transportation services. What Is Human Services Transportation? Human services transportation refers to a range of transportation services designed to meet the needs of individuals who have difficulties providing their own transportation due to age, disability, or income—sometimes referred to as transportation-disadvantaged populations. Many federal, state, and local public agencies, nonprofit organizations, and private entities pro- vide or fund transportation services that are specifically for people who face mobility challenges, including veterans, older adults (also referred to as seniors), individuals with disabilities, and people with lower incomes who cannot afford private transportation. Often, these individuals live in rural and urban communities with limited or no public transportation, further restricting options for mobility. Sources of Funds for Human Services Transportation Spending for human services transportation is typically funded from federal programs, state and local funds, and private sources of revenue. Federal Programs Many federal programs authorize the use of funds for transportation so that individuals can access government programs. The total federal spending on transportation services for the transportation disadvantaged is unknown because transportation spending is not always tracked separately from other program spending. In a 2003 report, GAO identified 62 federal programs that provided funds that could be used to pay for transportation services for transportation-disadvantaged populations (32). In 2012, GAO revisited this subject and identified 80 such programs in that year’s report to Congress (33). Most of these programs are administered by four federal agencies—DHHS, the Department of Labor, the Department of Education, and U.S. DOT. Other programs are administered by the Department of Housing and Urban Development (HUD), the Department of Veterans Affairs, the Department of Agriculture (USDA), and the Department of Interior (32). C H A P T E R 4 Coordination of Public Transportation with Human Services Transportation

36 Handbook for Examining the Effects of Non-Emergency Medical Transportation Brokerages on Transportation Coordination The following are some examples of the federal programs that provide funding for transporta- tion services for transportation-disadvantaged populations: • DHHS’s Medicaid NEMT; • The Department of Energy’s Head Start; • The Department of Labor’s Job Corps; • HUD’s Community Development Block Grants, Entitlement Areas; • U.S. DOT and FTA’s Enhanced Mobility for Seniors and Individuals with Disabilities; and • The Department of Veterans Affairs’ Veterans Health Care Benefits. Medicaid NEMT is the largest source of federal revenues for human services transportation (34). A more complete listing of programs can be found in “Appendix II: Inventory of Federal Programs Providing Transportation Services to the Transportation Disadvantaged” in GAO 12–647, Transportation-Disadvantaged Populations, Federal Coordination Efforts Could Be Further Strengthened (33). Under most of the federal programs, funds can be used to purchase transportation services from existing public or private transportation providers; provide public transit passes, taxi vouchers, or mileage reimbursement to program participants; or use some combination of these methods. Some programs provide capital funds for the purchase of vehicles (32, 33). State, Local, and Private Funds Total state and local spending for human services transportation is likely significant, although the total is undetermined because most programs do not require grantees to report these data (33). Local private companies and nonprofit or charitable programs also fund human services transportation but do not report such data to a central database. Matching requirements represent an obligation for nonfederal contributions to the program’s costs that come from state, local, or private funds. About half of the federal programs for human services transportation have matching requirements that generally require states and local agen- cies to contribute between 5 and 50 percent of total costs (32). Human Services Transportation Is Complex with Limited Coordination With so many organizations involved, human services transportation has become a complex and often fragmented system (32, 35). Public and private agencies that administer or refer clients to human services transportation programs may have different goals, serve different populations, and receive funds from different sources, each of which have its own rules and restrictions. The large number and diversity of human services transportation programs can lead to under- utilization of resources, inconsistent standards, greater administrative costs due to fragmented or duplicative services, and customer inconvenience. Services can overlap in some areas and be entirely absent in others (35, 36). Purposes for Coordinated Human Services Transportation To address these problems, governmental entities, human services organizations, and transpor- tation providers have advocated improved coordination among human services transportation services. While the objectives for coordinated services may differ somewhat from community to community, the fundamental purposes are usually to (36): • Avoid duplicative and overlapping services, • Reduce service gaps, Medicaid NEMT is the largest source of federal revenues for human services transportation.

Coordination of Public Transportation with Human Services Transportation 37 • Increase services, • Ensure cost-effectiveness and cost savings, and • Provide safe and reliable transportation services. Obstacles to Human Services Transportation Coordination Obstacles impeding coordination include concern among program sponsors that their own participants might be negatively affected, program rules that limit use by others, real and perceived regulatory barriers, and limited guidance and information on coordination. Coordination of services is also challenging due to differences in federal program requirements and statutory barriers, according to federal agency officials (33). For example, officials with CMS expressed a concern that coordinating NEMT with other human services or public transportation programs increases the risk of comingling federal program funds and the potential for fraud (33). In another example, officials at the Depart- ment of Veterans Affairs said that the department has the authority to provide transportation to certain qualifying veterans and nonveterans in relation to veterans affairs health care but has no legal authority to transport non-beneficiaries (33). What Is Public Transportation? Public transportation is a shared-ride passenger transportation service that is available to the public, usually for a fare per ride. Public transportation is operated by a governmental entity or by a private entity that receives financial assistance to provide the service from a governmental entity. In this handbook, public transportation refers to the transportation programs and services that are eligible for federal funding from FTA. The purpose of providing public transportation is to offer the general public better access to economic and community activities such as employment, education and training, medical appointments and health services, human services, shopping, entertainment and recreation, and personal business. According to the American Public Transportation Association, 820 public transit agencies provide public transportation in urbanized areas and nearly 1,400 public transit agencies operate in rural areas. Another 4,600 nonprofit organizations and agencies operate specialized trans- portation for seniors, people with disabilities, and low-income individuals (37). Types of Public Transportation Public transportation can be characterized as fixed route, flexible route, or demand response. One type of demand-response public transportation is the Americans with Disabilities Act (ADA) complementary paratransit. The different types of services illustrate how public trans- portation serves individuals who need to make trips for medical appointments or health services: • Fixed-route public transportation is provided along a designated route and operated at set times or headways (e.g., every 15 minutes). Most local bus routes, commuter bus, bus rapid transit, and all forms of rail operate on fixed routes with designated, scheduled stops. Fixed-route public transportation services are most common in more densely populated urban areas. • Flexible-route buses operate along a fixed route, but the buses may deviate from the route to go to specific locations. This may include traveling to residences, employment locations, schools, and shopping areas. In this handbook, public transporta­ tion refers to the transportation programs and services that are eligible for federal funding from FTA.

38 Handbook for Examining the Effects of Non-Emergency Medical Transportation Brokerages on Transportation Coordination • Demand response is a form of public transportation characterized by flexible routing and scheduling of small- to medium-sized vehicles operating in shared-ride services between pickup and drop-off locations according to passengers’ requests. Scheduling may be imme- diate response, similar to taxi service, or it may be advance reservation, so that trip requests are required a day or more in advance. Generally, public demand response is appropriate transportation service in a low-density rural area with a geographic dispersion of transit trip generators (e.g., employment, schools, shopping, and medical facilities) or in neighborhoods where low demand does not warrant fixed-route transit service. The ADA guarantees equal opportunity for individuals with disabilities in public trans- portation (38). FTA is responsible for regulations to implement ADA provisions for public transportation. Public transit agencies are required to operate wheelchair-accessible vehicles for fixed-route and demand-response transit service. ADA and FTA regulations require public transit agencies that provide local fixed-route transit services to operate complementary para- transit services for people with disabilities who cannot use the local fixed-route bus or rail service because of a disability (39). Capacity is an important concept in comparing the cost of different types of public trans- portation. Capacity for fixed-route public transportation is measured as the number of passengers that can be carried past a single point on a fixed route in a given period of time. The most common measure of capacity is in terms of passengers per hour. Because fixed- route transit operates on a schedule with vehicles passing on a regular frequency, bus and rail services generally have the capacity to increase passengers at a low or no marginal operations cost per additional passenger. On the other hand, demand-response public transportation responds to individual passenger requests for service between a specific origin and destination. Each new rider requires a specific trip pattern and associated travel time, limiting passengers per hour even with shared rides (two or more passengers transported on the same vehicle trip). Each additional demand-response passenger increases operations costs. Funding Public Transportation Through FTA FTA provides financial assistance to local public transit agencies. The purpose of this section is to document the sources of federal funding for public transportation and to highlight federal requirements for coordination of public transportation and human services transportation. Federal Authorization and Appropriation for Public Transportation Authorization bills passed by Congress approve federal funding programs for all surface transportation investments, including public transportation. Each federal authorization bill sets the federal policy for transportation for the duration of the bill. The three most recent federal authorization bills are: • SAFETEA-LU. The Safe, Accountable, Flexible, Efficient Transportation Equity Act— A Legacy for Users (SAFETEA-LU) was signed into law in 2005 to fund federal surface transportation programs through FY 2009. Congress extended the authorization bill three additional years through 2012 (40). • MAP-21. The federal authorization bill Moving Ahead for Progress in the 21st Century (MAP-21) authorized surface transportation programs for three years, FY 2013–2015 (40). • FAST Act. The current federal authorization bill, the Fixing America’s Surface Transportation Act (FAST Act), was passed by Congress and signed by the president in December 2015. The FAST Act reauthorizes surface transportation programs for five years through FY 2020 (41). ADA and FTA regulations require public transit agencies that provide local fixed­route transit services to operate com plementary paratransit services for people with disabilities . . .

Coordination of Public Transportation with Human Services Transportation 39 Based on the applicable authorization bill, Congress provides an annual appropriation that funds U.S. DOT programs. In FY 2015, Congress appropriated $80.5 billion to U.S. DOT for transportation for the United States and its territories. This represents about 2 percent of the total federal budget ($3.7 trillion) (42). The appropriation to U.S. DOT compares to $347 billion to DHHS for Medicaid in FY 2015 (43). The U.S. DOT agency responsible for public transportation funding is FTA. The federal appropriation to FTA for public transportation (all grant programs, capital, and operating) was $10.9 billion in FY 2015 under MAP-21, or about 15 percent of the U.S. DOT appropriation and 0.3 percent of the total federal budget (41, 44). The appropriation was $11.7 billion in FY 2016 and increases to $12.6 billion in FY 2020 under the FAST Act (44). After receiving the annual appropriation, FTA apportions formula program funds to states and urbanized areas and awards competitive discretionary grants (44). State DOTs, metropolitan planning organizations, and designated recipients in urbanized areas allocate the formula funds to public transportation providers. Based on data reported to the FTA National Transit Database (NTD), public transit agencies provided more than 10.5 billion passenger trips in 2015 (45). Public transit agencies in urbanized areas carried more than 98 percent of all transit passenger trips, and those in rural areas carried about 1.5 percent. Specialized transportation for seniors and people with disabilities represents one-half of 1 percent of all passenger trips (45). FTA Funding Programs FTA administers various funding programs for public transportation under the FAST Act. While no FTA program specifically funds transportation for medical trips, three FTA programs can be used to fund a part of the cost of operating public transportation to provide better access to economic and community activities including transportation for medical appointments and health services. The three FTA programs are (41): • 49 U.S.C. Section 5307—Urbanized Area Formula Grants authorizes federal assistance for capital, planning, and, in some cases, operating assistance for public transportation in urban- ized areas. An urbanized area is an area with a population of 50,000 or more that has been designated as such by the U.S. Census Bureau. • 49 U.S.C. Section 5311—Formula Grants for Rural Areas provides formula funds to states to provide capital, planning, and operating assistance to support public transportation in rural areas. A rural area is an area with a population of less than 50,000. • 49 U.S.C. Section 5310—Formula Grants for the Enhanced Mobility of Seniors and Indi- viduals with Disabilities provides formula funds to states and large urban areas to meet the transportation needs of seniors and people with disabilities. The FAST Act also encourages coordination of public transportation and human services transportation programs, and provides funding for the FTA pilot program for innovative coordinated access and mobility grants. 49 U.S.C. Section 5307—Urbanized Area Formula Grants. The largest FTA grant program, Section 5307, provides grants to urbanized areas to support public transportation (46, 47). Eligible Recipients. Section 5307 funding is available to designated recipients that must be public bodies with the legal authority to receive and dispense federal funds. For urbanized areas with a population of 200,000 or more (large urban areas), FTA apportions Section 5307 formula funds to the designated recipient(s) in each urbanized area. For urbanized areas with a 49 U.S.C. Section 5307 . . . provides grants to urbanized areas to support public transportation.

40 Handbook for Examining the Effects of Non-Emergency Medical Transportation Brokerages on Transportation Coordination population of 50,000 to 199,999 (small urban areas), FTA apportions Section 5307 funds to the governor or governor’s designee as the designated recipient. The designated recipient(s) can then sub-allocate funds to public transit providers and local governmental authorities. Eligible Expenses. Eligible uses of Section 5307 funds include planning, engineering, and capital investments. All preventive maintenance and some ADA paratransit service costs are considered capital costs. For urbanized areas with population less than 200,000, operating assistance is an eligible expense. For urbanized areas with population more than 200,000, operating assistance is an eligible expense only if a FAST Act special rule applies. The special rule applies to public transit agencies in large urban areas that operate 100 or fewer buses in fixed-route or demand-response services during peak periods. Transit agencies operating 76 to 100 buses in peak service may use up to 50 percent of the Section 5307 apportionment for operating expenses, and transit agencies operating 75 or fewer buses may use up to 75 percent of the Section 5307 apportionment for operating expenses. Federal Share. Under Section 5307, the federal share may not exceed 50 percent of the net operating cost (operating expenses less fare revenue). The federal share is 80 percent of eligible capital costs and preventive maintenance expenses. The federal share may be 90 percent for the cost of vehicle-related equipment attributable to compliance with the Clean Air Act and ADA. The federal share may also be 90 percent for projects or portions of projects related to bicycles (47). Under MAP-21, Section 5307 recipients could use 10 percent of the annual formula appor- tionment for ADA paratransit service, funded at 80 percent federal share. The FAST Act increases the spending cap for ADA paratransit services to 20 percent of a recipient’s annual formula apportionment if the grant recipient meets particular conditions. These conditions are to provide at least two of the following: • Provide travel training; • Train all operators in passenger safety, disability awareness, and safety training at least every two years; and • Have a memorandum in place with employers and the American Job Center to increase access to employment for people with disabilities (41). ADA paratransit services and the connection to Medicaid NEMT are discussed later in this chapter. 49 U.S.C. Section 5311—Formula Grants for Rural Areas. Section 5311 provides funding to states and Indian tribes to support public transportation in areas with a population of less than 50,000. In such areas, many residents often rely on public transportation to reach their destinations, including medical appointments (48). Eligible Recipients. FTA apportions Section 5311 funds to each state’s designated recipient (typically the state DOT) to allocate to providers of public transportation in rural areas. Eligible recipients include states and federally recognized Indian Tribes. Subrecipients may include state or local government authorities, Indian Tribes, private nonprofit organizations, and private opera- tors of public transportation or the intercity bus service that receive funds indirectly through a designated recipient. Eligible Expenses. Section 5311 provides capital, planning, and operating assistance to support public transportation in rural areas. Although Section 5311 does not specifically fund medical transportation, individuals in rural areas often require public transportation to access medical services. 49 U.S.C. Section 5311 provides funding to states and Indian tribes to support public transporta­ tion in areas with a population of less than 50,000.

Coordination of Public Transportation with Human Services Transportation 41 Federal Share. The federal share is 80 percent for capital expenses, administration, and planning and 50 percent for operating assistance. Section 5311 grant recipients may use up to 10 percent of the annual formula apportionment for ADA paratransit service, funded at 80 per- cent federal share. The FAST Act increases the spending cap for the ADA paratransit service to 20 percent of a recipient’s annual formula apportionment if the grant recipient meets particular conditions (see the discussion of federal share for ADA paratransit under Section 5307). 49 U.S.C. Section 5310—Formula Grants for the Enhanced Mobility of Seniors and Individuals with Disabilities. Section 5310 provides funding to states and large urban areas to meet the transportation needs of seniors and people with disabilities when the transportation service provided is unavailable, insufficient, or inappropriate (49). Although Section 5310 does not specifically fund medical transportation, the transportation needs of seniors and people with disabilities often include trips for medical appointments or other health services such as dialysis or physical rehabilitation. Coordinated Transportation Plan. FTA apportions Section 5310 formula funds to state DOTs for small urban and rural areas and to designated recipients in large urban areas. Desig- nated recipients have flexibility in how projects are selected for funding, but FTA requires proj- ects funded under the Section 5310 program to be included in a locally developed, coordinated human services transportation–public transportation plan. Eligible Recipients. Eligible recipients for Section 5310 funds include designated recipients in large urban areas, states, and state or local governmental entities that operate a public trans- portation service and are direct recipients under Section 5307 or Section 5311. Subrecipients may be local government authorities, private nonprofits, or private operators of public transpor- tation receiving the grant indirectly from direct recipients. Often, subrecipients of Section 5310 funds are human services transportation providers. Eligible Expenses. Section 5310 provides capital and operating assistance to improve the mobility for seniors and individuals with disabilities by removing barriers to transportation services and expanding transportation mobility options in all areas. Section 5310 provides funds for projects that: • Serve the special needs of transit-dependent populations beyond traditional public trans- portation service, where public transportation is insufficient, inappropriate, or unavailable; • Exceed the requirements of ADA; and • Improve access to fixed-route service and decrease reliance on complementary paratransit. At least 55 percent of Section 5310 funds must be used on capital or traditional projects such as the purchase of buses and vans; installation of wheelchair lifts, ramps, and securement devices; transit-related information technology systems; mobility management programs; and purchase of transportation services. The remaining 45 percent can be used for additional traditional or nontraditional projects, such as projects that go beyond the requirements of ADA. Federal Transportation Policy for Coordination The federal transportation policy for coordinating public transportation and human services transportation is established by executive order and by provisions of the federal transportation authorization bills since 2005. This section provides a brief history of the federal policy to encourage transportation coordination, and summarizes the functions and initiatives of a federal interdepartmental coordinating council. 49 U.S.C. Section 5310 provides funding to states and large urban areas to meet the transportation needs of seniors and people with disabilities when the transportation service provided is unavailable, insufficient, or inappropriate.

42 Handbook for Examining the Effects of Non-Emergency Medical Transportation Brokerages on Transportation Coordination Executive Order 13330. President George W. Bush issued Executive Order 13330 on the Coordination of Human Service Programs on February 24, 2004. The executive order established the national transportation policy for coordination and created a federal Interagency Trans- portation Coordinating Council on Access and Mobility (CCAM). The purpose of the council is to undertake collective and individual departmental actions to reduce duplication among federally funded human services and transportation services, increase the efficient delivery of such services, and expand transportation access for older individuals, persons with disabilities, persons with low income, children, and other disadvantaged populations within their own communities (50, 51). Federal Authorization Bills Require Coordination. Signed into law in 2005, SAFETEA-LU was the first federal transportation authorization bill to stipulate that public transit agencies should coordinate public transportation with human services transportation. Starting in fiscal year 2007, FTA established a requirement for a locally developed, coordinated public transit– human services transportation plan as a condition of receiving funding for certain programs directed at meeting the needs of seniors, individuals with disabilities, and low-income persons (51). Under SAFETEA-LU, FTA required projects funded through three programs to be derived from a locally developed, coordinated public transportation–human services transportation plan. The three programs were Section 5310 Elderly Individuals and Individuals with Disabilities, Section 5316 Job Access and Reverse Commute, and Section 5317 New Freedom. The next federal transportation authorization bill, MAP-21, consolidated two grant programs (Section 5316 and Section 5317) with other formula funding programs and revised the require- ments for a coordinated transportation plan. Under MAP-21, Section 5316 was consolidated into Section 5307 and Section 5311. Relevant Section 5316 projects continued to be funded under these two programs. Under MAP-21, Section 5317 was consolidated into Section 5310. Projects selected for funding under Section 5310 must be included in a coordinated transporta- tion plan (46). The revisions under MAP-21 carried through into the FAST Act, and FTA continues to require projects funded under the Section 5310 program to be included in a coordinated public transportation–human services transportation plan (41, 46, 49). Coordinating Council on Access and Mobility. CCAM was established by Executive Order 13330 in 2004, and the FAST Act calls for CCAM to update a strategic plan on transpor- tation coordination across federal agencies (50, 51). CCAM consists of representatives from the following federal departments: U.S. DOT (chair), DHHS, the Department of Labor, the Department of Education, USDA, the Department of Veterans Affairs, HUD, the Department of Interior, the Office of the Attorney General for the Department of Justice, the Social Security Administration, and the National Council on Disability. According to Executive Order 13330, the functions of CCAM are as follows: • Promote interagency cooperation and the establishment of appropriate mechanisms to minimize duplication and overlap of federal programs and services so that transportation- disadvantaged persons have access to more transportation services; • Facilitate access to the most appropriate, cost-effective transportation services within existing resources; • Encourage enhanced customer access to the variety of transportation available; • Formulate and implement administrative, policy, and procedural mechanisms that enhance transportation services at all levels; and • Develop and implement a method for monitoring progress on achieving the goals of this order. . . . SAFETEA­LU was the first federal transportation authorization bill to stipulate that public transit agencies should coordinate public transportation with human services transportation.

Coordination of Public Transportation with Human Services Transportation 43 The FAST Act directs CCAM to develop a strategic plan that will (41, 46): • Outline the role and responsibilities of each federal agency with respect to local transportation coordination, including NEMT; • Identify a strategy to strengthen interagency collaboration; • Address outstanding recommendations previously made by the council to develop a cost- sharing policy and to increase participation by recipients of federal grants in locally developed, coordinated planning processes; • Address GAO recommendations for local coordination of transportation services (32, 33); and • Examine and propose changes to federal laws and regulations that will eliminate federal barriers to local transportation coordination, including NEMT. Coordinated Access and Mobility Pilot Program The FAST Act created a new discretionary pilot program for innovative coordinated access and mobility. The objectives of the pilot program are to assist in financing innovative projects for the transportation-disadvantaged population (older adults, individuals with disabilities, and individuals with low income) and to improve the coordination of public transportation, human services transportation, and NEMT. Authorization for the pilot program was $2 million in FY 2016 and increases to $3.5 million in FY 2020 under the FAST Act (44). FTA launched the initial pilot program by announcing the Ride to Wellness demonstration projects in November 2016. The goals of the demonstration grants are to: • Develop replicable, innovative, sustainable solutions to health care access challenges; • Foster partnerships between health, transportation, home, and community-based services to collaboratively develop and support solutions that increase health care access; and • Demonstrate the impacts of transportation solutions on improved access to health care and health outcomes and reduced costs to the health care and transportation sectors. Ride to Wellness demonstration projects are expected to build community partnerships that break down industry silos, leverage existing resources, and enhance mobility for targeted groups. Why Coordinate NEMT with Public Transportation? As discussed previously, Medicaid NEMT is the largest source of federal revenues for human services transportation. Public transit agencies often attempt to coordinate NEMT with public transportation. The purpose of this section is to explain why coordination offers opportunities for NEMT and public transit agencies, and to describe some of the challenges. Opportunities for Coordinating NEMT with Public Transportation The opportunities for coordinating NEMT with public transportation are summarized in Table 4. Public Transportation Expertise and Resources Public transportation providers that are recipients of federal funds are required to comply with FTA regulations, and subrecipients may be required to comply with additional state regulations. Coordinating with public transportation can help NEMT providers to benefit from compliance with FTA and state regulations in the following ways (46): • Provide employee training for vehicle operators to ensure proficiency in safe vehicle opera- tions, equipment safety, and customer service; • Require testing for employees for alcohol and controlled substances; Ride to Wellness demonstration projects are expected to build community partnerships that break down industry silos . . . and enhance mobility for targeted groups.

44 Handbook for Examining the Effects of Non-Emergency Medical Transportation Brokerages on Transportation Coordination • Require vehicle operators to meet U.S. DOT physical examination by a licensed medical examiner at least every 24 months; • Ensure compliance with requirements for ADA in operations, vehicles, and facilities; • Provide a vehicle maintenance program to ensure a state of good repair; • Ensure transit vehicles meet federal performance standards for maintainability, reliability, safety, structural integrity, fuel economy, emissions, and noise; and • Benefit from investments in technology for safe operations, good vehicle maintenance, and convenience for passengers. Federal cost principles enable public transit agencies to share the use of vehicles if the cost of providing transportation to the community is also shared (52). This maximizes the use of available transportation vehicles and facilitates access to community and medical services, employment and training opportunities, and other necessary services for seniors, individuals with disabilities, and persons with low income. Such arrangements can enhance transportation services by increasing the pool of transportation resources, reducing the amount of time that vehicles are idle, and reducing or eliminating duplication of routes and services in the community. Medicaid benefits in lower cost for NEMT when public transit agencies share the use of transit vehicles. Coordinated Public Transportation–Human Services Transportation Plan According to provisions of federal authorization bills SAFETEA-LU, MAP-21, and the current FAST Act, public transit agencies are expected to coordinate public transportation with human services transportation. Authorized in 2005, SAFETEA-LU was the first federal trans- portation authorization bill to stipulate that public transit agencies should coordinate transpor- tation services. MAP-21 included the requirement for a locally developed, coordinated public transportation–human services transportation plan as a condition of receiving Section 5310 funds (46). The provisions of MAP-21 carried through in the FAST Act, and FTA continues to require projects funded under the Section 5310 program to be included in a coordinated trans- portation plan (49). The Section 5310 program provides funding to meet the transportation needs of seniors and people with disabilities, many of whom need access to medical services. Opportunity Description Benefit from the cost efficiencies of fixed- route public transportation Where appropriate, individuals can travel to medical appointments on fixed-route public transportation for the fare. Public transit agencies benefit from NEMT riders on fixed-route services to increase productivity and cost-effectiveness. Brokers and MCOs benefit from the lowest cost for NEMT trips. If the state Medicaid agency directly contracts for NEMT, the state benefits from the lower cost. Avoid service duplication; increase service productivity and efficiency Coordinating transportation can improve the efficiency of transportation services in a community by reducing unnecessary redundancies in service and more efficiently using existing transportation resources (e.g., vehicles, drivers, and administrative staff). Leverage public transportation expertise and resources Coordinating NEMT with the local public transportation provider can help to make full use of the required compliances with FTA and state regulations, increasing the safety and quality of service for NEMT. Federal cost principles enable public transit agencies to share the use of vehicles to provide NEMT. Follow a coordinated public transportation– human services transportation plan The coordination of NEMT with public transportation and other human services transportation programs can better meet the needs of transportation-disadvantaged individuals for all trip purposes. Provide local match for FTA funding programs The revenues earned by a transit agency from contracts to provide demand-response NEMT can be applied as a local match for FTA funding programs. The contract can be with the state Medicaid agency as a direct contractor or with a broker or MCO as a subcontractor. Table 4. Opportunities for coordinating NEMT with public transportation. Federal cost principles enable public transit agencies to share the use of vehicles if the cost of provid­ ing transportation to the community is also shared.

Coordination of Public Transportation with Human Services Transportation 45 The coordinated transportation plan must be developed and approved through a process that includes participation by seniors; individuals with disabilities; representatives of public, private, and not-for-profit and human services transportation providers; and other members of the public (50). The coordination of NEMT with public transportation and other human services transportation programs can better meet the needs of transportation-disadvantaged individuals for all trip purposes. Benefits to Increase Service Productivity and Efficiency The benefits of coordinating NEMT and public transportation programs include the following (36): • Make the most efficient use of limited transportation resources (e.g., vehicles, drivers, and administrative staff) by avoiding duplication caused by overlapping services. • Reduce unnecessary redundancies in service that often result from multiple providers operating uncoordinated services. • Schedule shared rides that can lead to significant reductions of operating costs (per trip) for transportation providers and the programs they serve. • Offer Medicaid beneficiaries easier access to transportation for non-medical purposes. People in need of transportation also benefit from the convenience of coordinated transporta- tion services to serve multiple trip purposes. Cost-Efficiency of Passenger Fares for Fixed-Route Public Transportation If available for the trip and appropriate for the Medicaid beneficiary, fixed-route transit is the lowest cost for NEMT. If a Medicaid beneficiary makes an NEMT trip on fixed-route public transit, the cost to Medicaid is the transit fare. The fare for fixed-route transit pays for a portion of the cost of the service, similar to the co-pay for a medical service. Public transit agencies benefit from adding NEMT riders on fixed-route transit to increase productivity (passengers per hour) and cost-effectiveness (cost per passenger). Brokers and MCOs benefit from the lowest cost for NEMT trips. If the state Medicaid agency directly contracts for NEMT (fee for service), the state benefits from the low cost for NEMT. Nationally, passenger fares provided 23.2 percent of total operations and capital cost for public transportation reported to the NTD in FY 2015. The remainder of the cost of public transporta- tion, including NEMT trips, is subsidized from federal, state, and local sources of revenue (53). NEMT Contract Revenue as Local Match for FTA Funding Programs FTA grant recipients must match the federal share with a local match of 10 to 20 percent for capital projects and 50 percent of the net operating cost. Passenger fares may not be used as local match. Funds from federal programs other than U.S. DOT can be used as local match for FTA grants. The non–U.S. DOT federal funds must be eligible to be used for transportation according to the regulations and laws of the federal program that provided the funds. Revenues received from service contracts with state, local, or human services agencies can be used as local match for FTA funds. Public transit agencies may use revenues earned from contracts to provide NEMT as local match for FTA grants. The public transit agency may contract directly with the state Medicaid agency or subcontract to a state or regional broker or MCO. Rural public transportation agencies are more likely than agencies in urban areas to rely on revenues received through service con- tracts as local match. NEMT is an important source of contract revenue for many rural public transportation agencies. If available for the trip and appropriate for the Medicaid beneficiary, fixed­ route transit is the lowest cost for NEMT.

46 Handbook for Examining the Effects of Non-Emergency Medical Transportation Brokerages on Transportation Coordination Challenges of Coordinating Public Transportation and NEMT The challenges of coordinating public transportation and NEMT for public transit agencies are summarized in Table 5. Coordination Should Not Conflict with the Medicaid Program According to CMS, DRA did not specifically address coordinated transportation. Coordination of transportation services is considered a positive goal, and CMS encourages states to develop coordinated transportation systems in order to promote efficiency and cost-effectiveness. How- ever, Medicaid funds may only be used for Medicaid services provided to eligible beneficiaries. When administering the Medicaid NEMT program, states must comply with all applicable Medicaid policies and rules regardless of whether the Medicaid rules interfere with their ability to coordinate their transportation efforts (29). Medicaid Funds Only for Medicaid Beneficiaries to Authorized Medical Services Medicaid will only permit NEMT funds to be used for transportation to authorized medical services provided to eligible Medicaid beneficiaries. For any trip other than NEMT, a Medicaid beneficiary must schedule and pay the fare separately. Medicaid considers providing NEMT for any other trip purpose as possible evidence of fraud or abuse. These interpretations can create challenges for a public transit agency that provides public transportation for all trip purposes. Challenge Description Coordination should not conflict with the Medicaid program For initiatives to coordinate NEMT with public transportation, coordination is appropriate as long as it does not conflict with the policies and rules of the Medicaid program. For example, NEMT brokers can participate in a locally developed, coordinated human services transportation–public transportation plan. Medicaid funding is limited to authorized services Medicaid will only permit NEMT funds to be used for transporting eligible Medicaid beneficiaries to authorized medical services. Differences in service requirements Coordinating NEMT and public transportation may require the public transit agency to adapt to different service requirements of the state Medicaid agency, broker, and/or MCO. Adapting to different service requirements may increase costs to the public transit agency. Any costs not reimbursed by the Medicaid agency must be subsidized from other public resources. Requirements for NEMT documentation NEMT requires verification that the Medicaid-eligible passenger receives an authorized medical service on the date of transportation. Shifts from NEMT to ADA paratransit Some brokers may shift NEMT clients to the ADA paratransit program to reduce operating expenses. The public transit agency must serve any trip request for an ADA-eligible rider. Unless the broker negotiates a reasonable payment for the service, the public transit agency recovers only the fare for the ADA trip, not the cost of the trip. Contract rates that may not cover the fully allocated costs of providing NEMT Medicaid expects to pay only the direct costs for the eligible NEMT trip. Medicaid will not pay shared costs when NEMT is part of coordinated services. A broker has an incentive to purchase from the lowest-cost transportation provider. The public transit agency’s reimbursement rate for providing NEMT may not cover the fully allocated costs of providing the service. If it does not, the public transit agency must find some other source of public subsidy. Prohibition against self-referral for governmental NEMT brokers If a public transit agency intends to be a governmental broker for NEMT, the public transit agency must meet certain requirements set out in DRA in order to be the provider of NEMT transportation. Table 5. Challenges of coordinating NEMT with public transportation. Medicaid will only permit NEMT funds to be used for transportation to authorized medical services provided to eligible Medicaid beneficiaries.

Coordination of Public Transportation with Human Services Transportation 47 CMS guidance for NEMT also does not permit charging for a trip when the Medicaid benefi- ciary no-shows or late-cancels the NEMT service. The transportation provider must absorb the cost of traveling to pick up the passenger who no-shows and the cost of inefficiencies in the schedule caused by a late cancel. These costs can be significant for long-distance trips, particularly in rural areas. Medicaid considers charging for a passenger no show or late cancellation as possible evidence of fraud or abuse. The Medicaid rules define abuse as practices “inconsistent with sound fiscal, business, or medical practices, and result in an unnecessary cost to the Medicaid program, or in reimburse- ment for services that are not medically necessary” (54). Examples of NEMT provider abuse may include billing Medicaid when taking a beneficiary to pick up groceries or run other errands and billing Medicaid for a trip when the beneficiary did not show for the service. Differences in Service Requirements Public transit agencies and the NEMT contracting agency may have different and sometimes conflicting policies and practices. For example, a public transit agency and the state Medicaid agency may have different expectations for demand-response shared trips, reservation windows, and guarantees for travel time. A public transit agency may have to incur additional cost to meet the service requirements of the state Medicaid agency, broker, or MCO. The actual cost may be above the negotiated rate for the NEMT trip. Documentation of the NEMT Service As outlined by the Social Security Act, Medicaid reimbursement requires verification that the NEMT passenger receives an eligible medical service on the date of transportation. Documenta- tion may also be required for canceled trips. Other documentation may include obtaining an original signature from the Medicaid beneficiary when boarding or alighting the transit vehicle. These documentation requirements are not a normal part of general public transportation ser- vice and therefore may place additional administrative requirements on public transit agencies providing NEMT. Shifts from NEMT to ADA Paratransit In some states, the state Medicaid agency or an NEMT broker may shift NEMT clients to the public transit ADA paratransit program. Some Medicaid beneficiaries have a disability and may be ADA eligible. Given ADA regulations that prohibit capacity constraints, a public transit agency cannot deny a trip request from an ADA-eligible traveler. If NEMT trips are requested by (or on behalf of ) ADA-eligible riders, public transit agencies must absorb NEMT trips within the ADA paratransit program. A growth in demand for ADA paratransit services stemming from shifts of NEMT trips to public transportation can be a significant issue for some public transit agencies. Typically, the fare for an ADA paratransit trip covers only a small portion (7.5 percent) of the cost of the service (55). CMS has stated that DRA will permit a state Medicaid agency or broker to pay more than the fare for an NEMT trip using ADA paratransit but no more than the rate charged to other human services agencies for paratransit (29). This guidance can alleviate the concern of costs transfer- ring from Medicaid to public transportation. NEMT Rates May Not Cover Fully Allocated Costs for Public Transportation Medicaid expects to pay only the direct (marginal) costs for NEMT trips. The public tran- sit agency’s price for providing NEMT may not cover the fully allocated costs of providing the service. Medicaid expects to pay only the direct (marginal) costs for NEMT trips.

48 Handbook for Examining the Effects of Non-Emergency Medical Transportation Brokerages on Transportation Coordination Fixed, Variable, and Marginal Cost. Fixed cost, variable cost, and marginal cost are impor- tant concepts to understand in the economics of public transportation and NEMT: • Fixed costs are business expenses that do not change with the amount of service (e.g., admin- istrative salaries and facility depreciation). • Variable costs change according to the amount of service provided (e.g., driver wages, fuel costs, and vehicle maintenance costs). • Marginal cost is the change in total cost for one additional NEMT trip; usually the marginal cost is made up of variable costs only. Fully Allocated Cost Versus Marginal Cost. A public transit agency looks to negotiate a price for NEMT demand-response service to cover the fully allocated cost of the NEMT trip. Fully allocated costs include the variable costs of the NEMT trip plus a share of the fixed costs (36). Some public transit agencies also seek to recover a portion of the capital investment in the vehicles used for NEMT services. However, according to CMS, Medicaid should be responsible for only the direct costs of delivering the specific NEMT trip and not be expected to pay for any shared costs or the cost of a vehicle purchased with public funds. Importance of Negotiating a Reasonable Price. When a public transit agency provides NEMT directly to the state Medicaid agency for a fixed fee for service, the restriction to pay only the direct (marginal) cost may apply. When a public transit agency negotiates a subcontract with a broker or MCO that receives a capitated payment for NEMT, the transit agency may be able to negotiate the price. As discussed previously, the public transit agency should have a cost allocation plan to document actual fixed and variable costs as a basis for negotiating price. If a public transit agency operates NEMT for a price less than the variable costs and the related direct fixed costs, a financial subsidy is required from another source. If a public transit agency does not recover the costs of providing the contracted NEMT services, the public transit agency may operate at a financial deficit that will negatively affect the transit agency’s ability to sustain public transportation services. Payer of Last Resort. The Medicaid program is the payer of last resort. Some state Medicaid agencies interpret that policy very strictly. For example, one state Medicaid agency considers public transportation as an available resource and expects any Medicaid beneficiary to use public transportation. Under this interpretation, the state does not reimburse for the cost of the fare. If a Medicaid beneficiary is eligible for ADA paratransit, the individual is expected to use the public transit service and pay personally for the fare, rather than schedule the trip through NEMT (56). In such a situation, the public transit agency and the passenger bear the entire cost of NEMT, with no payment from Medicaid. In another state, the state Medicaid agency requires the state revenues for seniors to be applied first, before Medicaid. In this case, the state Medicaid agency pays only 15 percent of the balance of the cost of an NEMT trip for a person 65 years of age or older. Prohibition Against Self-Referral for Governmental Brokers If a public transit agency intends to be a governmental broker for NEMT, the public transit agency must meet certain requirements in order to be the provider of NEMT transportation. If NEMT trips are provided by the transit agency (or subcontracted to another public transit agency), then specific financial conditions must be met, according to the DRA: • Separate accounting system. The public transit agency that acts as a broker must maintain a separate accounting system for the brokerage, and costs charged to the brokerage must be completely separate from all other programs. • Exclude shared costs. Medicaid will not pay NEMT costs that are shared with or allocated from a parent or related governmental entity. The Medicaid program is the payer of last resort.

Coordination of Public Transportation with Human Services Transportation 49 • Lowest cost. The public transit agency that serves as the broker must document that its service is the most appropriate and lowest-cost alternative with respect to an individual’s specific transportation needs. • Limits on charges for public transportation. The public transit agency that is the broker must document the agency is charging no more than the standard fare for fixed-route transit or no more than the rate charged to other state human services agencies for comparable demand- response transportation. Summary Human services transportation refers to a range of transportation services designed to meet the needs of individuals who have difficulties providing their own transportation due to age, disability, or income, sometimes referred to as transportation-disadvantaged populations. NEMT is an example of human services transportation for Medicaid beneficiaries who need to get to and from authorized medical services and have no other means of transportation. In this handbook, public transportation refers to the transportation programs and services that are eligible for federal funding from FTA. The purpose of providing public transportation is to offer the general public better access to economic and community activities such as employ- ment, education and training, medical appointments and health services, human services, and shopping. Public transportation providers are interested in providing NEMT for low-income passengers to complement other transportation services and to earn revenues that can provide local match for federal transit grants. This chapter provides information to understand the opportunities and challenges for coordi- nating human services, public transportation, and NEMT. The chapter also discusses the federal transportation policy to coordinate public transportation and human services transportation, and describes initiatives by CCAM to strengthen interagency collaboration. The next chapter in this handbook documents the effects on human services and public transportation of the different models for providing NEMT based on case study research in seven states.