On June 30, 2025, New York Attorney General Letitia James announced a major takedown involving 25 transportation companies across the state that allegedly defrauded Medicaid. The announcement is the result of investigations launched earlier this year into companies reimbursed by Medicaid for transporting patients to and from medical appointments.
In January, Attorney General James revealed that her office had opened new investigations into the Medicaid-funded transportation industry. These investigations, led by the Office of the Attorney General’s (OAG) Medicaid Fraud Control Unit (MFCU), uncovered widespread fraud by companies entrusted with providing non-emergency medical transportation.
As a result of the investigations, 16 transportation companies have agreed to pay back more than $13 million through civil settlements. In addition, the OAG has filed lawsuits against seven transportation companies that were previously issued cease and desist letters but continued their fraudulent conduct. The office has also secured the convictions of two individuals and filed charges against a third for their roles in these schemes.
Medicaid reimburses authorized transportation providers for taking eligible patients to and from covered medical appointments. To qualify, companies must enroll as Medicaid providers, use licensed drivers and appropriate vehicles, and submit claims only for completed trips. Providers are reimbursed based on a standard base rate, plus mileage and tolls when applicable.
However, the OAG found that many companies abused this system by billing for trips that never occurred, inflating mileage, adding false toll charges, and using unlicensed drivers. Some companies went further by offering kickbacks to Medicaid recipients in exchange for requesting transportation services, a practice that not only defrauds the system but also puts vulnerable individuals at risk. In several cases, companies exploited Medicaid recipients undergoing substance abuse treatment to facilitate their fraudulent billing schemes.
Compliance Perspective
Issue
Nursing homes that coordinate non-emergency medical transportation for residents must ensure that transportation vendors comply with Medicaid and Medicare requirements. Inadequate vendor screening, failure to confirm service delivery, or improper billing oversight can expose facilities to legal and financial consequences, including potential exclusion from federal healthcare programs. It is essential that nursing homes have strong internal policies, training, and auditing procedures to avoid fraudulent practices and ensure that transportation services are legitimate and medically necessary.
Discussion Points
- Ensure that your facility has comprehensive policies and procedures in place for screening and approving transportation vendors, including verification that vendors are not excluded from Medicare or Medicaid. These procedures should be regularly reviewed and updated to reflect any changes in regulations.
- Provide training for relevant staff involved in selecting and managing transportation vendors. Training should include how to verify vendor compliance with state and federal requirements, identify potential false claims, and ensure accurate documentation of services provided.
- Conduct periodic audits of transportation records and billing submissions to verify that services were provided, medically necessary, and billed appropriately. Use audit findings to address discrepancies and reinforce staff accountability for compliance.
*This news alert has been prepared by Med-Net Concepts, Inc. for informational purposes only and is not intended to provide legal advice.*