The ROI on NEMT: Strong Evidence Base with Opportunities for Greater Transparency

As healthcare costs in the United States continue to climb, and a greater emphasis is placed on measuring the value obtained for each dollar we spend, the same rules apply for non-emergency medical transportation (NEMT). Spending on transportation – the latest estimates indicate that Medicaid spends $3 billion each year, while Medicare Advantage plans and organizations that administer clinical trials might spend an additional $3 billion – has risen, mostly as a function of new Medicaid beneficiaries who joined after the expansion under the Affordable Care Act. The rising demand comes at a time of considerable budget pressure for state Medicaid programs, as expensive and curative new drugs come onto to the market.

In a world of almost unlimited needs and limited resources, it is important to understand the cost-effectiveness of NEMT programs in their current state – as well as how greater transparency and data capture will enable NEMT to become even more cost-saving while also serving ever higher numbers of patients. While it is commonly understood that NEMT reduces hospitalizations and readmissions, our investments cannot be a blank check. We can do a better job of understanding the extent to which NEMT saves money and improves outcomes, as well as for which diseases and populations such investments are most effective. Before we get too far in the future, let us examine the bedrock of existing evidence with regard to the cost-effectiveness of NEMT.

Back in 2005, the Transit Cooperative Research Program (TCRP) of the Transportation Research Board of the National Academies of Science commissioned a report that examined the costs and benefits of NEMT. The study authors, from the Michigan-based Altarum Institute, analyzed 12 preventive services and chronic conditions and found that providing NEMT is cost-effective in all cases. Cost-effective means that each additional dollar spent on NEMT for patients needing those services increases quality of life enough to justify the extra cost. Furthermore, in the case of four conditions (prenatal care, asthma, heart disease and diabetes) the authors found NEMT to be cost-saving, meaning that each additional dollar spent on NEMT for patients needing those services actually reduces total health care spending. (1)

These findings apply to the nation, but since NEMT programs are administered on a state level, it is relevant to consider local effects. In 2008, researchers at Florida State University evaluated the cost-effectiveness of Florida’s NEMT program. Based on conservative estimates of the number of avoided hospitalizations and nursing home admissions due to transportation assistance, the researchers found that each dollar invested in NEMT saved the state $11.08. (2) That amounts to an ROI of 1,108 percent – a return at which any businessperson or policy maker would jump.

The exciting part is that NEMT is already cost-effective and cost-saving even though in most communities it is a fragmented, wasteful, unreliable system that lacks basic transparency. If you ask almost any patient or healthcare provider who has interacted with the entrenched patchwork of brokers and transportation providers, they will express a combination of dissatisfaction and exasperation. This state of affairs is not the fault of any one brokerage or driver – most NEMT services are run by good people who work hard and want to help patients reach care. The real problem is that the system lacks the technological sophistication needed to coordinate among stakeholders in a way that provides a more reliable, safe and enjoyable experience for patients and a more cost-effective, transparent, data-rich experience for insurers, providers and public officials tasked with managing and improving programs. With NEMT, we face a collective problem that will require collaborative solutions.

Imagine how much more cost-saving programs would be, and how many more patients they could serve, if the systems were better coordinated, the black boxes were opened up, and the people in charge did not have to deal with harmful silos. There are three main steps that will enable this transformation to happen over the coming years.

  1. More efficient, lower-cost forms of transportation will be made available to patients. Recent years have seen the emergence of digitally-enabled, on-demand transportation modalities that provide more timely service at a lower cost when compared with traditional fleets of taxi cabs and van services. While these modalities have yet to see systematic reimbursement (outside of small demonstrations) from Medicaid and other payers, it is a matter of when and not if. When unit ride costs are lower, the cost savings become higher.
  2. Better software will enable route optimization and speed up all other NEMT processes. Right now, NEMT companies use an array of legacy systems to organize their dispatch and routes – from telephone and paper all the way up to electronic routing software. The fact of the matter is that the current level of technology adoption is sub-optimal compared to the level of technology that is available for deployment. The software of the near future will optimize routes, speed up eligibility checks and ride verification, automate documentation, and decrease payment delays. All of this will reduce costs and enable more people in need to access transportation.
  3. Data capture at the unit ride level will enable continuous evaluation and improvement. This is perhaps the change with the most long-term potential to improve transportation and lower costs. Right now, payers largely do not have access to ride-level data and, at best, see summary reports of overall cost and utilization. What we need is rigorous unit ride-level data capture in order to understand the cost, quality, safety, on-time performance and patient experience. As the adage goes, you cannot manage what you do not measure. Higher-granularity data capture will enable insurers and ride coordinators to better understand their patient populations and continuously improve service over time.

According to the Government Accountability Office (GAO), 42 programs across six federal departments provide funding for NEMT, in addition to the state-level programs that organize day-to-day spending and provide direct oversight. This administrative duplication and lack of central coordination creates the potential for waste and mismanagement. Ride Health and other organizations who care about the millions of patients served under NEMT programs must work to communicate the value and cost-savings of NEMT while striving to put in place the critical infrastructure needed for its continuous improvement.

(1) Wallace, R., Hughes-Cromwick, P., Mull, H., Bologna, J. Cost Benefit Analysis of Providing Non-Emergency Medical Transportation. Transportation Research Board: Washington, D.C. October 2005.

(2) Cronin, J. Florida Transportation Disadvantaged Programs: Return On Investment Study. The Marketing Institute at Florida State University College of Business. March 2008.