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Joel Davis’ State of the Industry Report
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TABLE of CONTENT
Introduction 4
A Business Philosophy to Ensure Profitability 10
Three Fundamental Rules of NMP 11
The Influence of Medicaid Brokers in a Changing Industry 12
The Medicaid Broker Playbook 69
Keys to Thriving in Broker Infested Waters 79
Subcontracting to Increase Profitability 81
Managed Care Consortium Agreement 90
Obamacare, the BIG Picture 103
The Influence of Obamacare in a Changing Industry 113
Increasing the Size of Medicaid & Impending Effects 114
What Does Obamacare Mean for Your Business? 120
Do You Need to Provide Health Benefits to Your Employees? 128
Ramifications of Obamacare 135
Concierge Care Medicine 145
Why You Need to Diversify Your Business 149
Leveraging New Opportunities, Waiver Programs 151
Leveraging New Opportunities, School Districts & Universities 158
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Diversifying Your Business Model, Strategy 1 174
Diversifying Your Business Model, Strategy 2 184
Diversifying Your Business Model, Strategy 3 194
Diversifying Your Business Model, Strategy 4 200
Diversifying Your Business Model, Strategy 5 205
Why You Need to Build, Grow, Save and Create Wealth 214
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INTRODUCTION
Congratulations on investing in this material! I sincerely commend and compliment you on your
investment because, in an effort to better your business, your investment illustrates your desire and
eagerness to learn as much as possible about our changing industry. Needless to say, as I will
demonstrate with considerable supporting evidence our industry is definitely experiencing a great deal
of change. The size of our niche market is definitely increasing. But with a troubled economy and
changing policies, as entrepreneurs we have many challenges to contend with – challenges that
definitely influence our bottom line and are not unique just to the NEMT industry!
I am going to provide you with a lot of information in this resource. The further we proceed, the more I
will demonstrate how a wide variety of variables are interrelated and influence our industry. Let me
start by sharing a recent article that underscores the level of opportunity that grows before us:
HOW BOOMERS WILL SHIFT THE ECONOMY
- TOM SIGHTINGS, U.S. NEWS & WORLD REPORT
As people age, they spend differently than when they were younger. Knowing which
industries will benefit could help you grow your nest egg.
In the year 2000, approximately 2.5 million Americans turned 65. This year, more than 3.5
million Americans will pass that milestone. And the number of people joining the ranks of
the elderly will keep increasing, at least for the next 20 years, as more and more baby
boomers hit their 60s, 70s and 80s. By 2030, the over-65 crowd will expand to 72 million
people, up from 40 million in 2010.
The increasing numbers of recent retirees, along with the hordes waiting at the gates, give
politicians headaches as they try to figure out how to finance Social Security and pay the
health care bills covered by Medicare.
But for those of us looking to invest in the American economy, this burgeoning population
means an increasingly lucrative market for products and services focused on the elderly. By
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the time they're done, some 78 million baby boomers will have survived millions of hip
replacements and heart transplants, swallowed trillions of Advil and Viagra pills, and
consumed billions of boxes of bran and packages of prunes.
Despite the faltering economy of the past five years, American seniors are richer than ever,
in large part because more older people, especially older women, are working than in
previous decades. According to a 2012 report from the Federal Agency Forum, the number
of senior citizens living in poverty has declined from 15% to 9% since the mid-1970s, while
the proportion of older Americans enjoying a "high income" increased from 18% to 31%. So
even while the burgeoning number of retirees will strain government resources, they will
provide enormous moneymaking opportunities.
These people will travel. They will move to warmer and friendlier climates. Many will
manage their individual retirement accounts and 401k's through financial institutions. They
will buy long-term care insurance, pay rent to senior citizen facilities and drop an average of
$8,000 per funeral.
A great deal of time and research has been invested in the creation of this resource. I strongly
encourage you to read everything! Read everything, not to validate my efforts in the creation of this
resource, but rather, because I wish for you to learn and understand as much as possible about the
future of our industry, our economy, and business in general.
It would be easy for me to simply tell you what I know and continue to witness in working with
Transportation Providers around the country. However, my goal with this resource is to provide you
substantial evidence from a variety of sources so that you can draw your own sound conclusions. For
this reason, I have enclosed a wide variety of supporting data, facts, and predictions from news articles
and professional trade publications authored by physicians, economists, journalists, and associated
professionals.
As a disclaimer, be prepared - there are views that, as an entrepreneur who believes in the “American
Dream” of self-determination and independence, may disturb you. I share all such information with
you, good and bad, because knowledge is critical to your success. You need to understand what is
happening on a macro scale so that you are better equipped and poised to not only make more money
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in a troubled economy, but save and protect your growing wealth. Although you will be disturbed to the
point you will question if this is America, do not be disheartened. By reading, learning, and digesting all
of this information you will, by the end, be greatly inspired on how to make more money – in ways that
most business owners are completely unaware.
In reading, ask yourself “How will these changes affect my business? How do these changes provide me
with new opportunity? What action do I need to take to better protect and preserve my business and
enhance my profit-earning potential?”
If there is one thing that I can assure you, the way in which NEMT and Home Care business owners have
planned, prepared, and operated their businesses in the past is now obsolete. If you don’t adjust and
adapt to the changing economy and industry your business will fail. Trust me, I don’t say this to scare
you, but honestly, it’s true. Business as usual is no longer feasible. If you don’t change and adapt you
will eventually be out of business – and, you may be fined along the way too via the IRS (more on that as
we move forward)!
Consider Florida, a very popular and attractive state for elderly and retiring baby-boomers. Florida is a
microcosm of what is being experienced throughout the United States, Canada, and beyond. Consider
the following article that discusses concerns over one of the single most important elements essential to
our healthcare system – the number of competent and qualified doctors!
FLORIDA DOESN'T HAVE ENOUGH DOCTORS FOR MEDICAID EXPANSION, LOBBY GROUP SAYS
- Kathleen Haughney, Tallahassee Bureau, the Sun Sentinel
TALLAHASSEE - Brace yourself for longer lines at the doctor's office. Whether you're
employed and insured, elderly and on Medicare, or poor and covered by Medicaid, the
Florida Medical Association says there's a growing shortage of doctors — especially
specialists — available to provide you with medical care.
And if the Florida Legislature goes along with Gov. Rick Scott's recommendation to offer
Medicaid coverage to an additional 1 million Floridians — part of the Affordable Care Act
that takes effect next January — the FMA says that shortage will only get worse.
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"Florida needs more doctors and it needs more nurses, and it needs them working together
in teams," said Rebecca O'Hara, a lobbyist for the FMA.
About 15 million Floridians have health insurance today, and Obamacare, which requires
most adults to have coverage by January, could add as many as 2.5 million more. One
million would come through a potential expansion of the federal-state Medicaid program
that Scott announced this week he was backing. The others would be the result of new
mandates requiring employers and individuals to have insurance or be fined.
Currently, the state has 44,804 doctors, but about 5,600 of them are expected to retire in
the next five years. And even though Florida has opened three new medical schools in the
past dozen years, the state isn't producing as many doctors as it needs. Scott's budget this
year has $80 million to fund programs to train 700 new residents a year, in hopes they'll
remain in the state.
Of all patients, people covered by Medicaid may have the hardest time finding a doctor;
only 59 percent of the state's physicians are taking new Medicaid patients, according to a
Kaiser Health News study.
Committees in both the House and Senate have been meeting for the past two months to
discuss implementation of the Affordable Care Act. On March 4, they expect to see two
major studies by the Office of Economic and Demographic Research, one that looks at the
overall economic impact of the health-care overhaul and another that simply examines
Medicaid expansion. Scott, however, has already made clear how he feels about that.
On Wednesday, he unexpectedly announced that he had reversed his earlier, adamant
opposition and now wants a three-year expansion that would cover single adults and
families earning up to 138 percent of the poverty line; the costs would be fully covered by
the federal government. If the expansion is re-approved after three years, the federal
government is committed to paying no less than 90 percent of the cost.
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House and Senate leaders will begin their budget deliberations in the coming weeks, which
will include the decision over new residency slots, along with the debate over whether to
expand Medicaid. Many lawmakers have expressed opposition.
The federal government this week gave Florida preliminary approval of a plan that would
put most of Florida's current 3.3 million Medicaid recipients — and any added via expansion
— in some form of managed care, either HMOs or doctor-run networks, by 2014. In order
for HMOs or the provider service networks to get state-approved contracts, they must prove
they can provide "adequate" care, which means patients must be able to see a doctor in a
reasonable time. "It's their responsibility to have network adequacy," Negron said of the
private providers. "So, they'll be responsible for making sure people can get care with
network physicians."
Negron also noted that the amount doctors will be paid for seeing Medicaid patients is
rising, which may prompt more physicians to take them. As part of the health care law,
primary-care doctors will be paid as much for a Medicaid patient as they are under
Medicare, a 73 percent increase.
Health care advocates who back the expansion say they aren't worried either. Greg
Mellowe, policy director for health advocacy group Florida Chain, said the state needed to
carefully watch the situation as it develops, but added, "We don't believe that there is a
crisis brewing." Mellowe noted that many uninsured already receive care — often in
emergency rooms, which is more expensive — that hospitals aren't paid for. If many of
these patients have insurance coverage, he said, hospitals may see an opportunity to shift
resources to primary care settings.
Just in this single article, there are many topics and circumstances that affect our economy, the medical
industry in general, and your business specifically! And all of this is coming from various experts;
physicians, politicians, the Kaiser Health News, the Florida Medical Association, and more. So this is
not just Joel Davis telling you about the growing problems in a lack of doctors. Rather, “The Florida
Medical Association says there is a growing shortage of doctors – especially specialists.” Compounding
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this problem is that “Only 59 percent of the state’s physicians are taking on new Medicaid patients” –
and at a time when the federal-state government are exponentially expanding the Medicaid system!
The article explains how this dynamic shortage of doctors does not discriminate - it affects everyone
regardless of level of coverage; private health insurance, Medicare or Medicaid. Truly, demand is
increasing while supply is decreasing. To further compound the problem, funding is shifting and
changing. Needless to say, I trust that you’re seeing that these ingredients are a recipe for potential
catastrophic problems! Not even taking the NEMT industry into consideration, think of how the medical
industry itself is spiraling towards an even more precarious situation – one in which even “the experts”
are having a hard time finding consensus in predictions and solutions.
In coming chapters I’m going to show you how a lack of physicians persists in other states and how they
are attempting to resolve the shortfall. Honestly, it’s shocking! If I told you what these states are doing
you wouldn’t believe me – you would think I was crazy, hence, the reason why it’s important for me to
share articles from news and trade publications.
Despite all of the changes and circumstances, I will continue to share with you all possible ramifications
about the economy, our industry, and your business, and one very important lesson, a philosophy, that
you need to learn, internalize and regularly practice.
Now, before I share with you exactly what this very important philosophy is, let me preface everything
by telling you that, although it’s very short and simple, the practice of this philosophy can be more
difficult to implement than one might think. And yes, I am speaking from first-hand experience. Once
you have learned to master the use of this philosophy, I promise, it will liberate and empower you. You
will have greater discernment and a heightened sense of peace in making sound, critical business
decisions. I can’t tell you how many entrepreneurs have expressed appreciation for sharing this simple
philosophy and I am confident that you too will come to appreciate its simplicity.
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A BUSINESS PHILOSOPHY TO ENSURE PROFITABILITY
Alright, drum roll please! Here is one of the absolute most important business philosophies that you
absolutely need to learn, internalize, and regularly practice: NMP! Yes, that’s it, NMP! This philosophy
is so simple you can spell it out in texting language!
I know, I know. You’re asking “Joel, OMG, WTF is NMP?!” It stands for NOT MY PROBLEM!
Now before you get hot under the collar and contemplate throwing this resource away thinking I’m
crazy and that I cheated you because NMP is so anticlimactic, trust me, stick with it because starting in
the very next chapter NMP (and all of its powers and abilities) will be revealed and, I promise, you’re
going to be saying NMP is ingenious!
So what is NMP? NMP is the ability, the courage, the discipline, and the foresight to, when presented
with circumstances that are not favorable or advantageous to your business, stand firm and say “NO” –
that is Not My Problem. NMP is the establishment of sound boundaries that are designed to protect
and preserve your business. And yes, saying “No” is easier said than done especially when you’re being
enticed and pressured.
Again, momentarily I will begin sharing with you clear cut examples of where and why NMP is absolutely
critical to the welfare of your business. But in so doing, let me be clear. NMP is NOT the act of being
rude, crude, or selfish. In fact, especially because we are in an industry in which we are charged to help
the elderly and disabled, such characteristics are simply unacceptable. With our clientele, it is all the
more essential that we are inherently kind, giving, and generous. However, that doesn’t mean we allow
ourselves to be taken advantage of!
Let me be clear. I am a firm believer in the Law of Reciprocity – the more you give, the more you receive.
In fact, I am more than a believer. I am an advocate for and a product of this Law. As Luke 6:38 says,
“Give and it will be given to you. A good measure, pressed down, shaken together and running over, will
be poured into your lap. For with the measure you use, it will be measured to you.”
So to be clear, Not My Problem is not about withholding blessings or giving to others. Rather, NMP is
about establishing boundaries and sound practices to protect and preserve the viability of your business.
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THREE FUNDAMENTAL RULES OF NMP
Momentarily, we are going to dive in and begin discussing the Medicaid Broker system in detail – an
area where NMP, boundaries and barriers absolutely need to be implemented to protect your business.
In setting the stage for the Three Rules of NMP, let’s reiterate what we already know:
The elderly population is growing exponentially – This is great! It is a statistically proven fact
which leads to an increase in demand for various services and market opportunities
Transportation demand is increasing dramatically – This is obvious! With an increase in
population comes an increase in medical appointments, treatments, and more
Medicaid and Managed Care are dramatically expanding market share and creating changes in
funding and policies – This sounds good, in theory. But the Government, in its infinite wisdom,
is forever interjecting new mandates into the market system; thus, requiring business owners to
be current about policy changes in addition to implementing creative solutions
The cost of care and patient independence is leading to more seniors remaining at home –
Awesome! Obviously, this leads to more market opportunity for inter-related elderly services
Hospitals are incorporating more and more outpatient procedures – Good for us! Due to fear of
penalty from Obamacare and technological advances, ambulatory surgeries and outpatient
procedures are projected to further increase in volume
Taking all of these market variables into consideration predicts new market opportunities are definitely
on the horizon. However, this does not mean that every opportunity is for you! Discernment will reveal
your direction. There are three fundamental rules to internalize and put into practice:
RULE 101: YOU’RE RESPONSIBLE FOR YOUR OWN SUCCESS – “You didn’t build that” slogan doesn’t apply
– you built and you are responsible for every element of your business. There are NO bailouts if you fail!
RULE 102: IF IT ISN’T PROFITABLE, YOU’RE NOT DOING IT! - Stop chasing “Shiny Objects” looking for
quick cash. Pursue sound, methodical strategies that focus on “Select Profitability!”
RULE 103: IT’S BETTER TO NEED IT AND NOT HAVE IT THAN HAVE IT AND NOT NEED IT – do not become
financially over extended (chasing “Shiny Objects”) causing a catastrophic financial liability.
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THE INFLUENCE OF MEDICAID BROKERS IN A CHANGING INDUSTRY
As we were discussing in the Introduction, Obamacare is ushering in sweeping expansions of the
Medicaid system. For this reason, it is absolutely impossible to discuss changes in the Medical
Transportation industry without discussing the influence of Medicaid Brokers. As the number of
Medicaid recipients and the cost of healthcare exponentially increase, more and more states will
leverage the Broker model in an effort to reduce cost in managing the transportation needs of Medicaid
recipients. Thus, with opportunity and revenue increasing for Medicaid Brokers, they continue to
become increasingly bold, audacious, and demanding in regards to subcontracting transportation
providers. Hence, the reasons why you need to proceed with great caution in dealing with Medicaid
Brokers and actively practice the Art of NMP.
Consider the following email correspondence from Logisticare, the nation’s largest Broker, to a
transportation provider with whom I was working in negotiating their Medicaid rates:
[From Logisticare to Transportation Provider via email]
1. Proposed rates are within the standard that are currently being paid for NEMT service.
2. Most if not all Medicaid and Medicare transportation service will be handled through
LogistiCare within the near future.
3. You may or may not be comparing your current rates for Workers Comp, Nursing Home or
Private individual transportation to the proposed rates offered by LogistiCare.
What will happen to your business when these same nursing homes, private patients and/or
their sons or daughters realize that they no longer will need to pay for Medical
transportation? As most if not all of these current customers of your company will be
covered under the new Managed Care program that will begin on October 2013. This will be
followed by the Medical Managed Care part of the plan to be in place by January of 2014.
Wow! That is definitely bold, audacious, and even quite arrogant! Essentially, Logisticare is telling my
client, the Transportation Provider, that they need to accept Logisticare’s rates because eventually, all
patients will be covered by Medicaid and, thus, regulated by Logisticare. Why would Logisticare make
such a bold statement? – Brokers love Obamacare because it is exponentially expanding the Medicaid
system, Broker’s core clientele. Obamacare is going to make Brokers a LOT of money!
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Ironically, in the example above, we did not accept Logisticare’s rates which were of slim-to-none profit
margin. Rather, we held true to NMP, did not chase “Shiny Objects,” nor wilt under pressure. As a
result, Logisticare eventually conceded and increased their rates of reimbursement! It was a sweet
morale booster and a financial victory.
To introduce you to another very popular broker, Medical Transportation Management, Inc. (MTM), let
me share with you an introduction taken from their own website as follows:
“MTM is a medical and transportation management company whose mission is to improve the
overall health and well-being of individuals by removing barriers to healthcare and promoting
independence.”
“MTM provides transportation management, home and community based services, call center
services, ambulance claims management, and functional assessments and travel training to
state and county governments, Medicaid and Medicare managed care organizations (MCO),
third-party administrators, and health care providers.”
“By providing careful assessments, comprehensive care management, and responsible network
development and oversight, we are able to improve member outcomes while helping our clients
align incentives, reduce costs, and increase customer satisfaction.”
These are all worthy and admirable goals which I applaud. However, as we all know, sometimes what
people say and do can be polar opposites (consider politicians)! To achieve such goals, comprehensive
care management, network development and oversight, reduce cost, and increase customer satisfaction
takes far more than good intentions – especially when you consider that Brokers typically do not have
assets and, thus, rely exclusively on subcontracting to Transportation Providers to accomplish their
mission. Therefore, considering just how much Brokers NEED Independent Providers, it would be safe
to assume that the relationship between Brokers and Transportation Providers would be one of
“Strategic Partnership” and less of a slave master and sharecropper!
In a moment, we are going to systematically go through and analyze the standard “Service Agreement”
that MTM forces transportation providers to sign. This is a very important exercise as I’m going to
reveal the mentality of Medicaid Brokers in greater depth and just how much they value and respect
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you, the Transportation Provider. It’s important to note that the enclosed Service Agreement is a literal
copy of the exact Agreement that MTM issues to Transportation Providers. I have transcribed this
document into this resource so that I can systematically interject key thoughts and feedback
throughout.
Why am I using MTM’s Service Agreement as an illustration versus the Service Agreement Logisticare?
Because MTM’s Service Agreement is ONLY 35 pages versus Logisticare’s 78 page Agreement! Now,
think critically. Why on earth would a Medicaid Broker need you to sign a 78 page Service Agreement?
Do you think any of the stipulations in such an excessively large Agreement are designed to protect you
or the Broker? The answer is obvious, everything in the Agreement is designed to protect and favor the
interest of the Broker – not you! So as we consider this Agreement, ask yourself if you are being
respected as a “Strategic Partner” or treated as a sharecropper.
As we go through and analyze the following Service Agreement my comments will be in color
blue font below each stipulation that I am referencing. Get ready, you’re about to witness the
importance of NMP in action!
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ATTACHMENT I
TO MEDICAL TRANSPORTATION SERVICES AGREEMENT
Between
MEDICAL TRANSPORTATION MANAGEMENT, INC. and
[Name of Your Company]
MEDICAL TRANSPORTATION MANAGEMENT (MTM)
TRANSPORTATION PROVIDER GUIDELINES
(Quality Management and Risk Management Program)
INTRODUCTION
Medical Transportation Management, Inc. (“MTM”) is a transportation management organization which
contracts with Managed Care Organizations (“MCO”), State and local governments and other medical
businesses, organizations, agencies, and facilities (“MTM Clients”). These contracts provide for MTM
coordination and management of scheduled non-emergency and “urgent” vehicular ground
transportation for the MTM Client’s Members, Customers, and Recipients (referred to in this document
as “Passengers”) through a network for transportation companies and services (“Transportation
Providers”).
Transportation Providers are under contractual agreement to provide transportation for MTM Clients
and their Passengers as defined by the terms of the “Medical Transportation Services Agreement.” It is
the Transportation Provider’s responsibility to be aware of, and to comply with, all terms, conditions, and
requirements of their contractual agreement with MTM and to comply with the “MTM Transportation
Provider Guidelines.” The Transportation Provider understands that Transportation Provider misconduct
will not be tolerated and could result in disciplinary measures including reduction of trips, probations,
suspension, or removal from the Transportation Provider Network.
Joel’s Insight: We are ONLY on the second paragraph and MTM is already making it clear that you, the
Transportation Provider, are responsible “to be aware of, and to comply with, all terms and conditions.”
So, in short, there is no onus or burden of responsibility on the Broker. What I also love, though, is that if
you fail to comply with any of these stipulations you could face “disciplinary measures” as though you’re
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in grammar school. But OK, we are interested in doing business with Medicaid Brokers because we know
that Obamacare is further expanding Medicaid; we wish to leverage the growing market to increase
profits. So we’re willing to comply with such stipulations.
Oh, but wait, let’s further put things into perspective. MTM is telling (threatening) us upfront in the
second paragraph that disciplinary measures may include a “reductions of trips, probations, suspensions,
or removal” of their Network. This is a very important message that MTM is sending to you here and
now. They can take transports away from you at any time! How could this affect your business if you
went out and invested in vehicles and assets only to be in jeopardy to have trips/volume taken away
from you? Again, we wish to increase our revenue so, for now, we will comply and work to meet your
requirements in an effort to make money.
Transportation Provider understands that selection of the Transportation Provider’s transportation
services by MTM will be based solely upon the quality and availability of their service and, where
applicable, upon competitive pricing of its services relative to other Transportation Providers doing
business in their services area. Transportation Provider warrants that no monies have been or will be
paid directly or indirectly to any employee of MTM as wages, compensation or gifts in exchange for
favors in granting of transportation services to Transportation Providers.
The “MTM Transportation Provider Guidelines” are the basis for the MTM Transportation Provider
Quality Management and Risk Management Program and are intended to provide consistency and
uniformity in MTM’s operations. These Guidelines comply with MTM Client requirements and provide
procedures, processes, routines, and documents which will clearly establish defined standards for the
Transportation Provider’s participation in the program. These Guidelines are subject to periodic revision,
as needed, to further enhance the MTM Medical Transportation Program and to comply with MTM Client
requirements. The Transportation Provider Guidelines, and any revisions or amendments thereto, are
effective upon receipt by the Transportation Provider. Transportation Providers understand adherence to
the MTM Transportation Provider Guidelines is required. Trip/log sheet documentation referenced in
Appendix E must be provided to MTM contemporaneously with submission of claims. All other
documentation referenced herein must be available at no charge to MTM upon request.
Joel’s Insight: Ah yes, another awesome sentence that I love because MTM is painfully clear on their
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intentions and who is in charge. Periodic revisions of this Agreement can be issued at any time for whose
benefit? “To further enhance the MTM Medical Transportation Program” – NOT YOUR Medical
Transportation program! Just reminding you of who the boss is and how you supposedly have no say in
the matter. And when MTM issues a revision, they are “effective upon receipt!”
Note: See definitions section of the Medical Transportation Services Agreement and Appendix F for
guidelines specific to your contract.
MTM TRANSPORTATION PROVIDER REQUIREMENTS
1.0 General Transportation Requirements
1.1 Transportation Provider agrees not to differentiate or discriminate in the treatment of any
passenger on the basis of sex, marital status, age, race, color, national origin, ancestry, religion,
disability, medical condition, veteran status, political affiliation, economic status, or sexual
orientation.
1.2 Transportation Provider must immediately report to MTM any change in Transportation
Provider’s ownership, corporate officers or controlling interest.
1.3 Transportation Provider must immediately report to the MTM Network Management
Department any change in Transportation Provider’s address, phone number and/or fax number,
or federal tax ID number.
1.4 Transportation Provider and its employees and agents must maintain the confidentiality of any
and all information related to MTM services, Clients, and passengers, and comply with the Health
Insurance Portability and Accountability Act of 1996 (HIPAA).
1.5 Breach of confidentiality may result in suspension and/or termination from the Transportation
Provider Network.
1.6 Transportation Provider understands if there is suspicion of fraudulent Transportation Provider
activity, an investigation will be conducted by MTM, with appropriate action taken, including
notification to the MTM Client, recovery of overpayments from Transportation Provider, or
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offset future Transportation Provider payments, and potential termination of the contract
between the Transportation Provider and MTM.
1.7 Transportation Provider agrees to cooperate with MTM and the MTM Client in the investigative
process of suspected fraudulent activity.
1.8 Transportation Provider and driver shall ensure that services available to MTM passengers are at
least comparable in quality to services available to the general public.
1.9 Transportation Provider agrees that MTM trip requests will have equal priority with
Transportation Provider’s day-to-day services.
Joel’s Insight: Let the games begin! So, MTM suggests that their “trip requests will have equal priority”
with other trips of our day-to-day service. I totally agree with that – as long as they’re paying the same
rates as other clients! Or is MTM suggesting that they pay less per transport of equal value yet they
somehow warrant “equal priority?” I’m all for taking great care of ALL clients equally, as long as they’re
ALL paying relatively the same price! If not, you’re (MTM) not expecting me to jump over a quarter to
get to a nickel, are you? If yes, sorry, but that’s YOUR problem - NMP!
1.10 Transportation Provider must not inquire as to the nature of a passenger’s illness or medical
services received, except in the following instances:
a) Transportation Provider needs to know such information due to medical necessity
relating to appropriate transportation.
b) The passenger becomes ill during the course of the trip and acquiring such information is
considered pertinent to assuring the passenger’s safety and well-being.
1.11 Transportation Provider shall provide drivers with visible employee picture identification card,
picture ID badge and uniform with name for security and identification purposes.
Joel’s Insight: Identification cards with picture ID, uniforms, etc. are all great suggestions and definitely
improve the appearance of your company. But they do cost money. How much are you (MTM) paying
me? Are the rates of reimbursement enough for me to cover all my costs and overhead expenses or were
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you expecting me to look professional, provide great service, and operate in the red?
1.12 Transportation Provider, for itself and its drivers, must obtain and maintain in current status any
and all licenses, permits, certificates, and registrations that are required by Federal, State or local
laws, rules and regulations.
1.13 It is the Transportation Provider’s responsibility to understand and comply with all applicable
State and Federal laws including, but not limited to, the Americans With Disabilities Act (ADA) of
1990; Federal Transit Administration (FTA) regulations (including FTA’s drug and alcohol
regulations); the Federal Highway Administration’s drug and alcohol regulations’ Rehabilitation
Act of 1973, Section 504; the requirements of 42 Code of Regulations, Part 431, Subpart F; and
Title VII of the Civil Rights Act of 1964.
1.14 Transportation Provider must display any applicable current State and local motor vehicle
inspection sticker.
1.15 Transportation Provider must provide to MTM their Federal Tax ID (“EIN”), or Social Security
number, whichever is applicable, and Form W-9.
1.16 Transportation Provider agrees to respond to complaints within twenty-four (24) hours and to
provide resolution and/or a corrective action plan approved by MTM.
Joel’s Insight: I agree with this, responding in 24 hours. It sounds great, is responsible, and makes sense.
Consider: what if something happens where I can’t respond within 24 hours? What if I’m on vacation,
out of town, or whatever, and I need more time? Maybe I need 48 or 72 hours. Does that constitute
“misconduct” and, thus, I’m going to face “disciplinary conduct?”
1.17 Transportation Provider agrees to allow, cooperate, and participate in MTM on-site visits of the
Transportation Provider’s place of business and inspection of business records and vehicles.
Joel’s Insight: Ok, coming to my place of business to inspect my vehicles is reasonable. By what
measures or standards will you (MTM) be “inspecting my business records and vehicles?” The last thing
we want to do is be vague. Vague creates a lot of room for confusion and miscommunication. Again,
what happens if some of my business records or vehicles don’t meet your standards, will I face
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“disciplinary conduct?”
1.18 Transportation Provider agrees to respond to MTM recommendations of the on-site visit and
understands that failure to respond by the requested date may result in a Corrective Action Plan
(CAP) and/or future trips not being scheduled with the Transportation Provider until such time
that satisfactory responses are in place.
Joel’s Insight: Ah, now I get it! So you, the Broker, want me to agree to allow you to come to my place of
business, according to your schedule, to inspect my business and vehicles according to your vague
standards, and if I refuse or “fail” your inspection it “may result in a Corrective Action Plan?” Even more
so, I, the business owner working to build a thriving and prosperous business, am at risk of having trips
taken away?
Hmm, I’m not sure I understand. Am I a strategic partner for which we respect each other, we share a
common vision of helping and profiting with each other to the benefit of our shared clients or, am I just a
sharecropper that is to be told what to do? I have no say so? If I don’t like it or fail to comply according
to your ambiguous standards I will be punished? Let me ask you (MTM) again, what are your rates of
reimbursement? How much are you paying me again?
1.19 Transportation Provider must comply, at a minimum, with their chosen service level. MTM
service levels are:
a) Curb to Curb
Driver must pull the vehicle up to the pick-up and destination entrances.
b) Door to Door
Driver must go to passenger’s residence door or facility entrance and announce
arrival as referred to in Guideline 10.5.
Upon arrival at the destination, it is the driver’s responsibility to bring the
passenger to the appropriate entrance or specified office as requested.
Return trip must follow the above instructions.
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Door to Door service will also encompass points noted in Curb to Curb
c) Door through Door
Driver must enter the residence or facility and help passenger to assure safe
assistance to and from the vehicle.
Driver must deliver the passenger at destination inside the facility or residence
to an appropriate facility representative.
Return trip must follow the above instructions.
Door through Door service will also encompass Door to Door and Curb to Curb
service.
2.0 Driver Qualifications
2.1 All drivers for MTM trips must possess a current, valid driver’s license appropriate for the
services rendered and for the size vehicle driver is operating and as required by the State and
local governmental entity in which driver provides transportation. A legible copy of each driver’s
license must be provided to MTM as part of the credentialing process.
2.2 Drivers must be at least 21 years of age and must be a U.S. citizen or legal resident
Joel’s Insight: So, you’re (MTM) telling me whom I can and cannot hire? What if I have a very
responsible and dependable 20 year old with a two year college degree? I can’t hire this person, why? Is
this my NEMT company or yours? Are we strategic business partners or, again, am I just a sharecropper
that has to follow orders to avoid “disciplinary conduct?”
2.3 Drivers must be able to read, write and communicate effectively in English. It is in the
Transportation Provider’s best interest to employ drivers and/or office personnel who are also
fluent in any other languages prevalent in Transportation Provider’s service area.
2.4 Drivers must be physically able to assist passengers entering and exiting vehicles, and capable of
safely providing transportation services. By submission of a driver for credentialing approval by
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MTM, both Transportation Provider and driver represent that driver has no physical or mental
impairment that would hinder or prevent driver from performing the services and safely
transport MTM passengers.
3.0 Driver Requirements
3.1 Drivers must obey all Federal, State and local traffic laws in the transport of passengers.
3.2 Drivers understand that in the event a driver or passenger feels there is a need for emergency
medical assistance, the driver must immediately call 911.
3.3 Drivers must drive in a safe and courteous manner, such that all passengers must be transported
safely to their destinations.
3.4 Drivers must conduct themselves in an appropriate, courteous and professional manner.
3.5 Drivers must maintain an acceptable standard of dress, personal grooming and behavior in order
to present a neat, clean and professional appearance. Transportation Provider shall provide
drivers with visible employee picture identification card, picture ID badge and uniform with name
for security and identification purposes.
3.6 Drivers must not smoke in the vehicle, or smoke in the presence of any MTM passenger
3.7 Drivers must not allow passengers to smoke in the vehicle. It is required that Transportation
Provider post a “NO SMOKING” sign in all vehicles.
Joel’s Insight: I have no problem with posting “No Smoking” signs in your vehicles. I am not a fan of
smoking. In fact, I’ve never even tried a cigarette. So posting such signs is a good idea. However, my
ONLY problem with this is having a Broker tell me I have to! What if I have a custom vehicle and, quite
honestly, I just don’t like the way such a sign looks in my vehicle? I know, I know. I am nitpicking. But
again, the reason why we start our own business in the first place is to make our own decisions, not be
told where we have to put a sign by someone (Broker) who is “supposed” to be a strategic partner and
NOT a jail warden!
3.8 Drivers must not eat while driving MTM passengers.
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3.9 Drivers must maintain a “trip” or “log sheet” listing all MTM trips for each individual day.
The trip or log sheets must be legible and complete. Required log information is found in
Appendix E.
Joel’s Insight: I am all for Daily Log Sheets or Driver Manifests. In Dispatching Made Easy, they are
readily available for each driver – and they work great, too! But guess what, this is the new millennium
and it’s OK for us to use technology! In Dispatching Made Easy, drivers can receive their trip information
electronically on their cell phones! This significantly reduces the overhead cost for business owners. BUT
because MTM expects us to maintain a paper trail for 10 years, we are supposed to increase our cost,
pain and suffering? We are supposed to incur additional tasks and responsibilities why? OK, my
company will consider such policies, if the price is right! If you’re not paying me a profitable rate of
reimbursement, sorry - NMP! I’m in business to make money and increase efficiency – not lose money
and increase potential burdens!
3.10 Drivers must not use alcohol or drugs at any time, and if taking medication, must still be able to
perform his/her duties in a safe manner. Any driver taking medication which may hinder his/her
performance must report such use to his/her supervisor, and not transport MTM passengers.
3.11 Drivers must not allow personal friends or family to ride in vehicle while transporting MTM
passengers, unless specifically authorized by MTM. Exceptions may be made for larger multi-
passenger vans and buses designed for shared rides, or for approval for a ride-a- long spouse for
a long distance trip.
3.12 Drivers must not allow animals in the vehicle unless necessitated by the passenger for medical
purposes, and requires pre-authorization from MTM.
3.13 Drivers must not make personal stops, other than for restroom and passenger/Transportation
Provider agreed-upon restaurant breaks, while transporting MTM passengers unless specifically
authorized by MTM.
3.14 Drivers must require passengers to use seat belts properly and assist in fastening seat belts
where necessary, and must refuse to continue travel if passengers are non- compliant. Drivers
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must carry and be knowledgeable in the use of seat belt extensions for securing passengers of
wide girth.
3.15 Drivers understand infants/children are to be in proper infant/child restraint seats as required by
State or Federal law. In the event a proper seat is not available, or the use of proper child
restraint seat is refused, the driver must deny transportation.
3.16 Drivers must not place children in child restraint seats in the front seat of a vehicle.
3.17 Drivers must exit the vehicle to open and close vehicle doors when passengers enter or exit the
vehicle. Drivers must offer a helping hand or arm to assist passengers exiting the vehicle. Such
limited assistance is included in curb to curb service as well as higher modes of service. Except
where service is curb to curb, they must provide safe assistance to or from the main door or
reception desk of the place of destination, when needed.
3.18 Drivers must assure passengers enter and exit the vehicle in an unobstructed and safe location.
3.19 Drivers are required to store in the trunk of the vehicle, or properly secure for safety, folding
wheelchairs, carry-on packages, and walking aids such as canes, walkers, etc.
3.20 Drivers must not touch any passenger except as appropriate and necessary to assist the
passenger into or out of the vehicle, into a seat and to secure the seatbelt, or as necessary to
render first aid or assistance for which the driver has been trained. Drivers must request
permission from the passenger prior to touching the passenger
3.21 Drivers must not make sexually explicit comments or solicit favors, medications, or money from
passengers.
3.22 Drivers must properly identify and announce his/her presence at the entrance of the building or
with attending facility staff at the specified pick-up location, if a suitable curbside pick-up is not
apparent.
3.23 Drivers must not enter the passenger’s home except under prior authorization from MTM.
3.24 Drivers shall not wear any type of headphones while on duty. Driver shall have the volume of the
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radio at a level acceptable to passengers.
3.25 Drivers shall not accept responsibility for any of passenger’s personal items.
3.26 Drivers must confirm that all wheelchairs and motorized scooters are properly secured to the
vehicle and wheelchair and motorized scooter passengers are properly secured in the wheelchair
before allowing the vehicle to proceed.
3.27 Drivers must not allow firearms, alcoholic beverages in open containers, unauthorized controlled
substances, or highly combustible materials to be transported in the vehicle.
3.28 Drivers must check their vehicle to ensure that at the end of each trip or trip route, all passengers
have vacated the vehicle.
4.0 Driver Training
4.1 Transportation Provider must develop and maintain a specific Transportation Provider Driver
Training Policy for providing appropriate training for newly hired vehicle operators (drivers), and
a Driver In-Service Training Policy for annual Training of current drivers. Suggested training
activities may be a combination of reading materials, film or video media presentations, verbal
instruction and on-the-job training. All training and education of drivers is the responsibility of
Transportation Provider.
4.2 Transportation Provider’s Driver Training Policy and Driver In-Service Training Policy are subject
to review by MTM, and a copy provided to MTM upon request.
4.3 MTM requires Transportation Providers to provide all drivers with training in Basic First Aid,
Defensive Driving, Assisting Passengers with Disabilities, Transportation Provider’s established
Emergency Procedures, Universal Precautions for bloodborne pathogens, and use of a fire
extinguisher. Basic First Aid and Defensive Driving Training is to include training listed in
Appendix A. The training must be documented in the employee’s file. Additional suggested
training and training resources are listed in Appendix B.
Joel’s Insight: Man, all of that sounds awesome! And it’s great and worthy training and skills to have!
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Again, let me ask you (MTM) this, how much are you paying me? I have a fleet of vehicles and a fleet of
drivers. Are you (MTM) reimbursing me at a rate adequate to ensure that all of my drivers are trained in
all of these skills and techniques? Surely, you’re (MTM) not expecting me to operate at a loss, are you
(MTM), “strategic partner?” If you don’t plan on reimbursing me sufficiently to cover such expenses and
still maintain a healthy profit, sorry – NMP!
4.4 All drivers responsible for transporting passengers in wheelchairs must be trained in proper
loading, unloading and wheelchair tie-down procedures prior to transporting MTM wheelchair
passengers. The training must be documented in the employee’s file.
4.5 All required training must be completed within 90 days of the driver’s hire date, and must be
documented in driver’s file in order to continue to transport MTM passengers.
5.0 Transportation Provider Personnel Policies/Documentation
5.1 Transportation Provider must maintain a file on each driver, including owners, when they have
driving responsibilities, which shall include:
a) Documentation of training
b) Copy of current driver’s license
c) Driver evaluations
d) Results of a criminal background check
e) Results of a child abuse or neglect background check
f) Results of an elderly abuse background check
g) Results of a State specific driver history record check
h) Results of Excluded Provider List check
i) Signed Drug-Free Workplace policy
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Note: d-f will be performed, to the extent permitted by law, in Transportation Provider’s state of
operation. Copies of the background record checks (d-h) shall be provided to MTM within ten (10)
days of the date on the records check.
Joel’s Insight: I am all for criminal background checks and all other associated background checks. Note,
it all costs money. Individually, it may not sound like a lot of money. When you have 5, 10, 20, 40 plus
drivers we’re talking several thousands of dollars in additional operating cost. Again, how much do you
plan on reimbursing me?
Note: When you enlist the help of the United Medical Transportation Providers Group (UMTPG) for
insurance, your insurance policies can cover Sexual Abuse and Molestation, child and elderly abuse. Such
stipulations are indeed important as drivers can gain access to nursing homes and hospitals rooms, in
addition to client residences. Especially when you have many drivers, such coverage is highly advisable.
5.2 Transportation Provider must develop a Driver Orientation Policy and Procedure, and provide
MTM a copy upon request.
5.3 Transportation Provider must assure current laws regarding drug and alcohol testing are
enforced for any of their drivers or attendants. Documentation must be available to MTM upon
request.
5.4 Transportation Providers must establish and maintain a Substance Free Workplace Policy to
include, reasonable suspicion and a for-cause testing procedure. This policy must include a pre-
employment drug screening for all drivers and attendants. This policy must be in writing and
signed by all drivers and attendants. Results must be documented in the files of drivers and
attendants.
Joel’s Insight: Pre-employment drug screening is highly advisable – in addition to annual or biannual
drug screening for ALL EMPLOYEES! It is very important that you do not discriminate and focus on drug
testing a select few employees. Doing so can definitely expose you to lawsuits and accusations.
Remember, drug testing costs money. How much are you (MTM) reimbursing me, “strategic partner?”
5.5 If the Transportation Provider has reasonable suspicion of a driver or attendant to be under the
influence of alcohol or drugs, the Transportation Provider must immediately remove the driver or
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attendant from MTM service until a proper medical evaluation can be made.
5.6 If MTM has reasonable suspicion, MTM reserves the right to require a driver or attendant to have
an alcohol and/or drug screening at any time at the expense of the Transportation Provider.
Screening tests must be accomplished within the time frame designated by MTM. A driver or
attendant will not be allowed to transport MTM passengers, or provide services to MTM
passengers, until a proper medical evaluation has been received and approved by MTM. Refusal
to submit to testing within the designated time frame is considered a positive test result and will
have the same disciplinary consequences. Drivers or attendants testing positive for drugs and/or
alcohol will no longer be permitted to transport MTM passengers or provide any other service to
MTM passengers.
Joel’s Insight: So you (MTM) can direct my drivers to submit to alcohol and/or drug screening at my
expense? Oh, I’m sorry, I thought I was the owner of my company and that we were just “strategic
partners” working to help each other to serve common clients. But OK, I guess I will submit to your
demands because I would like to service Medicaid clients. Oh, and I have to do it “within the time frame
designated by MTM?” What if I’m out of town, maybe on vacation? What if we’re really busy? What if I
don’t agree with your demand, that a specific driver needs to be drug tested (seeing as how I’m paying
for it!)? Oh, and um, how much are you (MTM) paying me again? I just want to make sure that it is
profitable enough to make being inconvenienced and pushed around worth my while because if it’s not –
NMP!!
5.7 Transportation Provider must subject all drivers, including new drivers, to a State specific driver
history record acquired through the State’s Department of Motor Vehicles and the results must
be documented in the driver’s file.
5.8 Transportation Provider must run State specific driver history records once per year, at a
minimum, on all drivers providing MTM service, and copies shall be available to MTM upon
request.
Joel’s Insight: I totally agree with pulling MVR’s (Motor Vehicle Reports) annually for each driver. A
driver could get a ticket when they are not on duty and you may not know until you realize your
insurance premiums might be going up because of a driver’s poor driving records. Depending on what
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state you’re in, ordering MVR’s for each driver can range between $10-25 per driver. Obviously, if you
have several drivers this can become costly. So although it is definitely a good idea, you need to make
sure that you consider all such additional costs when negotiating your rates of reimbursement.
5.9 To the extent permitted by law, all drivers and attendants, including new drivers, must be
subjected to a criminal background check through the State law enforcement agency on an
annual basis. The results must be documented in the driver’s file and copies provided to MTM.
Joel’s Insight: Oh, I’m sorry, previously you (MTM) mentioned that I need to get criminal background
checks, among others, prior to employment. But now, you insist that I have this done annually for all of
my drivers? Oh, OK, I can make that happen. Remind me again, how much are you (MTM) paying me
again?
5.10 To the extent permitted by law, all drivers and attendants, including new drivers, must be
subjected to a child abuse or neglect background check through the appropriate State agency if
such information is not included in the criminal background check. The results must be
documented in the driver’s file. The record of the background check MUST be provided to MTM.
Joel’s Insight: Oh, again, it all sounds so good. Again, please remind me, how much are you (MTM)
reimbursing me? Because honestly, if you’re not paying me enough to make it worth my while, sorry –
NMP!
5.11 To the extent permitted by law, all drivers and attendants must be subjected to an elderly abuse
background check through the appropriate State agency if such information is not included in the
criminal background check. Results must be documented in the driver’s file. The record of the
background check must be provided to MTM.
Joel’s Insight: Well, what a coincidence! I should have known, the jail warden imposes more demands! I
thought we were negotiating because we are “strategic partners?!” Oh, OK. But remind me again, how
much are you (MTM) reimbursing me - NMP?
5.12 No driver may perform transportation services for MTM until the appropriate criminal
background check, child abuse/neglect background check, and elder abuse background check
have been obtained, and the driver has been fully credentialed and approved by MTM.
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NOTE: As we continue forward I want you to note how many times MTM says “Transportation Provider
must” or “Transportation Provider agrees.” I have underlined such phrases to illustrate the
frequency. Again, you have to put things into perspective. Are all of these stipulations designed
and inserted into an Agreement such as this to protect you or them, the Broker? The answer is
obvious. And please understand I am NOT presenting you with all of this information to deter
you from subcontracting with a Medicaid Broker. Rather, I am presenting you with such insight
to ensure that you are more aware and knowledgeable so as to better negotiate greater rates of
reimbursement to ensure profitability.
5.13 Transportation Provider must not use any driver or attendant with any of the following
convictions or substantiated incidents:
a) child abuse or neglect
b) spousal abuse
c) a crime against a child
d) a crime against an elderly or infirm individual
e) a crime involving rape, sexual assault, or other sexual offense
f) homicide
5.14 Transportation Provider must not use any driver or attendant who has the following return
notification from the Background Screening/Investigation Unit of the Children’s Division (or
similar agency):
a) “Category” is shown as physical abuse or sexual maltreatment;
b) “Severity” is shown as moderate, serious/severe, permanent damage, or fatal;
c) “Conclusion” is listed as court adjudicated or probable cause.
5.15 Transportation Provider must not use any person as a driver or attendant whose name appears
on the Department of Social Services, the Department of Mental Health, or the Department of
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Health and Senior Services Employee Disqualification List (EDL), or on other similar agency list(s).
5.16 Transportation Provider must not use any person as a driver or attendant whose name, when
checked against the Family Care Registry (or similar agency registry), registers a “hit” on any list
maintained and checked by the registry.
5.17 Transportation Provider must not use any person as a driver or attendant in the conduct of MTM
services who has a felony criminal conviction of a felony offense within the immediate past five
(5) years. Further, any conviction (misdemeanor or felony) for any of the following driving
offenses within the previous five (5) years shall disqualify a driver from performing MTM
services:
a) DUI or DWI, or other alcohol related offense
b) Careless and imprudent, or reckless driving
5.18 For purposes of these Transportation Provider Guidelines, the term “conviction” shall also
include any plea of guilty, finding of guilty, plea of “nolo contendere”, or similar disposition,
whether or not such disposition results in a sentence or conviction under applicable state or local
laws. MTM further reserves the right to disapprove of any driver or attendant for safety reasons;
or where disqualification of a driver or attendant is requested by an MTM Client; or for other
reasons of good cause within MTM’s sole discretion. Transportation Provider acknowledges that
the offenses listed herein are not an exclusive listing, but that there are other offenses and
pertinent circumstances which can result in the disapproval of a driver or attendant.
Joel’s insight: I’m sorry I forgot again, I don’t own my own company! For a moment there I actually
thought I did own my company and managed my own employees – silly me! I should have known, you
(MTM) “reserve the right to disapprove” one of my employees. Oh, and um, how much money are you
paying me? I just wanted to make sure it was enough for me to accept that you are in control of my
company and that I have no say in the matter, Mr. Jail Warden.
5.19 Transportation Provider must not allow drivers or attendants to perform MTM services who are
currently on work release, probation, or parole for any felony, or any offense of the type
identified in 5.13-5.17.
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5.20 Transportation Provider must not use any driver with the following:
a) Convicted of more than two (2) minor motor vehicle moving violations, such as speeding,
failure to stop, improper operation, etc., within the previous twenty- four (24) months
b) More than one (1) at-fault incident (accident) resulting in personal injury or property
damage within the previous thirty-six (36) months, or three (3) or more cumulative
vehicle accidents within the previous five (5) years
c) A combination of one (1) unrelated minor motor vehicle moving violation and one (1) at-
fault incident (accident) resulting in personal injury or property damage within the
previous twenty-four (24) months
d) Revocation or suspension of the driver’s vehicle operator’s license within the previous
three (3) years for accumulation of points or alcohol related incident
5.21 Transportation Provider must perform periodic performance evaluations of all drivers, at a
minimum, every twelve (12) months and maintain documentation of each evaluation in each
driver’s file, copies of which shall be provided to MTM upon request.
Joel’s Insight: I am a very big fan of employee evaluations. Feedback and directed critiques are essential
for developing and improving your labor force. Yet as I am sure you guessed, as a business owner, I don’t
like being told how and when I need to do something – unless you’re reimbursing me enough to make it
sensible. If not, sorry – NMP!
5.22 Transportation Provider must maintain a driver’s health record, signed by the driver, that no
physical or health limitation exists that prevents safe, competent operation of the motor vehicle
or ability to assist any passenger in and out of the vehicle, or the performance of any other
passenger assistance services, when a passenger requests such assistance. A copy shall be
provided to MTM upon request. Transportation Provider’s assignment of a trip to a driver, and
the driver’s acceptance of the trip, constitute a representation by both Transportation Provider
and driver that driver has no physical, cognitive or other health limitation that prevents driver
from safely performing the trip and all duties and assistance necessary.
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5.23 MTM reserves the right to deny the approval of any driver, or to require a Transportation
Provider to suspend, or otherwise discontinue the use of any driver, in the performance of MTM
services at the sole discretion of MTM.
Joel’s Insight: Man, for a minute there, I thought you were threatening me telling me who I can and
cannot hire. Oh wait, you are! Please enlighten me, who is in charge of my business? Because honestly,
if you (MTM) are in charge, I would really appreciate it if you would start paying my taxes too!
5.24 Transportation Provider must not use any driver who has a pending felony charge, or any other
pending charge, which if the charge were to result in a conviction, would disqualify the driver
under these Guidelines. The driver and Transportation Provider must report all pending felony
charges to MTM, and the final disposition/resolution of such charges.
6.0 Vehicle Requirements
6.1 Transportation Provider must provide the make and model, model year, vehicle identification
number (VIN), license number, and vehicle type (sedan, minivan, paralift, etc.) to MTM for every
vehicle used to transport MTM passengers. This information must be provided no later than the
vehicle’s first day of service. Additionally, the Transportation Provider must notify MTM of any
vehicle permanently added or removed from MTM service. Use of any vehicle prior to approval
of MTM will result in nonpayment for the trip, and assessment of liquidated damages.
Joel’s Insight: This makes sense. And I’m not trying to “pick a fight” on every issue. Tell me, what
happens if I cannot provide this information on the first day? What if I’m so busy that I couldn’t do it
until the third day? Does this constitute “misconduct” and, thus, I’m going to be subject to more
“Corrective Action?”
6.2 All seat belts must be in proper working order and accessible to the passenger.
6.3 Transportation Provider shall provide seat belt extensions when needed.
6.4 All vehicles must prominently display Transportation Provider’s name, and phone number in the
interior of the vehicle.
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Joel’s Insight: Mr. Jail Warden, why must I have my company name and phone number “prominently
displayed” on the inside of my vehicle when I already have it posted on the outside of the vehicle? What
if I don’t like the way it looks next to the “No Smoking” sign that is already inside my vehicle? If I don’t
do this, do I have to face “Corrective Action?” Are you going to take trips away from me? Am I still
expected to treat your MTM transports equally as compared to other clients and patients that don’t
insist on all of these frivolous demands?
6.5 All vehicles must be clearly marked showing Transportation Provider’s business name on both
sides of the exterior of the vehicle.
6.6 All vehicles must be equipped with operable heating, air conditioning and ventilation systems so
as to ensure the comfort of the passenger.
6.7 All vehicles in use for MTM services must have:
a) emergency first-aid kit
b) fire extinguisher – (A,B,C)
c) three (3) reflective triangles or similar emergency warning devices
d) blood borne pathogen spill kits
e) extra electrical fuses
f) flashlight
g) ice scraper
h) current insurance card
i) current vehicle registration
j) MTM or Transportation Provider Accident/Incident forms
k) Transportation Provider Accident Procedure
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l) such other equipment as may be required by MTM
m) no-smoking sign
Additional equipment is recommended in Appendix C.
Joel’s Insight: MTM requiring that all vehicles are equipped with a first-aid kit makes sense. Requiring a
fire extinguisher, maybe, but extra electrical fuses? Again, I recognize that I might be nitpicking. Yet, if
someone can mandate that all of my vehicles must be equipped with “extra electrical fuses (versus
keeping them in the garage/repair shop), where does it end? Will there be any other redundant and
frivolous mandates that you require in order for me to avoid having trips taken away or being subject to
“Corrective Action” and, thus, adversely affecting my revenue?
6.8 Passenger cars (sedans) must have four (4) doors. Two-door vehicles are not acceptable when
transporting MTM passengers.
6.9 When a Transportation Provider utilizes a high profile/tall vehicle to transport MTM passengers
that has greater ground clearance than an average-sized sedan, Transportation Provider must
provide a sturdy, non-skid, stepping aid to assist the passenger in entering and exiting the
vehicle. This stepping aid must be capable of safely supporting 300 pounds, must be no higher
than twelve inches (12”) above the ground, with a nonskid top surface not less than eight inches
by twelve inches (8” x 12”)
6.10 For all vehicles used for paralift operations, the overhead clearance between the top of the door
opening and the raised lift platform, or highest point of ramp, shall be a minimum of 56 inches,
or such other distance as may be required by ADA or other federal or state laws or regulations.
6.11 MTM requires all wheelchair lifts have a design load of at least 600 pounds.
6.12 All ramps used for the loading and unloading of passengers must meet ADA Accessibility
Guidelines.
6.13 All tie-downs or other securement devices used for paralift operations must meet the ADA
Accessibility Guidelines.
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6.14 Vehicles must not be more than eight (8) years old without specific written approval of MTM.
Joel’s Insight: What?! Why? Why can’t I operate a vehicle more than 8 years old? My vehicles are well
maintained. So if I have a vehicle that is 7 years old, in one year I have to take it out-of-service for MTM
transports? OK, please, refresh my memory. How much are you (MTM) reimbursing me again? I just
want to make sure that I’m making a healthy profit with enough margins to compensate for the cost of
new vehicles.
6.15 Vehicles, regardless of age, may be taken out of service for use with MTM passengers at the
discretion of MTM after a vehicle assessment is performed.
Joel’s insight: Oh, silly me! I’m sorry, I should have anticipated this. Of course YOU (MTM) can take any
of my vehicles out-of-service at your “discretion.” After all, I’m here to serve you (MTM)! You can
terminate my employees at your “discretion” so it only makes sense that you can take my vehicles out –
of-service at your convenience! In fact, I appreciate your commands – I didn’t want to run my own
company any ways! I’d rather have you make the decisions so I can say – NMP!
6.16 Vehicles are required to have a form of two-way communication, which enables a central
dispatch to contact the driver at any time.
6.17 Vehicles must be clean, mechanically safe, and road-worthy.
6.18 All vehicles in use for MTM service must have:
a) Functional door handles
b) Accurate speedometers and odometers
c) Functioning interior lighting
d) Adequate side-wall padding and ceiling covering
e) One (1) interior rearview mirror
f) Two (2) exterior rearview mirrors – one on each side of the vehicle
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g) Passenger compartments that are clear and free from unsightly and potentially
hazardous, torn upholstery, torn floor covering or dangling seat belts
h) Cell phones are not to be used unless responding to a dispatcher call or making an
emergency call; and use of cell phone must be in compliance with state and federal
laws and regulations.
i) Vehicles must have tire tread-life meeting manufacturer’s minimum specifications
6.19 All vehicles in use for MTM service must not have:
a) Damaged or broken seats
b) Protruding or sharp edges
c) Dirt, oil, grease or litter in the vehicle
d) Broken mirrors or windows (other than small rock chips)
e) Excessive grime, rust, chipped paint or major dents
6.20 Transportation Provider agrees to remove from MTM service any vehicle to be found
unsatisfactory in reference to conditions listed in this section, or is questionable with regards to
safety or roadworthiness until repairs are completed.
Joel’s Insight: “Agree?” Of course I agree. In fact, I insist! This is my company in name only and we are
here to serve you (MTM). So yes, you can take my vehicles out of service at your convenience!
6.21 A vehicle with an inoperative two-way communication system must be placed out of service until
the system is repaired or replaced.
6.22 Daily pre-trip inspections are required, must be documented, and maintained for three (3)
months. See requirements in Appendix D.
6.23 Transportation Provider must maintain documentation that each vehicle has:
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a) passed periodic mechanical safety inspections as required by the state in which the
vehicle is licensed and
b) documentation is also to include maintenance of fire extinguishers, first aid kits,
warning devices (triangles, flares, etc.) and bloodborne pathogen spill kits.
6.24 Documentation of regular maintenance procedures and repairs must be available to MTM upon
request.
6.25 All vans and busses shall have accessible emergency exit(s) with appropriate emergency
procedures posted in compliance with Federal Motor Vehicle Standard No. 217.
6.26 All vehicles used to transport passengers who must sit in wheelchairs during transport must have
raised roof or lowered floor.
6.27 For wheelchair transports, if more than minimal assistance is required, a wheelchair lift vehicle
must be provided, which meets all ADA standards.
7.0 Insurance Requirements
7.1 Transportation Provider is required to provide proof of commercial automobile liability insurance
for any vehicle used for MTM service, in accordance with contract terms by means of:
a) Certificate of Insurance from the carrier with MTM named as a Certificate
Holder.
b) MTM named as an “Additional Insured” on a primary, non-contributing basis on
Transportation Provider’s Certificate of Automobile Liability insurance and General
Liability insurance.
c) Certificate of Insurance must be furnished to MTM upon initial application of
Provider, and as insurance coverage renews.
7.2 Transportation Provider’s Commercial Vehicle liability insurance and Commercial General liability
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insurance must meet the coverage limits set by MTM, MTM’s Client, or the applicable federal,
state, and local laws and regulations, whichever is greater. MTM may amend the required
minimum coverage limits at its discretion. The minimum vehicle liability insurance coverage
required by MTM is $300,000 combined single limit (CSL), or the state minimum, whichever is
greater. Transportation Provider must also maintain Commercial General liability insurance in the
amount of $300,000 Combined Single Limit (CSL), or the state minimum, whichever is greater.
Vehicle and Commercial General liability insurance must be issued on a primary, non-
contributing basis. MTM strongly encourages increased coverage for the Transportation
Provider’s protection. Higher coverage limits required by specific MTM Clients may limit
Transportation Provider’s ability to take trips for those Clients.
Joel’s Insight: Well of course, I will ensure that my insurance limits meet your (MTM) expectations!
After all, “my cup runneth over” with reimbursements. Oh, if you don’t mind my asking again, how much
are you (MTM) paying me? Because we’re “strategic partners” you (MTM) are going to reimburse me
with healthy premiums to ensure that we remain profitable, right?
7.3 Transportation Provider must comply with State’s coverage requirements for Worker’s
Compensation Insurance. A Transportation Provider that fails to obtain Workers Compensation
for all its drivers, agents and employees must provide MTM with sufficient documentation that
the Transportation Provider is exempt under applicable state law from maintaining Workers
Compensation insurance coverage. A mere statement from the Transportation Provider that it is
exempt is not sufficient. MTM reserves the right to require all Transportation Providers, including
those otherwise exempt, to maintain Workers Compensation insurance.
7.4 Transportation Provider must notify MTM immediately in the event their insurance coverage is
modified or terminated.
7.5 Transportation Provider, at its sole cost and expense, must procure and maintain such policies of
general and automobile insurance liability, both of which policies shall include contractual
liability, Workers Compensation insurance and other insurance as shall be necessary to insure
Transportation Provider, and its agents, employees, subcontractors including subcontracted
transportation companies, owner/operators, drivers and assigns, including volunteer drivers, and
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MTM against any claim or claims for damages arising from performance of any services by
Transportation Provider to MTM.
7.6 When proof of insurance is requested by MTM, Transportation Provider must provide
documentation five (5) business days prior to the date of expiration or no future trips will be
awarded. Additionally, MTM will begin canceling all existing trips. Canceled trips will not
automatically go back to the Transportation Provider when they produce current and correct
insurance documentation.
Joel’s Insight: This paragraph alone summarizes everything in regards to Medicaid Brokers. If you don’t
comply with their demands in the allotted time, “no future trips will be awarded.” Further, existing trips
will be “cancelled” and “will NOT automatically go back” to you! Now seriously, who wants to put their
business in such an unstable situation? You have no idea how many transportation providers I encounter
that drool over the opportunity to sign with a Broker, never reading through their Agreement, and when
the Broker makes ANY changes in any capacity their business is shaken if not literally put out of business.
Bottom line, we do NOT go into business with the desire to be in a vulnerable situation. Yet, when you
sign with a Broker and you rely exclusively on them for revenue, that is exactly what you are doing –
putting yourself in a vulnerable situation. If the rates of reimbursement are not adequate to allow you to
cover your operating expenses AND make a profit, you need to tell the Broker to take a hike! Seriously,
this paragraph alone should convince you of the power of NMP!
8.0 Operational Requirements
8.1 Transportation Provider’s dispatch/office must be able to be reached by phone during
Transportation Provider’s regular business hours, and answered by a “live” person, not by an
answering machine or answering service.
8.2 Transportation Provider must maintain all records and documentation, including driver logs, trip
sheets, and billing reports pertaining to MTM services for ten (10) years, from the end of the
calendar year during which services were provided, and retained further if the records are under
review or audit until the review or audit is complete.
Joel’s Insight: Sorry, but if you (MTM) are not paying me enough – NMP! If you are not going to
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reimburse me a healthy rate, then I don’t care how many people are on Medicaid, I don’t care how much
of a bind you (MTM) are in, I am not in business to lose money. Sorry, but – NMP!
8.3 Transportation Provider understands records requested by MTM must be original documents
sent at Transportation Providers expense, and will not be returned. Transportation Provider must
maintain copies at their expense.
Joel’s Insight: So I pay to send it to you, at my expense, and you (MTM) don’t have the courtesy to
return what is actually my property, my documents? Sorry, if you (MTM) are not paying me enough –
NMP!
8.4 Transportation Provider must allow on-site general performance evaluation, inspections,
auditing, monitoring, and duplication of records at no charge, of any and all data, billing reports,
trip/log sheets, vouchers and other records maintained by Transportation Provider on MTM
passenger trips, by agents of MTM, MTM Clients or State or Federal government officials during
normal business hours. MTM may conduct such evaluations and inspections unannounced. The
failure of Transportation Provider to timely allow on-site inspections may result in a Corrective
Action Plan (CAP), assessment of liquidated damages, and/or termination of Transportation
Provider at MTM’s discretion.
Joel’s Insight: Do you (MTM) hear yourself? How many more hoops do you want me to jump through?
Who is paying my office staff and associated labor expenses to comply with such laughable demands?
And if I fail to comply, you threaten me again with a laughable “Corrective Action Plan?” Am I in grade
school? Sorry, but if you (MTM) are not paying me enough to make it worth my while – NMP!
8.5 Transportation Provider understands if the Service Agreement (contract) is terminated for any
reason, if requested by MTM, Transportation Provider must forward all required records not
previously sent to MTM for the ten (10) year retention period to MTM. Transportation Provider
agrees that MTM payment for all unpaid claims at time of termination will be withheld until
MTM has received these records, and all transportation provider service records have been
audited by MTM for correctness and accuracy. MTM reserves the right to audit records received
from Transportation Provider within sixty (60) days of final receipt of all such records by MTM.
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Joel’s Insight: Oh, well I appreciate your honesty. So if you decide to terminate me, any “unpaid claims
at the time of termination will be withheld?” Huh! Do you think that having payments withheld
(revenue that we already worked for and earned) will adversely affect your revenue? This is why when
working with a Broker you must closely monitor your money and accounts receivables and never allow
Broker reimbursement to run in arrears!
8.6 Transportation Provider must provide transportation services as requested by MTM on an
efficient and timely basis.
8.7 If passenger is delayed due to late pick-up or drop-off by Transportation Provider, and cannot be
seen at appointment, Transportation Provider will not be reimbursed for trip.
Joel’s Insight: You just got threatened to have your money withheld for a passenger being delayed.
Sorry, but – NMP!
8.8 Transportation Provider agrees to notify MTM immediately of any significant delays such as a
breakdown or stopped traffic, which cause the passenger to be 15 minutes or more late for
his/her medical appointment. In addition to MTM notification, Transportation Provider will make
subsequent alternative plans for completing the trip in a timely manner if the medical
appointment can still be attended.
8.9 Transportation Provider agrees to contact the passenger, if phone number is provided by MTM,
to notify of a significant pick-up delay and obtain information as to whether or not the passenger
will still be able to attend the scheduled appointment.
8.10 Transportation Provider understands if they are consistently late for pick-up and/or drop- off by
MTM’s assessment, Transportation Provider may face disciplinary action and be assessed
liquidated damages.
Joel’s Insight: OMG, more threats! The famous “Corrective Action Plan” monster again, sorry – NMP!
8.11 Transportation Provider must not sub-contract with other transportation companies for MTM
services without prior written approval of MTM. If MTM becomes aware a Transportation
Provider uses a sub-contracted company without written approval from MTM, Transportation
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Provider will not be paid for any trip for which an unapproved subcontractor was used.
Joel’s Insight: Blah, blah, blah! It’s amazing. MTM’s Service Agreement is half the size of Logisticare’s
Agreement. That means twice the amount of threats from Logisticare as compared to MTM. Sorry –
NMP! If you (Broker) are not paying me enough in reimbursement to make any of this worth my while
then you need to move on to some other schleprock who is a big enough sucker to deal with this crap!
8.12 Approved sub-contracted Transportation Providers must meet the same standards and adhere to
the same “MTM Transportation Provider Guidelines” as does Transportation Provider, and
Transportation Provider must be responsible for their approved sub- contracted Transportation
Providers.
8.13 Transportation Provider may not solicit money from MTM Clients or their passengers for
payment of MTM authorized transportation services; except that Transportation Provider may
collect a co-pay amount approved by MTM and MTM’s Client from the passenger, where
applicable.
8.14 Transportation Provider understands that all trips, including recurring trips, may be assigned or
reassigned by MTM in its sole discretion. Transportation Provider has no claim or right to
transport any particular person, nor any claim or right to transport any person attending any
particular health care services facility.
Joel’s Insight: Blah, blah, blah. You (MTM) are a broken record. You already threatened me with this,
remember? Sorry, but – NMP!
8.15 Transportation Provider shall have a MTM approved accident/incident investigation procedure in
writing, and shall follow that procedure to respond to and review all accidents/incidents.
8.16 Transportation Provider must provide a copy of the Transportation Provider’s Accident/Incident
Investigation Procedure to MTM.
8.17 Transportation Provider must report all incidents, accident and injuries occurring while the
Transportation Provider or a sub-contracted Transportation Provider is transporting any MTM
passenger(s).
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8.18 Transportation Provider accident/incident reports must be made in writing by the end of the next
business day following an accident/incident while transporting an MTM passenger. If there are
injuries involved, Transportation Provider must also report verbally to MTM within three (3)
hours of the accident/incident.
Joel’s Insight: What if I’m busy? What if I’m out of town? What if I can’t do it when you want? Let me
guess, more of the famous “Corrective Action Plan,” right? LOL!
8.19 At a minimum, the accident/incident report must include the name of the driver, transported
passenger(s), and specific details of the accident/incident and related injuries.
8.20 A copy of the police report must be provided to MTM as soon as it is available.
9.0 Trip Scheduling
9.1 Transportation Provider agrees to check the MTM Daily Fax Summary and/or electronic trip file
to make certain all trip requests have been received by Transportation Provider. Transportation
Provider must contact MTM Provider hotline if a fax has not been received.
9.2 If Transportation Provider knows that the price, designated level of service, mileage, zip codes, or
any other data on the trip request is incorrect, Transportation Provider must notify MTM of the
corrections immediately. Transportation Provider shall have the right to turn back, or refuse any
trip assignment from MTM. If Transportation Provider performs a trip, Transportation Provider
agrees to accept the amount of compensation for that trip that is noted by MTM on the trip
assignment sheet provided in advance by MTM to Transportation Provider. Transportation
Provider agrees not to claim compensation in excess of the compensation noted on the trip
assignment sheet, irrespective of the level of service, or the totality of services provided by
Transportation Provider for the given trip; and payment by MTM of the amount of compensation
noted on the trip assignment sheet shall constitute payment in full and satisfaction of
Transportation Provider’s claim for compensation for services rendered for that trip, and
Transportation Provider, by performing the trip, waives any claim for compensation in excess of
the stated compensation on the trip assignment sheet. “Wait time”, where authorized by
contract, must be approved by MTM at the time of the occurrence of wait time, and prior to
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submission of an invoice claim for payment of the trip.
Joel’s Insight: So you (MTM) tell me what I have to agree to and “accept the amount of compensation”
that you deem worthy and that “constitutes payment in full” and to my “satisfaction?” Hmm, that
doesn’t make me feel much like a “strategic partner” as I was hoping! So where is the negotiation?
Where is the open communication to determine win-win solutions to both our advantage? Oh, are you
saying that there is no negotiation with you (MTM)? Sorry, but – NMP!
9.3 Transportation Providers are required to schedule drivers with adequate time allowances so
speed limits are followed and passengers arrive on time for appointments.
9.4 Transportation Provider must establish, where applicable, an internal schedule for the
passenger’s return “will call” trip pick-up which does not impose unreasonable waiting time for
the passenger, not to exceed one (1) hour maximum from time of passenger’s call (see 10.7).
9.5 The wait time for a pre-scheduled return trip, such as dialysis, rehabilitation, etc., after an
appointment, shall not exceed thirty (30) minutes.
Joel’s Insight: So if a driver gets caught in traffic or whatever, what’s going to happen? Let me guess,
more “Corrective Action Plan?”
9.6 If Transportation Provider turns back or refuses a trip assignment, Transportation Provider must
notify MTM as soon as the determination is made the Transportation Provider is unable to take
an assigned trip, and in any event, no later than 48 hours prior to the date and time of passenger
pick up.
9.7 Transportation Provider must not overbook MTM trips.
9.8 Transportation Provider agrees to contact the passenger by phone within a twenty-four (24) hour
window prior to trip, if phone number is provided, to confirm the Transportation Provider’s
estimated arrival time.
Joel’s Insight: There is no question that providing courtesy calls/reminders to passengers within 24-
hours prior to their trip is a great idea. But, my business was averaging 300 trips per day. And, I have
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worked with Transportation Providers that have double that per day and more. Do you really think that
such a demand is feasible? Sorry, but who is paying for the extra time and labor to meet such a
demand? If you (MTM) are not paying me enough for the administrative labor to do so, sorry – NMP!
9.9 Transportation Provider shall provide the Transportation Provider’s phone number to the
passenger during the pre-trip confirmation phone call.
9.10 Transportation Provider may give the passenger a ½ hour “window,” fifteen (15) minutes before
and after ideal pick-up time, providing the passenger will arrive on time for the appointment.
9.11 For the Transportation Provider’s benefit, the Transportation Provider must note on the form
what time Transportation Provider made the confirming call and with whom the Transportation
Provider spoke.
Joel’s Insight: How thoughtful, “for the Transportation Provider’s benefit.” I’m flattered!
9.12 If a trip is canceled by the passenger directly, the Transportation Provider must notify the MTM
Provider hotline immediately to document member cancellation of the trip, and document all
cancellation information, using the “MTM Coding System for MTM Canceled Trips,” and report
such on the weekly reconciliation report.
Joel’s Insight: Thank you for telling me how to operate my administrative duties and responsibilities!
9.13 Transportation Provider will not take calls directly from the passenger to arrange for covered
transportation services except for the “will call” telephone call for pick-up for the second leg, or
additional multiple leg trip.
9.14 If passenger calls Transportation Provider directly (except for the “will call” situation),
Transportation Provider must notify them to call the MTM toll-free telephone number or local
number provided to the passenger to arrange and authorize their transportation.
9.15 Transportation Provider will not contact passenger’s medical provider to schedule or re- schedule
appointments.
10.0 Trip Process
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10.1 Transportation Provider acknowledges and agrees that where mileage is paid by MTM for a trip,
all mileage will be calculated by MTM’s commercial GPS based mileage system, based on the
shortest distance from the pick-up point to the final destination point, irrespective of the route
actually taken by the Transportation Provider, and irrespective of the actual travel time incurred
in the performance of the trip. MTM’s system determination of mileage shall be final and not
subject to challenge or dispute by Transportation Provider.
Joel’s Insight: This is truly an incredible paragraph. MTM is going to tell you what the mileage is for each
transport “irrespective of the route actually taken!” Think about how audacious this is. It’s crazy! If there
are traffic issues, traffic jams, construction, etc. it doesn’t matter. You will take whatever MTM deems
worthy and NOT what you actually performed and are justified in receiving. Man, “that takes balls” – to
tell someone that is how you are going to treat them. Let me be clear, we are NOT in business to be
sharecroppers! We are NOT in business to just accept what a Broker decided to give us. Sorry, but –
NMP!
10.2 Transportation Provider must not cause a passenger to arrive more than thirty (30) minutes prior
to an appointment, unless requested or pre-authorized by MTM or the passenger.
10.3 Transportation Provider must allow a minimum of five (5) minutes “wait time” at pick-up
locations for scheduled passenger(s) to enter vehicle
10.4 Drivers must make “best effort” to make contact with the passenger notifying them their ride is
waiting outside before leaving the premises without the passenger. This would include, at a
minimum, honking, knocking at door, inquiring at reception desk and calling dispatch to place a
call to the passengers to notify them their ride is outside.
10.5 Transportation Provider agrees to present to the passengers upon leaving the vehicle, a business
card, typed instructions, or a pre-printed sticker, advising the passenger of contact and phone
number to call in order to arrange for a return ride home.
10.6 Transportation Provider must ensure all return and “will call” trips are picked up within a
maximum of sixty (60) minutes of the passenger’s request for a return trip (see 9.5).
10.7 Transportation Provider must maintain that all trips not exceed one (1) hour “in vehicle” riding
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time, except in those cases in which an unusual traveling distance is involved.
10.8 In multiple-passenger situations, passengers should not remain in the vehicle for more than
forty-five (45) minutes longer than the average travel time for direct transport. Exceptions may
occur in the circumstance of a long, rural multiple-passenger routed trip – in which case, the
passenger should be notified prior to the trip of the lengthy travel time. Further exceptions could
include pick-up and/or destinations outside of the stated local service area.
Joel’s Insight: I agree. I would never want a passenger to be in a vehicle for more than 45 minutes.
Consider what if there are traffic related issues? Let me guess, more “Corrective Action Plan?”
Also, if you prefer that I don’t take multiple passengers at the same time in an effort to reduce cost, then
you (MTM) better be paying me enough to afford to send individual drivers for individual clients! If not,
and I need to consolidate trips as much as possible to ensure profitability, then take it or leave it.
Otherwise, sorry – NMP!
10.9 Transportation Provider agrees to complete any pre-scheduled round trips even under the
circumstance when the medical service extends past the approximate expected completion time.
10.10 Transportation Provider must maintain a signed trip or log sheet, including passenger’s original
signature and date of transport, listing all passengers’ scheduled rides for each individual day.
Note: All driver trip logs must be maintained for ten (10) years.
Joel’s Insight: First, telling me how to operate my business administratively is bad enough. But what if
the client, through physical condition or mental capacity, can’t sign their name? What if I don’t have
their signature? I know, I know. More “Corrective Action Plan” and/or you (MTM) are going to withhold
payment from me, right? Sorry, but – NMP!
10.11 Transportation Provider must require the passenger to sign the trip/log sheet, or an individual
voucher for each leg of the trip at the time of completion of the trip. The passenger’s signature is
used as part of the trip verification process. Trip signatures obtained by Transportation Provider
at any time after the drop off of the passenger and after completion of the trip will not be
accepted by MTM, and Transportation Provider shall not attempt to obtain such passenger
signatures retroactively. The same rules and procedures shall also apply to obtaining the driver’s
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signature for each trip leg.
Joel’s Insight: Again, we face the issue of MTM mandating our administrative procedures. We also have
to ask: what about clients who are unable to sign due to physical and/or mental reasons? Do we fear
non-payment for the transport and/or “Corrective Action?
10.12 Transportation Provider must not require passenger to sign the trip/log sheet on any leg of the
trip which is not completed; to include passenger no-shows. The passenger’s signature must be
obtained contemporaneous with the completion of the trip.
10.13 Transportation Provider understands actual pick-up time and drop-off time must be noted for
each authorized passenger on the trip log sheet. Clearly designate date and time, using either
a.m. or p.m. designation or military time. See Appendix E for all required trip documentation.
10.14 Transportation Provider understands that lack of trip documentation set forth on Appendix E,
including but not limited to, lack of passenger or driver signatures, or date and time of transport
pick up and drop off, submitted at time of invoice/claim, may result in MTM denial of payment to
Transportation Provider and the recoupment of trip charges if MTM has already made payment
to Transportation Provider for the trip. MTM will not accept any passenger or driver signatures,
or other trip documentation, that does not accompany the original invoice/claim submission to
MTM.
Joel’s Insight: Again, threatened with “denial of payment.” This is definitely NOT how you treat
someone you view as a “strategic partner.”
10.15 If passenger is unable to sign, driver must document reason on trip/log sheet. Transportation
Provider understands payment may be subject to verification of noted reason.
Joel’s Insight: Ah, finally we are enlightened about what our drivers must do in the event of a patient
that is unable to sign a Trip/Log Sheet! Despite such circumstance, payment is still “subject to
verification.” So even if you successfully transport a client, you paid for the fuel, you incurred the labor
costs, your efforts are still “subject to verification.” Sorry, but if you (MTM) deny me payment, I’m not
performing your trips. Why, because I’m not in business to operate at a loss. In short, sorry – NMP!
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10.16 An adult, accompanying a minor child, may sign the adult’s name on the trip/log sheet as long as
the minor’s name is clearly noted as well.
10.17 Transportation Provider must provide MTM with the trip/log sheets, or the vouchers, upon
request. See Appendix E for trip/log sheet information.
10.18 Transportation Provider/passenger must call for approval prior to taking passenger to an
unscheduled appointment or a pharmacy trip. If Transportation Provider does not obtain prior
approval from MTM, they will not be paid for the trip.
Joel’s Insight: Ah (yawn), more threats and stipulations for denial of payment. You (MTM) continuously
threaten me with denial of payment, you threaten “Corrective Action” at your discretion, and you want
me to treat MTM clients the same as I would other clients? Sorry, but no – NMP!
10.19 If there is a discrepancy on the number of additional passengers noted on the trip faxes,
Transportation Provider must contact MTM before leaving passenger’s home/pick-up location. If
Transportation Provider does not obtain prior approval from MTM, additional passenger fees will
not be paid.
11.0 Trip Requirements
11.1 MTM requires, the Transportation Provider, to call, email or fax MTM with all no-shows at the
time of the no-show. Timeliness of reporting will determine whether the no show is a “member”
or “provider” no show.
11.2 Transportation Provider must also report all passenger no-shows and cancellations, in
accordance with the “MTM Coding System for MTM Canceled Trips,” to MTM on the MTM
weekly reconciliation report.
11.3 MTM recommends the Transportation Provider verify and document no-shows at the
passenger’s home.
11.4 Transportation Provider agrees to verbally notify MTM immediately of any incidents of passenger
misconduct. MTM may require written follow-up from the Transportation Provider.
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11.5 Transportation Provider agrees to report to MTM any known or suspected fraud or willful abuse
of MTM services by a passenger, which includes, but not limited to:
a) Passenger asking to be transported to locations other than the trip destination assigned
to the Transportation Provider
b) Verbal or physical abuse
c) Chronic no-shows
d) Evidence, which could include a visual sighting, that the passenger did not attend the
appointment to which they were transported
11.6 Transportation Provider understands all “trips” are defined as one-way trips.
11.7 Transportation Provider understands that, due to disability, age or mental condition, some
passengers utilizing MTM services require assistance and/or the use of an escort/attendant. The
escort/attendant must be recruited by the passenger or MTM, and multiple escorts are not
permitted. Such escort/attendant’s travel is to be provided by the Transportation Provider free of
charge.
11.8 Children under 16 years of age, to be transported without a parent, guardian or attendant, must
have a signed consent by a parent/guardian provided to the driver before the time of service.
Transportation Provider agrees to attach consent to trip/log sheet.
11.9 Transportation Provider agrees the MTM contract requires, at a minimum, two (2) rides, from
the same household ride for the price of one (1) fare, regardless of the age of the riders (such as
husband and wife or mother and child). In the case of an attendant, the two (2) authorized riders
will be the attendant, who does not live in the household but will be picked up there, and the
passenger/patient.
Joel’s Insight: Are you serious? I am all for offering a discount if I transport two passengers from the
same location. To demand that I only get paid for one passenger, when a driver has to load, secure, and
unload two passengers, is an abuse of all common business sense. Demanding that a Transportation
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Provider not be reimbursed for the transport of a second passenger clearly projects the mentality of
sharecropping! Sorry MTM, but we are in business to make money. If you don’t plan on reimbursing me
for a second passenger, you guessed it, NMP!
11.10 If the Transportation Provider determines a scheduled trip cannot be performed due to unsafe
driving conditions during inclement weather, the Transportation Provider must contact, in a
timely manner, both the passenger and MTM to notify them of the cancellation.
12.0 Reports and Billing
12.1 Transportation Provider must submit claims to MTM for authorized MTM-scheduled trips only.
12.2 Transportation Provider agrees to bill MTM for the MTM designated level of service, regardless
of the level of service actually provided. Transportation Provider may not accept the trip
assignment at the MTM designated rate, and claim additional compensation after performance
of the trip for a higher level of service or for any other extras.
Joel’s Insight: This is another poignant stipulation that clearly illustrates the level of audacious control
that, if afforded the opportunity, Brokers will demand of you, the Transportation Provider. So if you
agree to transport a Medicaid patient 20 miles, but due to construction, traffic jams, or other
circumstances, the trip takes 26 miles, MTM mandates that you will only be paid for the designated 20
miles. Thus, any additional time, cost in labor, fuel, and more are irrelevant. You, the Transportation
Provider, must absorb such losses. Well, if you (MTM) expect me to absorb such losses then you (MTM)
better be paying me a reasonable rate of reimbursement to ensure that my transportation company can
always absorb such potential losses.
12.3 Transportation Provider agrees there will be no charge to MTM for trips canceled by
Transportation Provider, passenger, or in advance by MTM.
12.4 Transportation Provider may not charge MTM a member no-show charge unless provided for in
Transportation Provider’s contract rate Schedule A.
Joel’s Insight: So, using the example above, if you drove 20 miles to pick up a patient and he/she does
not go, you do NOT receive ANY compensation! In fact, not only will you not receive any compensation,
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MTM is so specific that you, the Transportation Provider, “may not charge MTM a member no-show.”
Again, if you (MTM) expect me to absorb such losses, your rates of reimbursement better be good.
Otherwise, you can enlist the help of some other sharecropper! Sorry, but – NMP!
12.5 If a passenger is capable of riding in a sedan type vehicle with their collapsible wheelchair placed
in the trunk of the vehicle, the lower ambulatory rate must apply.
Joel’s Insight: Another example of Brokers trying to squeeze every ounce of profitability out of you.
12.6 If a Transportation Provider uses a wheelchair lift van for ambulatory passengers, the lower
ambulatory rate must apply.
Joel’s Insight: Another example of Brokers trying to squeeze every ounce of profitability out of you.
12.7 Transportation Provider understands that MTM will not pay for:
a) “Waiting time” charges unless specifically authorized in the Transportation
Provider’s contract rate Schedule A, and pre-approved by MTM.
b) Trip charges when Transportation Provider fails to either arrive at pick-up location in
time for timely delivery to passenger’s appointment, or fails to actually deliver the
passenger to his or her appointment on time, the result of which is the appointment
cannot be attended or must be re-scheduled.
c) Any additional charge if the passenger is picked up from, or dropped off at, any
location other than the pre-scheduled MTM authorized addresses.
d) Any additional charge if Transportation Provider diverts to other locations/stops for
passengers other than the pre-scheduled MTM authorized addresses, unless
specifically authorized by MTM.
Joel’s Insight: MTM specifies what they will not pay for in the previous four examples. But if such
circumstances were for a Private-Pay, worker’s comp, or a contracted transport, you would charge for
wait time, no shows, deadhead mileage, multiple pickup and drop-offs, and more. Yet, for some
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laughable reason, MTM expects you, the Transportation Provider, to provide equal treatment to their
clientele as you would for clientele from which you will actually be paid! Sorry, MTM, but – NMP!
12.8 The month-end billing total shall be consistent with the same total of the previously agreed-upon
weekly report totals for that month, and shall be submitted only after final reconciliation with
MTM has been completed for the total monthly billing.
12.9 Billing shall only include charges set forth in the predetermined rate set by MTM transmitted to
Transportation Provider.
12.10 Signed Transportation Provider invoices for services provided to passengers must be submitted
after MTM reconciliation has been completed for the month, and in no event more than ninety
(90) days after the actual date of service. Claims for services received by MTM more than ninety
(90) days after the actual date of service will be deemed waived and will not be paid.
12.11 Transportation Provider shall provide invoices to MTM on forms, at times, and in a manner
acceptable to MTM.
Joel’s insight: Uh oh! If what you do is not “acceptable to MTM,” you risk “Corrective Action!”
12.12 Transportation Provider will provide passenger signed trip tickets upon request as part of the
weekly verification process.
12.13 Weekly reports will be used by MTM to verify Transportation Provider/passenger trip records.
Final billing verification at month-end will be based on the information submitted on the weekly
reports.
12.14 Unless otherwise provided by contract, Transportation Provider payments of clean claims will be
mailed U.S. Mail bi-weekly, provided Transportation Provider has timely submitted all reports
and documentation. All claims will be either paid, denied, or suspended within 45 days of receipt
of the claim.
12.15 Transportation Provider agrees to refer to MTM’s individual internal Authorization/Trip Number
on all claims submission paperwork showing the passenger’s information relating to the
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scheduled trip, and to also refer to the Authorization/Trip Number in verbal conversations
relating to the passenger’s scheduled trip.
12.16 Transportation Provider understands disputed billings/claims must be resolved before payment
for any disputed bill/claim can occur.
Joel’s Insight: Trust me, in speaking from experience working with many Transportation Providers
around the country, this is another very important stipulation. I have witnessed several instances where
Providers had a dispute regarding payment and their payments were withheld. This IS an intimidation
tactic because Brokers know that you need your payment to preserve your cash flow. Thus, they hedge
their bets that you will simply accept their terms because you desperately need your money to remain
operational. Again, this is very much an abusive, controlling tactic.
12.17 Transportation Provider understands the Transportation Provider’s pricing and MTM’s payment
is contractual and that Transportation Provider will be paid directly by MTM for
covered/scheduled services. Transportation Provider shall not bill, or otherwise seek
compensation for services from the transported passenger (other than collection of a co-
payment authorized by MTM where applicable) or from MTM’s Client, even in the event of
MTM’s failure to pay Transportation Provider for services rendered.
12.18 Transportation Provider understands they are only paid for loaded miles (from passenger’s pre-
scheduled start location to pre-scheduled end location) and not for the distance traveled by
Transportation Provider to arrive at the pick-up location, unless special arrangements are agreed
upon by Transportation Provider and MTM in advance of trip.
Joel’s Insight: Deadhead mileage is one specific stipulation that, yes, you can indeed negotiate! Do NOT
fall prey to the bullying tactic that “Brokers do NOT negotiate.” In more instances that not, deadhead
mileage not only can be negotiated, it MUST be negotiated. If you transport a patient 80 miles to a
medical appointment, you simply MUST charge deadhead miles for the return trip. Sure, your deadhead
miles will typically be less than loaded miles. But you MUST charge deadhead miles for distance
transports. Using the example of an 80 mile trip, that will cost you additional cost in fuel, labor, and
wear and tear on your vehicles. You MUST charge a profitable rate for your loaded miles and you MUST
charge a deadhead mileage fee. If the Broker refuses to reimburse such charges, sorry – NMP! You can
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find some other schleprock to become your sharecropper!
Transportation Provider understands that executing a Medical Transportation Services Agreement and
these MTM Transportation Provider Guidelines does not guarantee Transportation Provider any
minimum number of trips and that assignment, withdrawal, and re- assignment of all trips is within the
sole and absolute discretion and control of MTM. Transportation Provider acknowledges that it has no
property rights or legal interests in any particular trip or transported passenger.
Joel’s Insight: As I always say in regards to signing with a Medicaid Broker, if you want to pet an
alligator, that’s on you. You can pet an alligator all day long and hope it won’t tear your arm off. But if
and when the alligator does tear your arm off you can’t get mad at the alligator - you knew that you
were petting an alligator! And nothing is more evident that you’re petting an “alligator” than this
paragraph. MTM clearly articulates that you are guaranteed nothing from them, that you will receive
NO “minimum number of trips,” and those trips you are fortunate enough to receive from them can, at
their discretion, become “withdrawal and re-assign” trips to other transportation providers. In short,
Brokers ONLY need you until they can find a cheaper alternative – bottom line! Why is it important to
understand this critical principle? Because you CANNOT build your business around a Broker! If you do,
your entire business is built on sand and can be washed away in an instant!
Transportation Provider further understands that with any violation of contract terms, MTM can
immediately suspend assignments of passenger trips to Transportation Provider. MTM also has the right
to discipline Transportation Provider for non-compliance with MTM Transportation Provider Guidelines,
by restricting or reducing Transportation Provider trip assignment.
Joel’s Insight: MTM says it all here; they can get rid of you “immediately,” without prior notice. Think, in
an instance, they can completely shut your business down. And yes, I have seen this before!
Transportation Provider warrants by signing this document they have read the document in its entirety
and have full understanding of all terms and conditions, and agrees to same. Transportation Provider
further pledges to abide by all terms and conditions set forth herein, and acknowledges such by signature
on the “Medical Transportation Services Agreement” and on this page of the “MTM Transportation
Provider Guidelines” document. If Transportation Provider does not understand any part of this
document, it is the Transportation Providers responsibility to seek the advice of an attorney for
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clarification prior to signing.
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Appendix A
Basic First Aid Training must be given by a certified First Aid instructor.
Defensive Driver Training must include one of the following:
a. National Safety Council DDC-8 Training Class
b. National Safety Council DDC-PC Online Training
c. National Safety Council Video Self-Instruction Kit
d. National Safety Council Self-Instruction CD-ROM Kit
e. American Association of Retired Persons (AARP) 55-Alive Driver Safety Program
f. Transportation Provider developed in-house training must include:
i. Pre-Trip Inspections
ii. Professional Avoidability vs. Legal Liability
iii. Motorists/Pedestrians
iv. Backing
v. Intersections
vi. Following Distance
vii. Braking/Skids
viii. Drugs/Alcohol/Sleep Deprivation
ix. Courtesy
x. Routines
xi. Accident Procedures
xii. On-Job Driver Demonstration
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Appendix B
Driver training, both pre-service and Annual, suggested in addition to 4.3 requirements could include:
a. Loading and securing persons with mobility assist devices
b. Sensitivity training
c. Working with passengers with all types of mental and physical disabilities
d. Passenger relations
e. On the road in-vehicle practical training, i.e. driving with supervision
f. Pre/post vehicle inspection responsibilities
g. Transporting passengers with frailties and oxygen tanks
h. Safety issues
i. Radio contact
j. Review of State/Federal regulations
k. New laws/regulations
l. Transportation Provider internal procedures
m. HIPAA compliance
Suggested training resources:
a. American Red Cross (ARC) for Basic First Aid and CPR
b. State Department of Transportation (DOT)
c. National Safety Council (NSC)
d. Training given by local or regional transportation providers in your area
e. Local fire departments (often have certified people to teach first aid)
f. Transportation industry video tapes
g. State and local law enforcement agencies
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Appendix C
Recommended equipment to carry in vehicles in addition to 6.7 requirements:
a. Hand Cleaner ( a “waterless” cleanser is suggested)
b. Umbrella
c. Tire Gauge and Jumper Cables
d. Rags and Wipes
e. Wisk Broom, Paper Towels, Glass Cleaner
f. Pouch with Maps
g. Safety Manual
h. Pre-Trip Inspection Forms
i. Car Manual
j. Copy of MTM Driver Guidelines
k. Blanket
l. Water
m. Seat belt cutter
Note: It is recommended that aerosol cans not be carried in the trunks of vehicles in hot weather.
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Appendix D
Daily pre-trip inspection should include:
a. Directional lights and flashers
b. Headlights/clearance and running lights
c. Brake lights and tail lights
d. Windshield wipers/washers
e. Interior lights
f. Horn
g. Fire extinguisher
h. First Aid Kit
i. Fluid levels
j. Tailpipe/muffler noise
k. Fuel cap in place
l. Mirrors
m. Two-way Communication
n. Tire condition
o. Heat and/or air conditioning units operable
p. Parking brake
q. Door/lift operations
r. Seat belts
s. Door handles
t. Speedometer and odometer
u. General cleanliness, inside and outside
v. Wheelchair securement devices
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Appendix E
Daily Trip/Log Sheet Information/Documentation Must Include the Following:
a. Transportation Provider’s Name
b. Driver’s Name Printed
c. Driver’s Signature
d. Driver’s License Number
e. Passenger’s Signature (for each leg of trip)
f. Passenger’s Name Printed
g. Date
h. Pick-up Address
i. Scheduled Pick-up Time
j. Pick-up Arrival Time
k. Pick-up Departure Time
l. Drop Off Time
m. Drop-off Address
n. Identification of whether the leg is a “To” or a “From”
o. Number of Additional Passengers
p. Ages of Additional Passengers
q. Place to Document No-Shows
r. Attendants Name and Signature (if applicable)
s. Ambulatory ______Wheelchair or Stretcher
t. The MTM internal Authorization/Trip number unique to each trip
u. Vehicle ID Number
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By now I am sure you are asking a very logical question, “Why would anyone want to sign an Agreement
with a Broker?” And your question is well-founded. I have seen an untold number of instances where
Brokers have bullied inexperienced Transportation Providers to such a degree that it has brought a great
deal of emotional stress and financial loss to owners who were well-intentioned and unsuspecting
entrepreneurs.
On many occasions, I have witnessed Brokers follow through on their threats to withhold and deny
payments. As a result, companies that were heavily dependent and reliant on Brokers had their cash
flow cut off and their businesses essentially destroyed. Some unsuspecting providers fall prey to the
promises of increased trip volume leading them to invest in vehicles, drivers, and assets only to become
financially overextended when the Broker cuts them off in favor of cheaper alternatives. Obviously, we
do not go into business to be abused or treated as sharecroppers with someone we anticipate should be
more of a “strategic partner.” Fortunately, with the help of this resource, you now know better! You
realize when you partner with a Broker you are petting an alligator – pet at your own risk!
The good news, however, is that there are also many success stories, instances where we successfully
forced Brokers to do what they claim they don’t do - negotiate! And yes, when you position yourself
correctly, when your business becomes a fixture within your community and you refuse to operate at a
loss, Brokers not only negotiate with you, they are forced to respect you! You make Brokers realize that
they cannot bully you and that YOU will turn the table and cut them off versus the other way around.
Later in this resource, I am going to share with you information illustrating how some Transportation
Providers are successfully using Subcontractors to service some of their Broker work. Such strategies
can be profitable if structured properly, far more than in-housing some of the infrastructure and
associated overhead expenses. But before sharing such strategies, I am going to share copies of emails
and correspondence illustrating instances where we successfully forced Brokers to negotiate with
Transportation Providers. Allow me to start by sharing a few articles and publications that will further
illustrate and enlighten you about the growth and objectives of Brokers.
Again, in the coming articles I highlight key points and interject comments in color blue font.
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MTM RAMPS UP FLORIDA OPERATIONS
- St. Louis Business Journal
All eyes are on Florida’s Medicaid transformation since the federal government approved a
plan this month that lumps certain Medicaid recipients into managed care programs in an
effort to curb rising costs, Kaiser Health News reports. The move to manage care is causing
Medical Transportation Management Inc. to ramp up its efforts to expand its core business
in Florida.
Health plans will now be reimbursed a set amount for each Medicaid recipient in this new
deal (which only includes elderly and disabled in long-term care for now). This payment
model removes the fee for service reimbursement model, Kaiser Health News reports. Since
health plans will be reimbursed on an individual basis, the assumption is they'll have to
create a network of providers to help these Medicaid recipients receive better care that’s
easier to navigate, although critics think it'll lead to worse care.
MTM is hoping to land a subcontract from the health plans that eventually win the contracts
to provide managed care. If MTM is a subcontractor for a health plan, they'll provide non-
emergency medical transportation--their core business, to these Medicaid recipients.
In the first year, the state will set aside nearly $417 million to pay for the care of the 36,795
qualified Medicaid recipients, Kaiser Health News reports. Currently, MTM operates as a
transportation provider in two Florida counties. But this federal approval could open the
door to subcontracts throughout the entire state.
Michele Lucas, a spokeswoman for MTM, said it's too early to tell just how much added
revenue that could mean. But Alaina Macia, MTM's chief executive, said "this is a huge
deal."
MTM reported revenue of $135 million in 2012, up from $132 million in 2011.
Joel’s Insight: To better put things into perspective, Logisticare, the largest Medicaid Broker, boasts
annual revenue in excess of $500 million! As you will see, they are very excited about Obamacare!
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Joel’s Insight: The following article is actually from 2011. Although outdated, I include it because it
illustrates the financial growth of MTM, and Brokers in general. Compare MTM’s annual revenue in this
article to their revenue reported in the previous article. MTM experienced an increase of $34.2 million in
one year! This article also shows how contracts can literally change annually and, thus, usher in different
Brokers. This means that any “promises” or Agreements that you share with one Broker can be rendered
obsolete with a new Broker. Obviously, this can dramatically affect your business – especially if you
don’t understand how to position your business and negotiate with Brokers.
MEDICAL TRANSPORTATION MANAGEMENT INC. (MTM) LOSES STATE CONTRACT
- Amir Kurtovic, St. Louis Business Journal
Medical Transportation Management Inc. has lost its $26 million contract with Missouri’s
Department of Social Services to provide non-emergency medical transportation for
Medicaid patients. The contract was a significant portion of revenues for the Lake St. Louis
company which had 2010 revenues of $97.8 million.
Michele Lucas, director of marketing for MTM, said the company will continue doing the
work until Oct. 30, when the program will be taken over by MTM competitor LogistiCare.
“We had a contract with the state and within the contract there are yearly renewal
options,” Lucas said. “We were not able to come to terms on rates so they went with a
different company.”
The contract, awarded in 2010, was for one year with the option to renew for two additional
years. This is not the first time the contract is trading hands between two companies. MTM
was Missouri’s first non-emergency medical transportation broker in 1997 and managed the
program for the next eight years. It lost the contract to LogistiCare in 2005 before winning it
back in 2010.
Lucas said MTM is in final negotiations for a contract of a similar size in the Houston area
that could recover most of the lost revenue. MTM President and CEO Alaina Macia
previously said she was hoping for a 20 percent growth in revenues in 2011 and 2012.
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Joel’s Insight: Again, this is an older article that I include for a reason. Did you notice how MTM projects
a 20% growth in 2011 and 2012? Well, they achieved that goal! I also appreciate how MTM is
negotiating a “contract of a similar size in the Houston are that could recover most of their lost revenue.”
In short, MTM is practicing NMP! Brokers have their eye on their bottom line. So as a Transportation
Provider, you have to ask yourself if Brokers can be so keen on keeping and ensuring profitability, why
can’t you? If NMP works for them, why shouldn’t you do the same?
The following is another excellent article. I have personally worked with Transportation Providers in
Wisconsin and, long story short, they finally decided to band together and refuse to operate at a loss in
accepting the low rates of reimbursement from Logisticare. The result – Logisticare was a complete flop
and now, legislatures are working to determine if the broker-model is even an effective model! This
entire situation in Wisconsin underscored the value and importance of the United Medical
Transportation Providers Group (UMTPG)!
LOGISTICARE LEAVING WISCONSIN AFTER ALL
- Gitte Laasby, The Journal Sentinel
LogistiCare, the much-criticized company that's been dispatching medical rides for Medicaid
patients in Wisconsin since 2011, will be leaving the state after all.
Chuck DeZearn, senior vice president of operations with LogistiCare, justified terminating
the $38 million annual contract with the state in November: The company had been losing
money in Wisconsin for a while, mainly because the state Department of Health Services
failed to provide accurate data on ridership. LogistiCare officials argued that this led them
to grossly underestimate the number of rides needed and bid half the amount it should
have charged to provide those rides.
Joel’s Insight: Don’t buy into the “inaccurate data” crap. Logisticare was losing money for three
reasons. First, the broker-model is built upon Request for Bids (RFB) which, ultimately, is designed to
award the lowest bidder. Logisticare was the lowest bidder which automatically squeezed their margins.
Second, because of their success in squeezing Transportation Providers in other states on already thin
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margins, Logisticare believed they could duplicate their strategy in Wisconsin. And the third reason,
Logisticare was losing money because when Transportation Providers refused to operate at a loss they
found themselves overpaying unqualified Transportation Providers.
"Data is extremely important. Once you're off as far as we were, with our expectations vs.
what ended up being reality, it's always an uphill climb to recover. That was the biggest
challenge, getting off on the wrong foot and constantly trying to catch up," DeZearn told the
Journal Sentinel Friday. "We stuck through a lot of months of losing money, trying to do this
correctly. It just never worked out to be, I guess, a win-win scenario for everybody. We just
said, 'Enough.' "
Joel’s Insight: Amazing, Logisticare’s own senior Vice President is talking about a “win-win scenario for
everybody?!” Hello, Mr. Senior Vice President, did you not read your own Transportation Provider
Service Agreement? Sorry, but your Service Agreement is far from a “win-win scenario for everybody!”
LogistiCare experienced a sharp uptick in complaints in September 2012, when it extended
its dispatch services to southeast Wisconsin. DeZearn said while the company strove not to
have any complaints, some are inevitable when you dispatch 216,000 trips in a month as
LogistiCare did in January.
Joel’s Insight: This is comical. Logisticare began to experience a “sharp uptick in complaints” when
Transportation Providers had enough of being told that their rates of reimbursement were going to be
further reduced and they stopped transporting Medicaid clients, thus, leaving Logisticare extremely
short-handed and unable to meet the growing demand.
"If we were 99.5% complaint free, you're still going to hear from 1,000 or so people," he
said. "So the volume of complaints was probably a little higher than it should be, (but) it's
just that it's a high number because it's a high number of trips."
Driver complaints
Transportation providers, throughout LogistiCare's tenure, complained that LogistiCare gave
them sloppy data on rides and didn't work with them to solve problems. In order to make up
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for the low bid, they said, LogistiCare pressured them into lowering their prices so much
that trips weren't viable, driving mom-and-pop cab companies out of business.
Joel’s Insight: Interesting, the consensus from Transportation Providers is that Logisticare was not
working with them to “solve problems.” Yet, it was Logisticare’s Senior Vice President who was just
talking about finding “win-win scenarios for everyone.”
"We'll work with any broker that gets (the contract), as long as they'll consider providers an
asset rather than a liability," said Red Christensen, general manager of American United Taxi
Cab, which hopes to provide rides for the company that gets the next state contract.
"Unfortunately, LogistiCare had more of an adversarial relationship with providers rather
than working with them."
Joel’s Insight: Because I have worked with a handful of Transportation Providers in Wisconsin, I have a
true affection and appreciation for what has happened in that State. As this transportation provider
indicates, they welcome the opportunity to work with Brokers who consider them “an asset rather than a
liability.” Ultimately, this is the goal of Transportation Providers, to work with Brokers as “strategic
partners” and not as sharecroppers. The irony, Wisconsin is a microcosm of what can happen when
Transportation Providers unite and refuse to operate at a loss. The result, Brokers get run out!
Legislators need to take another look at whether the brokerage model is really saving any
money. Officials have been unable to provide data to quantify how much, if any, money was
saved by converting to a broker, which was supposed to cut down on fraud.
LogistiCare operates in 40-some states across the nation under government contracts or as
business-to-business, DeZearn said.
Joel’s Insight: In Wisconsin, Logisticare learned the hard way what can happen when Transportation
Providers decide to band together and practice NMP! This is exactly what the United Medical
Transportation Providers Group is working to achieve – empowering Independent Transportation
Providers with a common voice.
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THE MEDICAID BROKER PLAYBOOK
I share the following email from a Transportation Provider because it does an excellent job setting the
stage for a series of emails between MTM and another transportation provider I worked with in a similar
market. I have removed names for anonymity and legal purposes. As you read through the emails,
harken back to stipulations defined in the “Service Agreement.” Consider for yourself MTM’s tactics.
The more I work with Transportation Providers, the more comical Brokers become because they all
operate from the same playbook – using the same tactics and strategies of intimidation and control.
Joel,
All they [MTM] do is communicate through emails regarding lowering our rates to be more
competitive with other provider's. They take work from us until we feel the squeeze where
we have no choice but to lower our prices. It's being done that way to all of the provider's
here in [State] by MTM. Crappy tactics if you ask me.
We are at $1.50 per mile and agreed to come down to $1.23 per mile and that's when MTM
sent us back a counter offer trying to make us come down to $1.15 per Mile. After that
counter offer I withdrew my offer of $1.23 and I'm leaving it at $1.50 per mile. They can
squeeze all they want with their silly tactics but they won’t pull a fast one on this old man.
Funny thing is MTM is still paying me at the $1.50 rate.
I get some of my work from 2 Major Hospital's here in the area and will ramp up my volume
very soon. I am taking 11 Case Manager's between 2 hospitals out for lunch to introduce
myself and the services I provide along with my pricing. At the most I will spend for lunch is
approximately $400.00. Break that down. Its only 6 wheelchair moves or 4 stretcher moves.
Not a bad investment... kind of like your Course, Knowledge is the Key to Success.
Thank You,
[Name]
Joel’s Insight: This email supports exactly what Brokers say they will do – take away transports until you
bow to their demands! But you will notice, this Provider practices NMP and refuses to be a sharecropper.
The result, MTM is still paying him the full mileage rate of $1.50 per mile. What I also appreciate about
this Provider is that he “knows his numbers” and is actively putting “Personal Promotions” to use to
introduce and connect with decision makers. He’s personally building brand recognition!
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The following pages are a series of emails between MTM and a different Transportation Provider that
was also informed that their mileage rates of reimbursement were going to be reduced from $1.50 per
mile to $1.00 per mile. Again, this is a 33% reduction in reimbursement that MTM was attempting to
force Providers to accept or have their trip assignments reduced or eliminated.
As I always tell Transportation Providers, correspond as much as possible via writing/email so that you
have a record, a paper trail, especially in dealing with Brokers, contractors or facilities.
After receiving notice of the forced 33% reduction in reimbursement, this Provider, obviously shocked
and upset, attempted to call MTM. Forced to leave a message, he received a short, brief, and direct
email from MTM the following day (Email 1). Thereafter, the Transportation Provider enlisted my help
for which I drafted a series of replies that we forwarded to MTM via fax and email.
[Email 1 - MTM to Transportation Provider]
[Name],
Reducing reimbursements are a necessity for which all providers will be experiencing. We
are working to give providers as much advanced notice as possible of the coming changes so
that you can plan accordingly.
Regards,
[Name]
Joel’s Insight: There are a few key points that I want you to notice in this email. First, as ridiculous as it
sounds, notice how the Area Liaison from MTM greets the transportation provider – just by name, no
pleasantries. Again, I know this sounds ridiculous, but you will see how this changes later on. It’s
comical!
Second, notice how short and brief the email. MTM definitely doesn’t attempt to parse words (for now).
This is definitely a common practice of Brokers. When they do correspond via email/writing they
attempt to be as brief as possible so as not to expose themselves to potential legalities.
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[Email 2 – Transportation Provider to MTM]
[Name], Area Liaison
Medical Transportation Management, Inc.
Fax 800-459-6224
Re: Rates of Reimbursement
Dear [Name]:
We are in receipt of your recent email indicating that MTM is attempting to reduce our
mileage rate of reimbursement by 33.3%. Needless to say, this is very much unexpected
and unanticipated news. But more so, especially considering the amount of miles that
[Name of Company] incurs on a daily basis in transporting clients throughout [State] and
[State], accepting any reduction in reimbursement is not prudent or sensible.
We appreciate your advance notice, but although this reduction in reimbursement may be
“a necessity” for MTM and other providers, it simply is not feasible for [Name of Company].
As you know, we maintain excellent performance standards which are to the benefit of our
shared clientele and a reflection of our strategic partnership. However, maintaining such
high standards do come at a cost for which we are confident that MTM would not
encourage us to compromise.
Thank you again for your correspondence and bringing this issue to our attention. We trust
that you understand that we cannot operate at the proposed rates of reimbursement and
look forward to continuing to provide a superior level of service.
Sincerely,
[Name]
President, [Name of Company]
Joel’s Insight: First, notice how professional our response is in terms of layout and content. It is nothing
like MTM’s correspondence. Second, notice the tone. It is pleasant, yet still direct. It is very “passive
resistant” which subtly begins to convey to MTM that we wish to work with them but we most certainly
are not pushovers willing to operate at a loss! Over the course of this correspondence you will notice
how things begin to change and the level of respect for us from MTM becomes evident.
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[Email 3 – MTM to Transportation Provider]
[Name],
We enjoy having you in our network, but all transportation providers are experiencing a
reduction in mileage reimbursement. In order to ensure that [Name of Company] remains
competitive with other transportation providers you will need to agree to the new rates.
Providers that do not accept these new rates will see their number of trips reduced and
assigned to other providers.
Regards,
[Name]
Joel’s Insight: MTM definitely was NOT expecting to receive our response. Their reply came almost
instantantly. But at this point, MTM still assumes that we will cave under pressure like other
Transportation Providers, hence, the continued threats of “trip reductions.” The rebuttal is a slight bit
longer and even includes a simple pleasantry; “We enjoy having you in our network.” But ultimately,
MTM holds true to their posture of intimidation and control. You will need to agree to the new rates or
your number of trips will be reduced and assigned to other Providers.
What I appreciate most about this response is how MTM attempts to make their forced reductions in
reimbursement almost as a favor – “to ensure that you remain competitive with other Transportation
Providers you will need to agree to the new rates.” What an absolute joke! Well, I guess we can
definitely say that MTM does not discriminate and is an equal opportunity Broker in breaking everyone!
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[Email 4 – Transportation Provider to MTM]
[Name], Area Liaison Medical Transportation Management, Inc. Fax 800-459-6224 Re: Rates of Reimbursement
Dear [Name]:
Thank you for your recent correspondence. We have enjoyed working with you and MTM
these past two years and we welcome the opportunity to continue our relationship.
However, based upon the proposed reduction in the rates of reimbursement it appears that
our strategic partnership will conclude at the end of next month when our current
Agreement expires.
At a time when fuel, insurance, labor, and other associated operating expenses are
increasing, MTM is proposing a reduction in reimbursement which would force [Name of
Company] to operate at a loss. Obviously, as a for-profit enterprise, we are not in business
to lose money. Thus, we have no alternative but to reject your proposal and allow both
MTM and [Name of Company] the remaining six weeks as a transitional period to prepare
for the dissolution of our working relationship.
Again, [Name], we thank you for the opportunity to work with you and all of MTM over the
past two years and we wish you nothing but future success.
Sincerely,
[Name]
President, [Name of Company]
Joel’s Insight: It’s important to note that we purposely waited three days before sending this email. And
yes, the Transportation Provider was growing impatient! But it definitely paid off. We waited so that (1)
MTM would just assume that we caved on their demands, allowing us to “catch them off guard with our
reply, and (2) to project our lack of concern or panic regarding the overall issue. You will also notice that
we “welcome the opportunity to continue our relationship,” so we’re leaving the door open and put the
ball in MTM’s court. We even refer to MTM as a “strategic partnership.” We also reference continued
increasing overhead expenses in an effort to convey to MTM that we’re not stupid, we understand the
“Laws of Economics,” and we’re not going to violate these “Laws” and operate at a loss under any
circumstances!
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[Email 5 – MTM to Transportation Provider]
Hello [Name],
I tried to call you and left a message with [Name of Office Manager] but have not heard back
from you. I would like to schedule a time when we can further discuss the rate of
reimbursement circumstances and explain in greater detail what MTM is trying to do. Based
upon market expansion, there is a very good possibility that we will be assigning [Name of
Company] an increased volume of trips.
Let me know when you will be available or call me directly to discuss. I look forward to
sharing more details with you.
Regards,
[Name]
Joel’s Insight: This is when things heated up and did so quickly and MTM’s stalwart and dismissive
posture came to an abrupt halt! Upon receiving our response, Email 4, as predicted, MTM’s Liaison
called the Transportation Provider – immediately! But as I instructed the provider, do not take the phone
calls. Correspond only via email so that you have a paper trail in addition to allowing the lack of verbal
response to weigh on MTM’s concerns.
Why was MTM in a state of panic, calling the provider immediately? Because in this Transportation
Provider was averaging in excess of $28,000 per month and growing with MTM, so the stakes were
pretty high for everyone. Although this Transportation Provider literally risked losing half of his monthly
revenue, he definitely had a high degree of leverage - and that is what we were working to exploit. In
our second rebuttal we reaffirmed that we would no longer be performing MTM transports. Needless to
say, this was definitely of concern to MTM (and the Transportation Provider) as losing this experienced
and proven provider would be a huge logistical liability to MTM. This Provider is located on a border
state and operates MTM transports throughout both states. So again, this is a very knowledgeable and
experienced Provider that MTM was at risk of losing.
I trust that you noticed the pleasantries, the “Hello” and “I look forward to sharing.” Did you notice how
the Liaison was a bit more talkative and encouraged verbal conversation? Brokers are so predictable!
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[Email 6 – Transportation Provider to MTM]
[Name], Area Liaison
Medical Transportation Management, Inc.
Fax 800-459-6224
Re: Rates of Reimbursement
Dear [Name],
Thank you for your messages and your email. I apologize for my delayed response as we
have been very busy, so much so that I have been on the road and unable to return your
calls. So if you don’t mind, please feel free to contact me via email as my time is limited
during the day and I can’t afford to neglect our clients. I trust that you understand.
In regards to the forced reductions in reimbursement, although unfortunate, as a business
owner I do understand strict budget controls to remain viable. So please know that I fully
understand and can appreciate that a company as large and expansive as MTM must be
financially prudent.
As far as receiving a trip volume increase, please provide me with more clarification as I am
a bit confused. If [Name of Company] were to accept and provide transportation at the
forced rates of reduction we would be operating at a loss. Please pardon my ignorance, but
why would we want to take on the burden of even greater losses?
Again, thank you for contacting me, [Name]. If you could respond via email with greater
clarification to resolve my confusion I would greatly appreciate it.
Sincerely,
[Name]
President, [Name of Company]
Joel’s Insight: By this time, our confidence was further growing because prior to this email being sent,
MTM’s Liaison had left three voice messages over two days; obviously illustrating their eagerness and
sense of urgency to keep this Transportation Provider in their network. You will notice that we used the
word “forced” reductions in reimbursement and we project an almost naïve sense of confusion, further
playing our strategy of “passive resistant.” We’re kind, we’re polite, yet we continue to be firm and
stand our position. In borrowing the boxing slogan, I refer to this strategy as “Rope-a-dope.”
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[Email 7 – MTM to Transportation Provider]
Hello [Name],
It’s good to hear from you and thanks for getting back to me. I know that you guys are busy
so I do understand. I do have good news, though. I explained to [Name of Director] how
long you have been in our network and the great relationship that we have with [Name of
Company]. Over the last few days we have been able to put a package together that would
give you guys an increase from $1.00 to $1.25 per mile. I explained to [Name of Director]
how many trips you are doing between [State] and [State] and he agreed that we should
work with you to get you an increased mileage rate. This is an exclusive opportunity for
[Name of Company] so definitely contact me as soon as possible so that we can sign
everything which will give you a premium rate as compared to other providers.
Regards,
[Name]
Joel’s Insight: I trust that by now you are realizing how comical this situation is becoming and how,
clearly, MTM does not want to lose the services of this Transportation Provider. Notice how the emails
continue to grow in pleasantries and length. But most of all, note how MTM is now positioning
themselves as doing “exclusive” favors for this provider by offering them a “premium rate as compared
to other Providers.” What a progression, a stark difference from the initial emails that were short
directives.
Something else that you need to note and learn from is the comment “contact me as soon as possible so
that we can sign everything.” This is one of the most predictable tactics straight out of Broker’s Playbook
101! I can’t tell you how many times I have seen this - Brokers always developing this false sense of
urgency, the unnecessary push to sign an Agreement ASAP. And in most instances it works because
naïve, inexperienced Providers do just that, sign contracts that are less than advantageous to their
interests. During this entire negotiation process we purposefully delayed some of our responses so that
WE controlled the timing and sequence of events.
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[Email 8 – Transportation Provider to MTM]
[Name], Area Liaison
Medical Transportation Management, Inc.
Fax 800-459-6224
Re: Rates of Reimbursement
Dear [Name]:
Thank you again for your continued correspondence. I appreciate your assistance in
conveying to [Name of Director] the circumstances regarding our trip volume and dynamics.
However, under our existing Agreement which expires January 31st, our mileage rate is
$1.50 per mile. Thus, agreeing to $1.25 per mile is most definitely not an increase and far
from “premium.” Rather, $1.25 per mile is a net loss; something that [Name of Company]
simply cannot risk when considering uncertain variable costs such as fuel, insurance, and
labor.
Again, [Name], I thank you for your help and consideration. But to be clear, [Name of
Company] will not be renewing our contract with MTM should you insist on any forced
reductions in reimbursement or trip volume. Like MTM, we must do everything possible to
ensure organizational profitability and sustainability.
Please feel free to contact me should you have any questions.
Sincerely,
[Name]
President, [Name of Company]
Joel’s Insight: Although cordial and gracious, you will notice that this email takes a more firm posture
and sends a final and clear message. A clear line in the sand has been drawn; either MTM forces
reductions in reimbursement in which case we will not renew our contract, or MTM abandons their
attempts and we proceed.
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[Email 9 – MTM to Transportation Provider]
Hello [Name},
Attached is an updated agreement reflecting reimbursements. Please sign and return as
soon as possible so that we do not risk delays and or interruptions.
Let me know if you have any questions.
Regards,
[Name]
Joel’s Insight: Well, well, well. Although we do get a fine “Hello,” we are back to the short, direct
emails. But if that’s the price of victory, oh how sweet it is! This email was received three days after
sending the previous email reaffirming that we will not agree to mileage rates less than $1.50 per mile.
Attached was an updated Agreement reflecting the existing rates including $1.50 per loaded mile.
The entire process took a couple of weeks and included some high anxiety for the Transportation
Provider. However, it was definitely a worthy investment and a moral victory. Although there is no net
gain in terms of increased reimbursement, the good news is that there is no reduction in reimbursement
as MTM is forcing upon other Providers. Additional good news is that we have sent a clear message to
MTM which I am sure will serve this Transportation Provider long-term.
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KEYS TO THRIVING IN BROKER INFESTED WATERS
I know that I have bombarded with you a LOT of information and insight regarding Brokers. And trust
me, I have a LOT more in which I could share, but that would literally fill volumes! I also know that much
of what I have put before you appears negative and may have you discouraged about the prospects of
working with a Broker(s). But do not be disheartened. My intentions are solely to be honest with you
and to provide you with road guards that help to protect and navigate your venture moving forward.
I can’t tell you how many Transportation Providers enlist my help AFTER signing a “loser” Agreement
and then realize (1) their finances are hemorrhaging, (2) their sources of revenue are one dimensional
and completely dependent on an overbearing Broker, and (3) prospects for recovery appear bleak
because the Broker is prepared to strictly enforce the “loser” Agreement.
But the good news is that I can also boast of many successful NEMT businesses that are very prosperous
to include their relationships with Medicaid Brokers. There are several key reasons for their success
with Brokers which you need to learn and follow:
KNOW YOUR NUMBERS. Rarely, if ever, are Medicaid reimbursements as profitable when
compared to Private-Pay or other forms of reimbursement. But in knowing your operating
expense ratios you can more easily and accurately determine profitable rates of reimbursement.
Let me be clear. Brokers do not care about your operating expenses. They only care about
getting your rates down as low as possible while ensuring that you still provide reliable service
so that they can boost their profit margins – bottom line. In Hawaii, Brokers recently proposed a
$6 reimbursement for a wheelchair pickup. Why? Because Transportation Providers allowed
them to! Providers kept relenting and relenting and Brokers kept pushing and pushing down
reimbursements. The result, providers went out of business! Know your numbers – sorry, but
you shouldn’t even put the key in the ignition and attempt to turn over the engine for only $6!
KNOW YOUR VALUE AND YOUR WORTH. I’m not referring to your net value, which is important.
Rather, I am referring to what your market can sustain. How much are people willing to pay for
your professional service?
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If customers are willing to pay $85 for a stretcher transport and Brokers are suggesting a $25
reimbursement for a stretcher of equal distance you instantly know that such a proposition is
unsustainable! Further, it doesn’t matter how much volume the Broker proposes, if you cannot
turn a profit on a single transport then you most certainly cannot turn a profit on more
transports! If I’m drowning in 10 feet of water the last thing I need is 5 more feet of water!
DO NOT BE ONE DIMENSIONAL. One of the greatest mistakes is when Transportation Providers
become one dimensional and rely exclusively or disproportionately on Brokers for their source
of revenue. As expressed in their Service Agreement and illustrated in their emails, Brokers will
take away trips away and reassign them to other providers willing to serve as sharecroppers.
Thus, any movement and trips/revenue can have immediate and disastrous effects on your
business. One of your primary goals should be to build diversified clientele with various sources
of reimbursement. When you are diversified, you are empowered!
FORCE NEGOTIATIONS. The email correspondence between the Transportation Provider and MTM
clearly illustrates that, yes, Brokers DO negotiate. I have witnessed and contributed in countless
negotiations with various Brokers. But understand and be realistic. If you are new to the NEMT
industry you have very limited leverage and negotiating power, especially if you are in a large
market. Thus, you need to focus on building your Private-Pay and contracted work. When you
build brand recognition and become a fixture within your community you then have leverage
and negotiating power.
In business, you don’t get what you deserve, you get what you negotiate!
PRACTICE NMP, AND ALWAYS BE WILLING TO WALK AWAY. I know that NMP sounds a bit comical –
it’s a bit of a play on words. With all seriousness, if you wish to build a viable and profitable
business you need to be able to say “NO” and walk away without remorse or second-guessing.
Trust me, Brokers first priority is their profit margins and you too are entitled to the same focus.
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SUBCONTRACTING TO INCREASE PROFITABILITY
A strategy that is continuing to grow, if for no other reason than financial necessity, is Transportation
Providers subcontracting to Independent Operators for servicing Medicaid recipients. I continue to
witness this with Transportation Providers in competitive and growing markets. What was once a
strategy rarely used and not permitted by most Brokers, is now becoming an accepted strategy and
suitable to meet the growing demand.
As I have mentioned several times before in my Newsletter and email correspondence, the way we are
doing business today in the medical transportation and home care industries has definitely changed
from years past. I trust that you realize this after reading the many articles and publications I have
presented in this resource.
Brokers too are recognizing and adapting by adjusting their considerations to meet the growing demand
of dramatically increasing number of Medicaid recipients via Obamacare. Especially considering what
we have accomplished in the State of Wisconsin (Logisticare losing the contract and essentially getting
evicted), Brokers know they can’t afford the possibility of becoming short-handed when Transportation
Providers refuse to provide transports for meager reimbursements. Although Brokers are not stumbling
over themselves to increase rates of reimbursements, they do recognize that more flexibility on
particular issues is critical to their best interests.
Don’t misunderstand, Brokers remain far from a pleasure in terms of policy and practice! But ultimately,
they know that Transportation Providers are their life blood. Without us, they are out of business!
We all understand the basic principle of subcontracting – outsourcing work to Independent Operators.
Essentially, what makes this strategy financially viable for the NEMT industry is that the Independent
Operator, often referred to as a “gypsy service,” uses their own vehicle, maintains their own insurance,
and pays for their own fuel. In all practicality, they are operating their own vehicle. Additionally, rather
than paying labor costs, worker’s compensation and associated tax burdens, you compensate via
straight reimbursements and then issue a Form 1099 as Independent Operators are responsible for their
own taxes.
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Subcontractors can definitely add to your bottom line. However, if not managed properly, there can be
areas for concern. Before deciding that subcontracting is suitable for your business model, you need to
be aware of some key elements as follows:
Command and Control: Subcontractors are not your employees. As such, you can risk sacrificing a
degree of “ownership” over your level of service. Think practically. Employees driving your vehicles,
wearing your uniforms, and operating under your company policy and procedures tend to have a
greater sense of obligation to their job. Their performance is expected to contribute to the building of
your company’s reputation and brand recognition. As such, you have greater autonomy to train your
employees, implement expectations, and create policies.
The reasons for those preferring to serve as Independent Operators versus working as employees are,
like individual personalities, wide and varied. However, I would cite the overwhelming consensus is that
an Independent Operator wishes to remain just that – independent! Just as we seek freedom and
fulfillment through entrepreneurship and owning businesses, so too do Independent Operators. The
difference, however, is that Independent Operators essentially “own their job.” Unlike an employee, on
days that Independent Operators cannot or prefer not to work, they simply tell you. Ultimately, if they
don’t want to work, they don’t have to!
Undercutting and Undermining: Over the years, we have had an untold number of Independent
Operators contact our office in an effort to learn how to start their own business. They believe they can
gain greater reward serving directly as a Subcontractor to Medicaid Brokers versus Independent
Operators for you. Especially when Independent Operators are desperate for money to remain
operational, your customers are prospect number one!
You should definitely have a Non-Compete Agreement with your Independent Operators. Such
Agreements are an initial deterrent and clearly articulate your intentions and expectations to the
Operator. However, you have to keep things in proper perspective. At this level and at such modest
price points, a Non-Compete Agreement serves only as a form of intimidation than a realistic course of
action. If an Independent Operator violates a Non-Compete Agreement it is a civil matter only. The cost
in legal fees, time, and effort would far exceed any potential reward. Yes, your attorney could send a
few threatening letters to a violating Independent Operator and you would be out of $500 – $1000. But
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ultimately, such idle threats amount to nothing more than expensive toilet paper. Similarly, based upon
what you have learned about Brokers, do you really think they would be an advocate for such
complaints? - No, of course not. Unless there is evidence of unacceptable service, Brokers will always
go with the cheapest option.
Undercutting and undermining are always potential possibilities with subcontracting. Independent
Operators have informed us of such intentions and Transportation Providers have complained of such
occurrences. Because Independent Operators are literally the ones “making face time” and assisting
your clients, they essentially perceive your customers to be their customers. Understanding that
undercutting is always a possibility, it is all the more important that you find, secure, and adequately
compensate reliable and responsible Independent Operators.
When Independent Operators venture off and apply directly to Brokers, there exists the possibility that
they may lure away some of your clientele. Because Brokers make primary decisions based on price, if
the Independent-Operator-turned-Medicaid-Provider offers to perform transports at a reduced rate
chances are very good that they will receive transports. The first moral of the story is that Brokers are
not loyal to you - they are loyal to the lowest price. The second moral of the story is that Independent
Operators are not loyal to you – they are loyal to the highest reimbursement.
Suitable Clientele: Because Independent Operators use their own personal vehicles, typically a sedan or
minivan, the only clientele that you can suitably subcontract are ambulatory clients or those in a
wheelchair able to transfer into the seat of a car. Personal vehicles cannot accommodate para-lift
transports and they obviously cannot accommodate stretchers.
Subcontracting can be profitable because you are not paying the fixed and variable overhead expenses
associated with transporting ambulatory Medicaid recipients. However, to make money worth your
while you need volume. You need many Independent Operators for which you make a percentage of
each reimbursement. Consider the following reimbursements offered by MTM in the state of Florida:
A. Ambulatory trips will be paid at the following rate:
Base rate fee for cab/sedan per one way trip:
$11.00 includes the first five (5) miles
Mileage rate for trips:
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5.01 to endless loaded miles: $1.25 per mile
B. Para-lift trips will be paid at the following rate:
Base rate fee for para-lift per one way trip:
$20.00 includes the first five (5) miles
Mileage rate for trips:
5.01 to endless loaded miles: $1.25 per mile
C. Stretcher trips will be paid at the following rate:
Base rate for stretcher per one way trip:
$80.00 includes the first five (5) miles
Mileage rate for trips:
5.01 to endless loaded miles: $1.25 per mile
Special Rates
Wait time – must have prior authorization
Ambulatory: 40 or more loaded miles: $5.00 an hour
Para-lift: 40 or more loaded miles: $10.00 an hour
I have to include MTM’s wait time rates because they are so comical. If a driver is “approved” to wait
for a patient that has to travel 40 or more miles, you will be reimbursed at a rate less than minimal
wage! It’s laughable that Brokers propose such a rate, but even more so, it’s scary to think that there
are many uninformed and inexperienced Providers that actually agree to such rates.
Think about it. If you agree to a $5.00 or $10.00 per hour wait time and you are paying a driver an
hourly wage to wait, you are literally agreeing to lose money. You are being reimbursed at a rate that is
less than what it costs. This is why you have to love Medicaid Brokers – they have the balls to propose
the audacious and even bigger balls to enforce it!
MTM’s proposed wait time alone illustrates why you need to outsource, subcontract, your ambulatory
Medicaid recipients to Independent Operators. With MTM’s rates of reimbursements, you cannot
afford to have drivers, on your payroll, waiting for $5 – 10 per hour. You cannot afford the overhead
expenses of vehicles, insurance, fuel, and labor expenses.
Managing Independent Operators: In addition to saving money and reducing overhead expenses,
subcontracting to Independent Operators allows you to operate in more remote and distant locations.
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Realistically, because Independent Operators are not your employees and they operate their own
vehicles, technically, you rarely, if ever, need to see them! With the help of technology, you can literally
forward trip-related information to your Operators and manage them from a distance.
Transportation Providers with whom I work incorporate Subcontractors into their business model; they
use Dispatching Made Easyi (DME) to send the Independent Operators trip related information. Using
DME’s Mobile Functionality, dispatchers assign and convey trips to Independent Operators and, using
their own phones at their own expense, Operators relay trip status to dispatch. Dispatchers don’t even
talk to the Independent Operators – everything is done electronically via Dispatching Made Easy. If
additional trips are received from Brokers throughout the course of the day, dispatchers simply send
Operators their trips electronically. For Brokers who require signatures, DME allows you to email Trip
Manifests to Independent Operators to be printed from their home computers. This technological
convenience is significant leverage that saves you a lot of money while making you even more!
In regards to policy compliance, according to the Medical Transportation Service Agreement that we
evaluated earlier in this resource, you will recall the various driver expectations to include background
checks, drug screening, CPR training, Motor Vehicles Reports and more. Subcontracting work to
Independent Operators does not absolve you, “The Company,” from complying with Broker related
policies. However, you can pass along these financial obligations to the Independent Operators. In fact,
it is to your advantage to ensure that Independent Operators cover such expenses because it serves as a
filtering mechanism, weeding out those who are not serious, and it ensures their vested interest in your
Provider-Operator Agreement.
The Medical Transportation Service Agreement also reserves the right for Annual Inspections of Vehicles.
Needless to say, Independent Operators must agree to and comply with annual inspections by Broker
representatives if they are to work for your company. In this regard, subcontracting to Independent
Operators makes policies and procedures as dictated by Brokers more helpful than harmful. Especially
for Operators that you don’t see regularly, annual vehicle inspections, drug screening, and Motor
Vehicle Reports can actually contribute to ensuring higher standards.
Profiting from Independent Operators: How do YOU actually make money from subcontracting? There
are two options. You either take a percentage of the Operator’s total earned reimbursements or you
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offer a flat fee reimbursement. One strategy is not necessarily better than the other. The right solution
for you is really determined by what is best for your accounting procedures and your financial goals.
Using the MTM rates as an illustration, MTM reimburses $11.00 for an ambulatory pickup. You, the
Provider, will receive this reimbursement and compensate your Independent Operator $8.00, keeping
$3.00 as profit. Likewise, where MTM’s mileage reimbursement is $1.25 per mile, you would
compensate the Operator $.85 per mile, profiting $.40 per mile.
As I mentioned previously, subcontracting ambulatory Medicaid work is a volume-based business
model. Profiting from $3.00 pickups and $.40 per mile is an example where “nickels and dimes add up.”
Obviously, these numbers will vary depending on the various rates of reimbursements in different states
and with different Brokers.
Another benefit to subcontracting Medicaid work is what Brokers often refer to as Liquidated Damages.
When a customer is picked up late, late for an appointment, or encounters other inconveniences, the
Broker reserves to the right to seek Liquidated Damages – code word for the Broker is not paying you!
The good news with such inconvenient circumstances, Liquidated Damages, is that it does not come out
of your pocket - it gets passed along to the Independent Operator.
Another benefit to using Dispatching Made Easy is that the moment your dispatcher receives a call
indicating that a patient is ready to be returned and selects “Customer Awaiting Return,” the trip is time-
stamped, marking the exact time which cannot be changed. Such confirmation serves as an additional
form of checks and balances should protesting any Liquidated Damages to Brokers become necessary.
Motivation for Independent Operators: A logical question is why would anyone want to serve as an
Independent Operator? Why don’t Operators just apply to Brokers directly to become an approved
Provider? I am sure that there are personal motivations that I cannot speak to as they are unique to
each Operator. However, as I work with Transportation Providers who use subcontractors, I cite a few
primary reasons.
First, many Independent Operators cannot afford to go 30-45 days without payment as is sometimes the
norm with Brokers when first applying to become a Provider. Practically speaking, there are many
people who live “week to week” and “paycheck to paycheck.” They simply cannot afford a sustained
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period of time without money. Second, by joining with an approved and established Provider, an
Independent Operator can gain more trips and more money much more quickly than going through the
enrollment process with Brokers. Third, an Independent Operator has no desire to deal with any
potential headaches or administrative hassles from Brokers. They just want to obtain their trips, do
their job and get paid without potential complications. The more you can provide consistent work,
without hassle and with generous compensation the more likely you are to retain worthy Operators.
Suitable Applicants: Finding reliable and responsible Independent Operators is obviously important.
Although they are not your employees, Independent Operators still serve and represent your company.
One might think that finding experienced taxicab drivers are ideal candidates. However, not so
surprising, Transportation Providers using Independent Operators have discovered this is not so.
According to many Providers, taxicab drivers tend to be less reliable, easily distracted, and more
interested in pursuing “fast cash” versus providing assistance befitting the elderly. A consensus of
Providers indicate that, overall, many taxicab drivers are less willing to take the time to leave the vehicle
to assist elderly people in and out of the vehicle, up and down stairs, and open and close doors.
In the event that someone reading this is a former taxicab driver, please don’t take offense and “kill the
messenger.” Again, this less than desirable opinion of taxicab drivers serving the role of assisting the
elderly comes from experience via a consensus of Providers. Needless to say, I trust that there are many
exceptions and many former taxicab drivers can provide exceptional service. So do not be disheartened.
There are, however, two types of people that serve as prime candidates for Independent Operators.
The first, we will be discussing in the Home Care section of this resource; middle-aged women, possibly
single mothers, looking for additional money. Multiple Providers have mentioned such candidates,
middle-aged women, because (1) they tend to be more mature as compared to younger women, (2) if
they have children, then definitely need the money and are desirous of some type of stable cash flow,
and (3) they have an instinctive nurturing nature that is ideal for serving the elderly.
Speaking of women employees, especially if you already have or you plan on diversifying into Home
Care, you may already have them. As we discussed, Obamacare is changing the way we employ people.
We cannot afford to have more than 50 employees or we will be paying unsustainable taxes and health
benefits. Our businesses will not be profitable! Further, because of Obamacare, full-time employees
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are considered working 30 hours per week, no longer 40 hours. Thus, more and more employers are
laying people off and hiring part-time help.
Because your Transportation Business and Home Care Agency are two separate legal entities providing
mutually exclusive services, you have some creative options. Middle aged women are prime candidates
for your Home Care Agency, working 20-30 hours per week depending on demand, and then serving as
reliable Independent Operators for your Transportation Company. As an employee of your Home Care
Agency, they will draw a steady paycheck. As an Independent Operator for your Transportation
Company they will receive steady compensation and receive a 1099 at the end of the year.
Various reminders that make using Caregivers as Independent Operators more enticing and
economically feasible are as follows:
Workers compensation for Home Care Providers is relatively cheap, especially when compared
to Workers Compensation for NEMT drivers. In your Transportation Company, you will not pay
Workers Compensation for your Independent Operators
Your Caregivers have reliable vehicles and are experienced in assisting and transporting elderly
people to medical appointments. Further, if you use some of the strategies discussed in “How
to Build a Million Dollar Home Care Agencyii,” they have magnetic signs with your company logo.
While on duty as a caregiver in your Home Care Agency and while serving as an Independent
Operator in your Transportation Company they will be advertising your business.
The second type of candidate is older, retired men – and I understand why. Personally, I always
welcomed the opportunity to hire such persons. Older retirees obviously (1) have a proven job history
demonstrating their reliability, (2) most are receiving pensions and social security so that they literally
cannot be compensated too much or it could conflict with their retirement benefits, and (3) their
motivation for working is simply to stay busy, engaged in life, and create some supplemental income.
Located in Upstate New York, we had a big IBM presence so I always welcomed the opportunity to hire
retired IBMers looking to stay active and engaged in life.
Insurance and Liability: Independent Operators are responsible for their own insurance because they
will be using their own personal vehicle. Thus, Operators can have standard insurance; something like
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Geico, State Farm, All-State, etc. By using Independent Operators and not having to insure vehicles with
livery insurance, you are saving a small fortune!
You do, however, need to carry a General Liability policy, one that lists your Independent Operators
individually. So you do need to make sure that your Independent Operators have good driving records
and clean Motor Vehicle Reports. But again, the good news is that the cost of a General Liability policy
is a minute fraction of the cost in carrying livery insurance for each vehicle. Feel free to visit us at
http://www.umtpg.org/umtpg-benefits/insurance-savings to learn more and enter your contact
information. One of our lead insurance brokers will contact you with pricing and more information.
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MANAGED CARE CONSORTIUM AGREEMENT
Now that we have gone into excessively great detail discussing the Medicaid Broker system and
particulars thereof, let me share with you an Agreement that Transportation Providers are required to
sign when providing services to Kaiser Permanente, an integrated Managed Care Consortium that
provides services to Medicaid recipients. Kaiser Permanente was founded in 1945 by industrialist Henry
J. Kaiser and physician Sidney Garfield.
We need to review this contract for two specific reasons. First, the possibilities of working with
Managed Care Consortiums or similar-type structures in the near future are very real possibilities.
Second, this Agreement will give you an unbelievable sense of perspective when you compare this
Agreement to that of the Broker Service Agreement. Kaiser’s Agreement is ONLY 8 pages as compared
to the 38 page MTM Agreement and 75 page Logisticare Agreement. Third, the rates of reimbursement
from Kaiser are dramatically higher and more favorable as compared to the peanuts that Brokers
attempt to offer!
Consider, the non-profit Kaiser Foundation Health Plan and Kaiser Foundation Hospitals entities
reported a combined $1.6 billion in net income on $47.9 billion in operating revenues last year. Kaiser
Permanente has 8.9 million health plan members, 167,300 employees, 14,600 physicians, 37 medical
centers, and 611 medical offices. As of 2006, Kaiser Permanente operates in nine states and the District
of Columbia, and is the largest Managed Care Organization in the United States.
In short, although we are comparing apples to oranges, Kaiser is HUGE as compared to individual
Medicaid Brokers. And Kaiser only operates in 9 states! Needless to say, Kaiser is a serious “player”
versus the archaic and caveman tactics as practices by Brokers.
Kaiser’s Agreement with Transportation Providers is in stark contrast to the Service Agreements
proposed by Medicaid Brokers. Clearly, by the language and amicable tone of the contract, Kaiser
actually understands that they need Transportation Providers in an effort to accomplish their daily
missions. Thus, they treat Transportation Providers much more like strategic partners versus
sharecroppers as do Medicaid Brokers!
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MANAGED CARE CONSORTIUM SERVICE AGREEMENT
This Letter of Agreement (“Agreement”) sets forth the basic terms for non-emergency wheelchair
and/or gurney van transport services negotiated on behalf of [Name of Transportation Provider]
("Contractor"), a ____________________________, and Kaiser Foundation Health Plan, Inc. (“Health
Plan”), a California nonprofit, public benefit corporation.
Contractor is a provider of wheelchair and/or gurney van, transport services. Contractor is duly
licensed and approved by applicable Federal, State, local laws and regulations to provide such services.
Contractor shall provide authorized gurney and/or wheelchair non-emergency ground transportation
services (“Services”) to certain members (“Members”) of Health Plan who are Medicaid beneficiaries
(“Members”) and referred to Contractor by Health Plan or The Permanente MediCal Group (“Medical
Group”). Contractor may make use of subcontractors in its performance of Services under this
Agreement, as long as subcontractors are pre-approved by Health Plan to meet the requirements stated
in this Agreement. Contractor is fully responsible for adhering to all of the terms and conditions of this
Agreement regardless of whether it uses subcontractors in performance of the services stated. Health
Plan is licensed as a health care service plan by the California Department of Managed Health Care
(“DMHC”).
Joel’s Insight: It’s only the second paragraph and Kaiser is already demonstrating the freedom and
flexibility afforded to Transportation Providers. Kaiser has no problem with Providers using
Subcontractors as long as they are “pre-approved by Health Plan to meet the requirements” of this
Agreement.
Health Plan and this Agreement are subject to the Knox-Keene Health Care Service Plan Act of
1975 (“Knox-Keene Act”) located at California Health & Safety Code Sections 1340, et seq. and
regulations promulgated thereunder. All federal, state and local laws and regulations applicable to the
provision of Services hereunder are incorporated by reference herein and shall be binding on the
parties, including but not limited to the laws, regulations and directions governing the Medicare
Advantage and regular Medicare and Medicaid Programs, and applicable provisions of Knox-Keene Act,
and such other laws that are mandated as a result of Health Plan’s contractual relationship with
government funded healthcare programs. All applicable provisions of the accrediting standards and
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requirements of The Joint Commission, the National Committee for Quality Assurance and any other
applicable accrediting organization shall also apply to this Agreement.
This Agreement will be for a term of two (2) years, commencing June 1, 2013 (“Effective Date”) and
expiring, with an option for Health Plan to extend the agreement for (2) one (1) year periods (the
“Term”). This Agreement may be terminated, with or without cause, during its stated two year term by
either party giving sixty (60) days prior written notice to the other party of its intention to terminate.
Either party may terminate this Agreement effective immediately upon breach by the other party of any
material provision of this Agreement, provided such breach continues for fifteen (15) days after receipt
by the breaching party of written notice of such breach from the non-breaching party. Termination or
suspension of the Agreement without any future obligations owed by either party to the other shall
result during the occurrence of any force majored.
Joel’s Insight: First, especially when using MTM’s Broker Agreement as a point of reference, the
language in Kaiser’s Agreement is much more amicable and respectful of the needs of both parties.
Second, Kaiser’s Agreement allows either party to terminate this Agreement without future obligations
owed by either party to the other – what a stark difference from that of MTM’s Agreement!
Contractor hereby agrees to provide gurney and/or wheelchair ground transportation services
to Member Patients by Health Plan under this Agreement as reasonably requested by Health Plan.
Contractor’s drivers and all personnel who assist in providing the said service will each have all
permits, licenses, and certifications required by applicable federal, state, municipal and county laws
and regulations now or hereafter in force and effect. Such permits, licenses and certification will be
current and in possession of Contractor’s drivers and other personnel at all times for inspection by
Hospitals upon request. Contractor will notify Health Plan immediately of any changes in regard to its
license status (e.g. suspensions, cancellations, updates, etc.).
Joel’s Insight: MTM and other Brokers require that drivers have proper licensing available for inspection.
But all throughout this Agreement you will notice that Kaiser refrains from including the ridiculous
threats of “Corrective Action Plan” should a provider fails to be compliant with any stipulations.
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Service Locations:
Services are to be provided within the KP California Region, defined as within the
following counties: [Name of Counties].
Contractor is committed under this Agreement to coordinate its efforts with the requirements
of Health Plan and Medical Group to assure the quality of all care and services provided to Member
Patients. In accord with a mutually agreed upon quality management program as outlined in Exhibit B,
which is attached hereto and incorporated herein by this reference, Contractor, Health Plan, and
Medical Group Contractor hereby acknowledges that the quality assurance, risk management, and
utilization review programs of Health Plan and Medical Group require that Health Plan and Medical
Group monitor the quality assurance, risk management, and utilization review programs of Contractor
and all of its personnel. Contractor agrees that Contractor, Health Plan, and Medical Group shall
cooperatively pursue opportunities to continuously improve the care provided under this letter of
Agreement in accord with the provisions of Exhibit B. Contractor shall allow representatives of Health
Plan and Medical Group to participate actively in the conduct of Contractor's quality assurance and
utilization review programs. The parties hereto will perform utilization reviews as part of their efforts to
achieve the objectives of quality assurance and utilization review.
Joel’s Insight: Wow! Look at the difference in tone between this Agreement and that of MTM! In
Kaiser’s Agreement, we see “mutually agreed” and “cooperatively pursue opportunities” – underscoring
the strategic partnership between Kaiser and Contractor. No such language exists in MTM’s Agreement
because, in the perspective of MTM, Transportation Providers serve the role of servant.
Services provided under this Agreement may or may not be a covered benefit under the
Member’s membership agreement (the “Membership Agreement”). If Services are a covered benefit
under the Member’s Membership Agreement (“Covered Services”), Health Plan shall be responsible for
payment to Contractor, as set forth in greater detail in Section 1 below. If Services are not a covered
benefit under the Member’s Membership Agreement (“Non-Covered Services”), Health Plan shall not be
responsible for payment to Contractor; however, the Member will be notified that the Services are not
covered and that the Member will be personally responsible for the Non-Covered Services if the
Member elects to have them provided; in which case, if the Member agrees to be personally responsible
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for the Non-Covered Services, Contractor shall be so notified, and the payment shall be as set forth in
Section 2 below. If the Services are Non-Covered, and the Member does not agree to be personally
responsible therefor, Contractor shall not provide Services.
Joel’s Insight: Kaiser demonstrates further good will by specifying that the cost of transportation
services for Members may or may not be covered under their Health Plan. In the instances when such
transportation is NOT covered, Kaiser will notify the Member in advance and, thus, the Member will be
responsible for such expenses.
For Covered Services, Health Plan shall pay to Contractor according to the rates included in
Exhibit A, which is attached hereto and incorporated herein by this reference. Contractor shall submit
its claims for Covered Services to:
Joel’s Insight: As you will notice in the attached rate sheet, the rates of reimbursement from Kaiser are
dramatically higher and more reasonable as compared to the rates proposed by Medicaid Brokers –
further evidence illustrating that Kaiser understands that Contractors need to remain profitable and
solvent in order to continue supporting the mission of Kaiser.
KP NCAL Member GV/WCV Claims Mailing Addresses
Gurney Van/Wheelchair Van claims must be billed on a standard CMS-1500 form, indicating the KP
authorization number in Box 23, and sent to:
EMI-Gurney Van/Wheelchair Van Claims
PO BOX 853915
Richardson TX 75085-3915
Overnight packages and expedited mail should be sent to EMI’s street address:
EMI-Gurney Van/Wheelchair Van Claims
1200 Riverplace Blvd. Suite 600
Jacksonville, FL 32207
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Customer Claims Service Department
Hours: Monday through Friday 8:00 am to 5:00 pm Pacific Time
Telephone: 1-888-[Number]
FAX: 1-[Number]
1. Payment shall be made to Contractor for services rendered within forty-five (45) days of
receipt of a completed HCFA 1500 form. Except as expressly stated elsewhere in this
Agreement and for an applicable co-payment, Contractor shall look solely to Health Plan for
compensation for Covered Services rendered to Member Patients under this of Agreement.
Contractor agrees that in no event, including, but not limited to, non-payment by Health
Plan, insolvency, or breach of this Agreement, shall Contractor bill, charge, collect a deposit
or surcharge from, assert a lien on a Member’s settlement or judgment against a third party
tortfeasor, or have any recourse against any Member Patients for Covered Services provided
pursuant to this letter of Agreement. Contractor further agrees that this provision shall
survive the termination or expiration of this letter of Agreement and shall be construed to
be for the benefit of Members.
Joel’s Insight: The only downside to this Agreement is that Kaiser reserves the right to pay Net 45.
However, if you maintain a healthy cash flow, this stipulation will not be a long-term problem.
2. If a Member elects to continue receiving Non-Covered Services from Contractor after such
Member’s coverage benefits under his or her applicable Membership Agreement have been
exhausted or after Health Plan disallows coverage for such services, Contractor shall seek
compensation solely from such Member (or such Member’s representative) for such
services, and Health Plan and Medical Group shall not be liable to Contractor for any charge
in connection with such services rendered by Contractor to such member. Contractor shall
submit invoices for services provided under this letter of Agreement to the Member, unless
indicated otherwise.
Joel’s Insight: If transportation service is no longer covered for a Member of the Health Plan, Kaiser not
only informs the Member, but they also allow the Member to continue using the Transportation Provider
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of their choice. Medicaid Brokers do NOT do this – afford Members such autonomy. Kaiser further
makes it clear to the Member and to you, the Transportation Provider, that the Member will be
responsible for the cost of transportation service.
Contractor shall maintain, and shall require its subcontractors providing Services hereunder to
maintain, in full force and effect, at its sole expense, insurance covering its obligations under this letter
of agreement for professional liability, bodily injury and property damages at limits of not less than $1
million per occurrence and motor vehicle liability insurance with a combined single limit of not less than
$1 million to cover the scheduled autos vehicles used in performance of Contractor’s duties hereunder.
Contractor shall cause such insurance policies to name Health Plan as an additional insured. Upon
request, Contractor shall provide Health Plan with satisfactory evidence of its compliance with these
insurance requirements.
Contractor agrees that all information, records and data maintained or collected about Member
Patients shall be confidential and Contractor's agents and employees shall not discuss or transmit such
information except as a necessary part of providing services to Member Patients. Neither Contractor
nor Health Plan shall disclose to any person not a party to this letter of agreement in any manner
whatsoever any information about this Agreement, including without limitation, information about
either party’s duties or benefits hereunder or the contents of Exhibit A without the prior written
consent of the other party. Notwithstanding anything to the contrary stated herein, Health Plan, in its
own discretion, may disclose to Health Plan or Medical Group any information about this Agreement
obtained as a result of this Agreement. The parties recognize and acknowledge the importance of
protecting the privacy rights of Members, including, but not limited to those rights in the Health
Insurance Portability and Accountability Act of 1996, Public Law 104-191, together with the regulations
promulgated thereunder (collectively, “HIPAA”).
Contractor agrees to indemnify and hold harmless (and at Health Plan’ request, defend) Health
Plan and all other persons or organizations cooperating in the conduct of the “Kaiser Permanente
Medical Care Program” and each of their officers, partners, employees and agents from and against any
and all claims, losses, damages, liabilities, costs, expenses, or judgments for or in connection with injury
or damage (including, but not limited to, death) to any person or property that such injury or damage
results from or is any way connected with any acts, failure to act, or the performance of or failure to
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perform obligations under this interim agreement by Contractor, its officers, partners, employees, or
agents. Health Plan agrees to indemnify and hold harmless (and at Contractor’s request, defend)
Contractor from any and all claims, losses, damages, liabilities, costs, expenses or judgments for or in
connection with injury or damage (including, but not limited to, death) to any person or property that
such injury or damage results from or is any way connected with any acts, failure to act or the
performance of or failure to perform obligations under this Agreement by Health Plan, its officers,
employees or agents. Neither termination or expiration of this Agreement nor completion of acts to be
performed under this Agreement shall release either party from its obligations to indemnify as to any
claim or cause of action asserted so long as the event upon which a claim or cause of action is
predicated shall have occurred prior to the effective date of any such termination or completion.
Joel’s Insight: There is no other paragraph in this Agreement that illustrates how Kaiser attempts to
create an amicable and mutually beneficial arrangement for both parties. First, Kaiser insists that both
parties indemnify and hold each other harmless. Second, they specify that such an arrangement shall
not terminate or expire. This is a good will stipulation that you rarely see in Broker Agreements.
Contractor agrees that if this Agreement is determined to be subject to the provisions of
Section 952 of P.L. 96-499, which governs access to books and records of contractors of services to
Medicare providers where the cost or value of such services under the contract exceeds $10,000 over a
twelve (12) month period, then Contractor will permit representatives of the Secretary of the
Department of Health and Human Services and of the Comptroller General to have access to this
Agreement and books, documents and records of Contractor, as necessary to verify the costs of this
Agreement in accordance with criteria and procedures contained in applicable federal regulations.
Contractor will provide services to Member Patients without discrimination on account of race,
sex, sexual orientation, color, religion, national origin, age, physical or mental handicap, or veteran’s
status. Contractor recognizes that Health Plan, as a federal government contractor is subject to various
federal laws, executive orders and regulations regarding equal opportunity and affirmative action which
may also be applicable to subcontractors. Contractor, therefore, agrees that any and all applicable
equal opportunity and affirmative action clauses shall be incorporated in this Agreement with Health
Plan as required by federal laws, executive orders, and regulations, which include the following: Title VI
of the Civil Rights Act of 1964, the Age Discrimination Act of 1975, the Genetic Information
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Nondiscrimination Act of 2008, and the Rehabilitation Act of 1973, all as amended; shall provide
reasonable access and accommodation to persons with disability to the extent required of a health
services provider under the Americans with Disabilities Act of 1990, or any applicable state law or
regulation; and shall not unlawfully discriminate, harass, or allow harassment against any employee or
applicant for employment on the basis of any factor prohibited by law including, without limitation,
those already delineated in this Section. Contractor also agrees to comply with any and all applicable
equal opportunity and affirmative action clauses from the Federal Acquisition Regulations (FAR) at 48
CFR Part 52, which shall be incorporated in this Agreement by reference as required by federal law,
including, without limitation, the following FAR clauses: (1) Equal Opportunity (April 2002) at FAR
52.222-26; (2) Equal Opportunity for Special Disabled Veterans, Veterans of the Vietnam Era, and Other
Eligible Veterans (September 2006) at FAR 52.222-35; (3) Affirmative Action for Workers with
Disabilities (June 1998) at FAR 52.222-36; and (4) Utilization of Small Business Concerns (May 2004) at
FAR 52.219-8. In addition, Contractor agrees to comply with the provisions of Executive Order 13496
(codified at 29 CFR Part 471, Appendix A to Subpart A) concerning the obligations of federal contractors
and subcontractors to provide notice to employees about their rights under Federal labor laws. If
Contractor is not otherwise subject to compliance with the laws and executive orders specified in this
Section, the inclusion of this Section shall not be deemed to impose such requirements upon Contractor.
Notwithstanding any other provision of the Agreement, if Health Plan reasonably determines
that a modification of this Agreement is necessary to cause it to be in conformity with state or federal
law, or the requirements of an accrediting or regulatory agency, or in order for Health Plan to
participate in government-funded health plan products, then Health Plan shall give Contractor written
notice of the proposed modification, and the date on which it is to go into effect, which shall not be less
than thirty (30) days following the date of the notice, and the modification shall go into effect on that
date. Health Plan shall consider any objections made by Contractor concerning the proposed
modification during the notice period.
Any notice or demand required under this Agreement will be in writing; will be sent by certified
mail, return receipt requested, postage prepaid or by a recognized overnight carrier which provides
proof of receipt; and will be sent to the addresses below. Either party may change the address to which
notices are sent by sending written notice of such change of address to the other party in accordance
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with the provisions as stated in this paragraph. The addresses for the parties for the purposes of such
communication are:
KAISER FOUNDATION HEALTH PLAN, INC.
Attn: _____________________________________________
THE ABOVE TERMS HEREBY ARE AGREED TO AND UNDERSTOOD
KAISER FOUNDATION HEALTH PLAN, INC.
By :______________________________
Print Name :_______________________
Title :_______________________________
Date:_______________________________
Provider: [COMPANY NAME]
By :__________________________________
Print Name :___________________________
Title :______________________________
Date :______________________________
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EXHIBIT A
to
Letter of Agreement for Wheelchair/Gurney Transportation Services
Description of Services
Service
Wheelchair Transport Services (WCS):
(1) Driver (Certified CPR, First Aid Only). No medical services provided (only assistance or equipment, no lights or sirens. Can accommodate oxygen or allow portable oxygen tanks.
Gurney Van Transport Services (GVS):
(1) Driver (Certified CPR, First Aid Only). No medical services provided (Only assistance or equipment), no lights or sirens. Can accommodate oxygen or allow portable oxygen tanks.
RATES
Base
Rate
Mileage
(Per Mile)
Wait Time
(per 15
min.)
Oxygen
(Per Trip)
Stairs
(Per
Trip)
Service
Offerings RATES (Business Hours)
GVS $124.00 $4.00 $13.00 $0.00 $5.00
WCS $44.00 $2.00 $7.50 $0.00 $4.00
Service
Offerings RATES (Nights & Weekends)
GVS $0.00 $0.00 $0.00 $0.00 $0.00
WCS $0.00 $0.00 $0.00 $0.00 $0.00
Business Hours: 7:00am - 6:00 pm Mon-Fri
Nights & Weekends: 6:01 pm - 6:59 am Fri-Sun
GVS (Gurney Van Services)
WCS (Wheelchair Services)
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EXHIBIT B
Letter of Agreement for Wheelchair/Gurney Transportation Services
AGREEMENT FOR QUALITY MANAGEMENT PROGRAM
Health Plan agrees that all information, records and data collected or maintained about Members shall
be confidential. Health Plan, its employees and agents shall maintain the confidentiality of all Member
information received in the course of providing services under this Agreement. No employee or agent of
Health Plan shall discuss, transmit or narrate in any manner any Member information of a personal,
medical or other nature except as a necessary part of providing services to the Member.
Contractor agrees to the following:
A. Sentinel events: Report within 12 hours, any unexpected occurrence or variation involving death
or serious physical or psychological injury or the risk thereof to a Member. Serious injury
specifically includes loss of limb or function. A “sentinel” event is an event where there is a
serious or immediate threat/risk to patient safety; leads to patient deterioration or patient
harm, and requires medical director review.
B. Upon request, provide:
Patient assessment records (i.e., LOC (level of consciousness), etc.)
Written responses in support of quality case reviews
Documentation justifying abnormal arrival times (i.e., >15 minutes of quoted real time
Estimated Time of Arrival)
C. Any additional mutually agreed upon ongoing monitoring
Kaiser Foundation Health Plan Quality
Contact: Medical Transportation Department
1950 Franklin Street, 8th floor
Oakland, CA 94612
Phone: 510-987-2336
Fax: 510-873-5393
Attention: Senior Quality/Utilization Analyst
Progress Reporting and Communications:
Monthly activity reports to be provided by supplier to KP, format and content to be
agreed upon by KP and supplier
Performance reports to be provided by supplier to KP when requested, format and
content to be agreed upon by KP and supplier
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OBAMACARE, THE BIG PICTURE
"I predict future happiness for Americans if they can prevent the government from wasting
the labors of the people under the pretense of taking care of them."
- Thomas Jefferson
Let me preface everything by telling you that I am from the People’s Republic of New York (named in
honor of communist China, Cuba, and other socialist states). Trust me - I definitely don’t say this to
boast! As of this writing, New York has officially become the number one most highly taxed and
regulated state in the Union. We are like a true socialist state, great in taxes, unfulfilled promises,
welfare, and burdensome regulations! So despite any of the commercials you may have seen
advertising “The new New York” in an effort to encourage new business in New York, I can assure you, it
is a load of crap! And yes, I am absolutely speaking from first-hand experience. Needless to say, I will
only be in New York for a short time longer and then I’m definitely moving to a more business friendly
state.
Now that I have adequately expressed my displeasure with The People’s Republic of New York, I share
with you a handful of articles from the New York Times, easily one of
the most liberal, left-leaning newspapers in the country. Why is this
important? Because if the New York Times is writing about the
precarious situation of our economy due to overspending,
Obamacare, welfare, and more, then you KNOW it has to be serious!
Again, I want you to consider all sources and information so that you
can draw your own conclusions. And if The People’s Republic of New
York Times is acknowledging this growing disaster, you know that we
are heading for a financial cataclysmic event! And yes, this absolutely has everything to do with your
business!
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WHAT IS DRIVING GROWTH IN GOVERNMENT SPENDING?
- NATE SILVER, THE NEW YORK TIMES
It’s one of the most fundamental political questions of our time: What’s driving the growth
in government spending? And it has a relatively straightforward answer: first and foremost,
spending on health care through Medicare and Medicaid, and other major social insurance
and entitlement programs.
In the long run, the overall economic health of the country is the most important constraint
on fiscal policy. A growing economy gives us a lot of good choices: maintaining or expanding
government programs, cutting taxes or holding them at a moderate level, reducing or
managing the national debt. A stagnant economy means that everything gets squeezed.
Another surprise is how little we are paying in interest on the federal debt, even though the
debt is growing larger and larger. Right now, interest payments make up only about 6
percent of the federal budget.
The growth in federal government spending relative to inflation is because of the increased
expense of entitlement programs. Spending on welfare programs like food stamps and
unemployment insurance is the most cyclical – or technically the most countercyclical, since
much of it kicks in automatically during an economic downturn. And health care spending
has been increasing at the fastest rate.
Health care spending increased at 5.7 percent per year (and federal government spending
on health care increased at a 6.7 percent pace). In contrast, the gross domestic product
grew at a rate of 2.7 percent over this period, with tax revenues increasing at about the
same rate as the G.D.P.
Spending on infrastructure and government services, excluding defense, has kept pace with
gross domestic product growth.
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Spending on entitlement programs was about $500 billion per year in 1972 in today’s
dollars. If it had increased at the same rate as the gross domestic product, it would now be
about $1.4 trillion. Instead, it is now about $2.9 trillion per year. What this means is that
there has been about a $1.5 trillion increase in entitlement spending above and beyond
gross domestic product growth. This is actually slightly larger than the overall increase in
government spending relative to gross domestic product. But essentially all of the increase
in spending relative to economic growth, and the potential tax base, has come from
entitlement programs, and about half of that has come from health care entitlements
specifically.
The growth in health care expenditures, for better or worse, is not just a government
problem: if we can’t slow the rate of growth in health care expenditures, we’ll either have to
raise taxes, cut other government spending or continue to run huge deficits. Or we could
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hope to grow our way out of the problem, but health care expenditures may be impeding
private-sector growth as well.
Slowing the growth of entitlement spending will not be easy. Particularly in the case of
health care, it has become substantially more expensive for individuals with both public and
private insurance to purchase the same level of care.
And on a political level, cuts to entitlement programs are liable to be more noticeable to
individual voters than cuts to things like infrastructure spending. A 10 percent cut to Social
Security or Medicare benefits will surely draw the ire of voters. A 10 percent reduction in
the amount allocated to bridge repair, or in the amount of government-sponsored energy
research, will affect individual citizens less directly.
Joel’s Insight: What do huge deficits, over-spending, and all other factors leading to our down economy
have to do with your business? Um, only everything! Think long-term. Where will you be financially
three, five, ten, twenty years from now? What will be the status of our economy and your money? We
are in the business to make money – bottom line. Anything that influences our ability to create and build
wealth and gain financial independence is of concern. Needless to say, a down economy leads to high
inflation, high unemployment, diminished sales and services, low returns on investments, and much,
much more. Thus, by understanding what is happening on a macro scale, we can, as Entrepreneurs,
better plan, prepare and adjust our businesses and finances so as to limit our exposure to risk.
Again, if the New York Times, of all sources, is admitting the growing precarious financial situation
regarding our economy versus advancing a socialist agenda, then it has to be serious!
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FEDERAL WELFARE SPENDING TO SKYROCKET 80 PERCENT IN NEXT DECADE
- DANIEL HALPER, THE WEEKLY STANDARD
Federal welfare spending will skyrocket 80 percent over the next decade, according to new
analysis by the minority side of the Senate Budget Committee. Here’s a chart, provided by
the committee, detailing the growth in spending:
“This chart displays projected federal spending on federal welfare programs over the next
ten years, based on data from the Congressional Research Service and Congressional Budget
Office,” the Republican side of the Senate Budget Committee explains. “These figures do not
count state contributions to federal welfare programs (primarily on low-income health
assistance) which brought total welfare spending in FY2011 to more than $1 trillion—
dwarfing any other budget item including Medicare and Social Security, and totaling enough
to mail every household in poverty a check for 60k each year.”
Currently, 95% of spending on means-tested poverty assistance falls into four categories:
cash assistance, health assistance, housing assistance, and social and family services.
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Welfare spending has increased on a year-over-year basis regardless of whether the
economy has improved or unemployment has declined, and is projected to continue this
dramatic rise indefinitely. Spending on these poverty programs will rise approximately 80%
from FY2013-FY2022, representing a total cost of $11 trillion—roughly one quarter of
cumulative federal spending. Slowing the growth rate from 80% to a still massive 60%
would thus result, according to standard congressional budget accounting, in a $1 trillion
savings over ten years.
Part of the large increase in welfare spending is driven by a series of controversial
recruitment methods that include aggressive outreach to those who say they do not need
financial assistance. Recruitment workers are even instructed on how to “overcome the
word ‘no’” when individuals resist enrollment. The USDA and Department of Homeland
Security also have promotions to increase the number of immigrants on welfare despite
legal prohibitions on welfare use among those seeking admittance into the United States.
"The democracy will cease to exist when you take away from those who are willing to work
and give to those who would not."
- Thomas Jefferson
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In the event you thought that the previous article was an exaggeration, I encourage you, take a moment
to study and let the message of this image sink in. And yes, this is very much a “real” image that I took
on my cell phone. It was featured on a billboard about 100 yards from my church. I had another image
that I took near the main entrance of a supermarket featuring two representatives from the “Family
Enrichment Network.” Unfortunately, that image did not come through on my phone, but it featured a
recruiting booth for prospective applicants as they frequented the supermarket. Upon entrance,
customers were solicited by smiles, greetings, brochures, handshakes, and associated solicitations to fill
out applications for Food Stamps. And in the event you’re wondering why a supermarket would allow
such solicitations of their customers, you have to remember, we’re talking about Food Stamps; a “feel-
good” service that, if denied, would have you labeled uncompassionate!
This truly is an incredible message, “Food stamps help keep Broome County Strong.” The concept of
hard work, persistence, and self-reliance is quickly fading from the American conscience and is replaced
by increasing social services. Effective marketing and recruiting strategies are making welfare a more
popular and viable option as compared to workfare. Again, what does this have to do with your
business? Everything! Such unsustainable policies and institutions are contributing to the rapid
bankruptcy of our economy which, in turn, directly affects your ability to make and protect your assets!
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Before anyone begins railing me with accusations that I am not compassionate because I am of the
opinion that our current welfare-state is more harmful than helpful, please, don’t waste your time! I am
very much compassionate and a firm believer in giving. In fact, I am not only a generous giver, I am a
cheerful giver! Why – because the more we give the more we receive is promised in Proverbs 11:24-25:
24 One person gives freely, yet gains even more; another withholds unduly, but comes to poverty. 25 A
generous person will prosper; whoever refreshes others will be refreshed.
I recognize that my money is not of my own. Rather, I am only a good steward of God’s money as it all
belongs to Him. Because I give, He blesses me with more. The more I give, the more He blesses me! So
too will God bless you when you give generously. What does giving and welfare have to do with your
business specifically? Everything!
I believe in two things, relief and restoration. There are people who need temporary relief, maybe in
the form of money, time or other assistance. However, when someone continuously requests
assistance for the same problem, they no longer need relief. They need restoration! For example, when
someone continuously asks to borrow money because they can’t pay their bills, they need immediate
relief. But more so, they need long-term restoration. You can give them money to relieve them of their
immediate problem, but soon thereafter they will be back for more. They need long-term restoration.
Such is the scenario with our welfare state, Obamacare, and associated social mechanisms that are
making people more dependent on the Government. Welfare was originally designed to offer short-
term relief for those in need. However, under the guise of “helping people,” such institutions have
become more of an enslavement mechanism, making people dependent on the Government long-term,
versus helping to restore people to personal growth, development, and independence.
In the event that you think that I am wrong, I echo back to 1968 when Lyndon B. Johnson traveled to
West Virginia as a backdrop of poverty to declare “Today, we declare a war on poverty!” Well, Mr.
Johnson, well Mr. Obama, with ever increasing welfare numbers and by increasing the ceiling for
Medicaid recipients over 50 years, we can officially declare that poverty has absolutely kicked our ass!
What’s this have to do with your business? Everything! A bankrupt economy has everything to do with
your business and your ability to make money!
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JP MORGAN’S FOOD STAMP EMPIRE
- PETER SCHWEIZER, THE DAILY BEAST
In 2010, President Obama signed into law the Healthy, Hunger-Free Kids Act. It received
bipartisan support, and was hailed as a compassionate victory for America’s poorest
children. The bill was also a potentially good development for mega bank JP Morgan Chase.
Why, you may be wondering, would one of the nation’s biggest banks benefit from a bill
meant to feed poor children? A closer look at the legislation reveals the answer. The bill
mandates that “all state agencies implement Electronic Benefit Transfer (EBT) systems by
October 1, 2020” for those receiving money through the Women, Infants, and Children
(WIC) program. And which company administers nearly half of all states’ EBT programs?
You guessed it: JP Morgan Chase.
We seldom think of poverty programs as profit centers, preferring to discuss them as
matters of ideology. Liberals view programs like WIC—which provides food to both
pregnant mothers and mothers of young children—as the mark of a compassionate nation.
Conservatives see them as a gateway to government dependency. Arguably, they may fit
either of those descriptions. But as with so many other government programs in
Washington, both WIC and its close cousin, the federal food stamp program, have morphed
into something else: cash cows for powerful corporate interests.
“This business is a very important business to JP Morgan,” Christopher Paton, the
company’s managing director of treasury services, told Bloomberg News. “It’s an important
business in terms of its size and scale. We also regard it as very important in the sense that
we are delivering a very useful social function. We are a key part of this benefit delivery
mechanism. Right now volumes have gone through the roof in the past couple of years or so
… The good news from JP Morgan’s perspective is the infrastructure that we built has been
able to cope with that increase in volume.”
18 of the 24 states JP Morgan handles have been contracted to pay the bank up to
$560,492,596.02 since 2004. Since 2007, Florida has been contracted to pay JP Morgan
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$90,351,202.22. Pennsylvania’s seven-year contract totaled $112,541,823.27. New York’s
seven-year contract totaled $126,394,917.
These contracts are transactional contracts, meaning they are amendable based on changes
in program participation. Each month, the three companies that administer EBT receive a
small fee that can range from $.31 to $2.30 (or higher depending upon the number of
welfare services on an EBT card and state contractual requirements) for each SNAP
recipient.
With states paying EBT processors so much, one might think that these companies would be
expected to tenaciously prevent and investigate fraud and abuse. That job is left to states’
EBT fraud investigation units which, according to the USDA’s website, the federal food
stamp program has “over 100” inspectors to police the nearly 200,000 retailers nationwide
that accept EBT cards.
The rapid growth of welfare enrollments can be attributable to the fact that, in recent years,
more and more states have begun to operate under “broad-based categorical eligibility”
rules. That means households which were previously ineligible to receive SNAP benefits may
now receive them.
But there may be one more reason the food stamp industrial complex continues to balloon:
because wealthy corporate interests have been filling the campaign coffers of politicians
who control the program’s trajectory. Prior to the 2002 EBT implementation mandate, JP
Morgan’s political donations to members of the House and Senate agriculture committees
were modest. But since 2002, they’ve been on a steady climb upward.
"I believe that banking institutions are more dangerous to our liberties than standing armies.
If the American people ever allow private banks to control the issue of their currency, first by
inflation, then by deflation, the banks and corporations that will grow up around the banks
will deprive the people of all property - until their children wake-up homeless on the
continent their fathers conquered."
- Thomas Jefferson
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THE INFLUENCE OF OBAMBACARE IN A CHANGING INDUSTRY
At this point, I think it necessary to reiterate the purpose of this resource. My goal is to educate you on
the overall status of what we, as Entrepreneurs, face in a changing economy and a changing social
system in addition to the various strategies to grow and diversify your business. Education is absolutely
critical, as I mentioned in the very beginning, the way that we have done business is the past is now
obsolete. If for no other reason, Obamacare, and the associated burdens, will have lasting affects
throughout all businesses and industries. It has changed everything.
The most fundamental reason why entrepreneurs start their own business is independence. We seek
financial independence without cap or ceiling on our profit earning potential. We desire more time,
freedom and flexibility. We seek creative and managerial independence to build what we envision.
After learning more about Brokers, I trust that you can see how, if allowed, Brokers can severely stifle
your entrepreneurial independence. Nothing in their Agreement or business practices favors you.
The good news with Brokers, you only yield control as you choose. If you wish to be more selective and
not transport Medicaid recipients then you will never deal with Brokers. If you wish to use Brokers more
selectively and subcontract portions of your work to Independent Operators that can prove to be more
profitable. Many successful Transportation Providers only provide Private-Pay and contracted
transportation services. By choice, they do no work with Brokers. Other Providers transport Medicaid
recipients on a limited basis, essentially supplementing their existing revenue. Regardless of the level of
Medicaid services, as a Provider you should choose the degree to which you wish to work with Brokers
(hence, NMP). When the choice is yours, you’re empowered!
Now that we have journeyed down the pathway of Broker-ism, which I trust has been enlightening, it is
time to travel a parallel path for which I provide even greater insight from various articles and
publications. Again, rather than my telling you what I know and see developing, I prefer that you hear
from doctors, economists, professors, analysts, journalists and more, on both sides of the political aisle,
so that you can draw your own informed conclusions. I strongly encourage you to read everything as
the information is of great impact on your business. As you read, I suspect your entrepreneurial
perspective will again be challenged as it is with the Broker system.
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INCREASING THE SIZE OF MEDICAID AND IMPENDING EFFECTS
Obamacare is not just a change within the industry, Obamacare IS changing the industry! It is now an
institution and unlike working with a Broker, you have no choice but to comply. You cannot negotiate.
Through Obamacare, the government has heightened control. Failure to adhere will bring fines, audits
and the full weight of the Internal Revenue Service and the Federal Government. Furthermore, despite
political promises, Obamacare affects everyone, business owners and employees alike, in all industries.
Medicaid is the lifeblood of the Broker system and as you will continue to discover, under Obamacare,
the size and enrollment of Medicaid recipients is exploding. Knowing the tactics, strategies, and
mentality of Medicaid Brokers, it’s important that we consider the landscape of the medical industry
with such expansion. How much more emboldened and enthusiastic will Brokers be with such “job
security?”
In 1964, President Lyndon B. Johnson traveled to Martin County, Kentucky, to declare what he called a
“War on Poverty.” As an expansion of the Great Society, Johnson believed in expanding the
government’s role in social programs, welfare, and health care. Here we are 50 years later. As you read
the following articles illustrating how Obamacare is increasing the Medicaid ceiling, ask yourself who’s
won this war; prosperity or poverty?
LET’S MEET ON MEDICAID, MR. PRESIDENT
- BOBBY JINDAL, THE WASHINGTON POST
As the implementation of Obamacare nears, every governor must decide whether to expand
Medicaid. This is not a simple question. Expanding Medicaid will significantly burden state
budgets across the country. The Kaiser Family Foundation and the Urban Institute, estimate
that such an expansion would cost Louisiana more than one billion dollars over the first 10
years. The Obama administration heralds this as a tremendous bargain for states. That’s
simply not the case. The administration overlooks that Medicaid is largely failing current
enrollees with its outdated model that costs billions of taxpayer dollars and produces poor
outcomes.
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Medicaid operates under a 1960s model of medicine, with inflexible, one-size-fits-all
benefits and little consumer engagement and responsibility. Expanding the entitlement
program as it stands would further cement a separate and unequal tier of health coverage.
Without fundamental reform, Medicaid will continue to deliver what it has for decades:
limited access, poor quality and budget deficits.
Fortunately, states know the problems and how to address them. Our ideas to fix Medicaid
target several areas for reform: eligibility, benefit design, cost-sharing, use of the private
insurance market, financing and accountability.
The process to determine eligibility should be simple, accurate and fair. States should have
the flexibility to set eligibility standards that make sense for residents, instead of the rigid,
one-size-fits-all approach dictated by Washington. States should be allowed to design their
programs to promote value and individual ownership in health-care decisions. This includes
using consumer-directed products, flexible benefit design, and reasonable and enforceable
cost-sharing requirements. States must be freed from decades-old rules that are no longer
relevant to 21st-century health care.
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RIGHT CALL ON MEDICAID
- NICK PANDELIDIS, YORK DAILY RECORD
Since announcing that Pennsylvania would not be participating in the Obamacare Medicaid
expansion, Gov. Corbett has been excoriated by Obamacare supporters. Gov. Corbett is
being accused of being unsympathetic to the plight of the uninsured, denying them "good"
healthcare insurance with Medicaid coverage. In addition, his critics claim that the Medicaid
expansion is "free money" that would not only pay for Pennsylvania's Medicaid expansion
but also stimulate our commonwealth's economy.
While the federal government is "picking up" the cost of the Obamacare Medicaid
expansion for three years and 90 percent going forward, Pennsylvania's Medicaid spending
has already reached a critical level. Since 1980, Pennsylvania's Medicaid expenditure has
grown from 12 percent to 24 percent of the state budget. As the Medicaid burden has
grown, it has crowded out other state expenditure including education and infrastructure.
Joel’s Insight: If Medicaid expenditures currently account for 24% of Pennsylvania’s state budget, how
much more will this burden increase as Obamacare expands annually as projected? What impact will
this have on state and national economies?
Expanding Medicaid at the national level worsens an already dangerous and untenable
federal fiscal situation. With a $16-plus-trillion debt that exceeds our GDP, we no longer are
a prosperous nation. There is no "free money." More spending can only come from three
sources: confiscating more taxes out of the private sector further suppressing our listless
economy; borrowing, which really means more taxes out of the future economy; or simply
printing more money, devaluing our earnings and savings.
“We need earmark reform, and when I'm President, I will go line by line to make sure that we
are not spending money unwisely.”
- Barack Obama
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Because Medicaid reimburses physicians so poorly, many doctors restrict the number of
Medicaid patients they can see, or don't participate at all. Studies have shown that even
individuals with no insurance can more easily get an appointment with a physician than can
Medicaid recipients. As a result, Medicaid patients use the emergency room for care twice
as frequently as those with private insurance.
Through Obamacare, Medicaid expansion extends eligibility for Medicaid to those who have
incomes between 100 percent and 138 percent of the poverty level. Obamacare also
qualifies this same population for substantial taxpayer subsidies to obtain private insurance
in the new insurance exchanges.
Nick Pandelidis is a local physician and a regular contributor to Viewpoints.
Joel’s Insight: What makes this article more profound is that it is authored by a physician. In discussing
anything regarding the medical industry, health care systems and procedures, and the like, I trust the
opinion and experience of a physician before I do any politician!
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CANCER CLINICS ARE TURNING AWAY THOUSANDS OF MEDICARE PATIENTS
- SARAH KLIFF, THE WASHINGTON POST
Cancer clinics across the country have begun turning away thousands of Medicare patients,
blaming the sequester budget cuts. Oncologists say the reduced funding, which took effect
for Medicare on April 1, makes it impossible to administer expensive chemotherapy drugs
while staying afloat financially. Patients at these clinics would need to seek treatment
elsewhere, such as at hospitals that might not have the capacity to accommodate them.
“If we treated the patients receiving the most expensive drugs, we’d be out of business in
six months to a year,” said Jeff Vacirca, chief executive of North Shore Hematology Oncology
Associates in New York. “The drugs we’re going to lose money on we’re not going to
administer right now.”
Joel’s Insight: Amazing! Here you have cancer clinics turning people away because they are at severe
risk of losing money? Talk about NMP! This is the foreshadowing of what is to come with Obamacare
and the impending rationed care policies take effect.
After an emergency meeting Tuesday, Vacirca’s clinics decided that they would no longer
see one-third of their 16,000 Medicare patients. “A lot of us are in disbelief that this is
happening,” he said. “It’s a choice between seeing these patients and staying in business.”
Joel’s Insight: Wow! Cancer clinics are actually turning away one third of their clientele to ensure
profitability and survivability. Yet, where are the cries and labeling of these clinics as uncompassionate?
The fact of the matter is they’re not uncompassionate. They’re just reacting to changes in the market
just as we need to do with our businesses. As markets rise and fall, inflation and interest rates fluctuate,
we need adjust accordingly.
The federal government typically pays community oncologists for the average sales price of
a chemotherapy drug, plus 6 percent to cover the cost of storing and administering the
medication. Since oncologists cannot change the drug prices, they argue that the entire 2
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percent cut will have to come out of that 6 percent overhead. That would make it more akin
to a double-digit pay cut.
“If you get cut on the service side, you can either absorb it or make do with fewer nurses,”
said Ted Okon, director of the Community Oncology Alliance, which advocates for hundreds
of cancer clinics nationwide. “This is a drug that we’re purchasing. The costs don’t change
and you can’t do without it. There isn’t really wiggle room.”
Joel’s Insight: Talk about slim profit margins! Clinics only have 6 percent margin on a drug that is
absolutely critical to cancer patients? They’re right. There is very little “wiggle room” or margin for
error. Any fluctuations in the market could definitely affect these clinics’ ability to administer this drug
as we are learning in this article. What would/will happen if the economy bottoms out completely due to
the impending bankruptcy as predicted by many economists?
Cancer patients turned away from local oncology clinics may seek care at hospitals, which
also deliver chemotherapy treatments. The care will likely be more expensive. Those costs
can trickle down to patients, who are responsible for picking up a certain amount of the
medical bills. Medicare patients ended up with an average of $650 more in out-of-pocket
costs when they were seen only in a hospital setting.
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WHAT DOES OBAMACARE MEAN FOR YOUR BUSINESS?
The influence of Obamacare on your business depends on the size of your labor force, employee
salaries, whether you provide benefits and how much employees are required to contribute. As
business owners, our challenge is to reach the greatest amount of customers with quality products or
services, and to do so as cost effectively as possible. Needless to say, for any business in any industry,
the challenges for achieving profitability are numerous and diverse. There are research, production, and
development challenges. There are marketing challenges. There is hiring, training, and associated labor
related issues. And the list of challenges continues.
Ironically enough, the government does play a very important role in business and industry. But the
government’s role is NOT to be IN business. Rather, the government’s role is designed to serve a type of
mediator and road guard to ensure a legal and “level playing field” that ensures equal opportunity for
everyone. Notice I did not say equal guarantee or entitlement! Unfortunately, when an overactive or
overbearing government exceeds their intended purpose and intrudes in the process it becomes more
of a hindrance than a help – for everyone. An intrusive government creates more obstacles and barriers
versus solutions and opportunities.
“Government is not a solution to our problem, government is the problem.”
- Ronald Reagan
Needless to say, no such obstacle is more burdensome to growth, prosperity, and entrepreneurial
innovation than excessive taxation. Consider the following articles and draw your own conclusions. Do
we have an overactive, intrusive government process? Are such taxes stimulating or stifling growth and
opportunity? How will these impeding tax increases affect your ability to grow, build, and save?
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RINGING IN 2013 WITH OBAMACARE TAXES
- KATE ROGERS, FOX BUSINESS
Small businesses may be ringing in the New Year with a dose of optimism, as well as a reality
check. Taxes and fees associated with Obamacare are beginning to take effect, and the
countdown begins to 2014, when many small businesses across the country will have to
decide whether to start offering employer-sponsored health insurance or pay a penalty.
Curtis Dubay, senior tax policy analyst at the Heritage Foundation, said on January 1, several
tax increases went into effect that stand to potentially impact smaller companies,
depending on annual income levels. The medical device surtax of 2.9% became law,
although Dubay said the vast majority of medical device manufacturers are larger
companies. Another potential hit to entrepreneurs is the new 3.8% surtax on all capital
gains and dividends. An increase to the Medicare payroll tax is also likely to pinch small
business, according to Dubay.
“This further compounds the damage from the fiscal cliff,” Dubay said. “Now the total top
income tax rate is 39.6%, plus that uncapped 3.8% on every dollar of income. President
Obama has said he wants to return to the rates we had under the Clinton Administration,
but under Clinton the Medicare tax was 2.9%.”
Now the big tax to watch for is a penalty for employers with more than 50 workers who
chose not to offer coverage to their workers. Edmund F. Haislmaier, senior research fellow
on Health Policy Studies at the Heritage Foundation, said the tax will impact different
industries in different ways. Small businesses in the food service and hospitality industry will
be more likely to pay the fee of $2,000 per worker annually for failing to offer coverage to
workers, because they rely more heavily on low-wage employees. “They will drop coverage
or not offer coverage because the penalty costs will be less than the insurance would cost,”
Haislmaier said.
For example, for a worker making $10 per hour, if you shift the costs to them for health
care, their compensation would drop to about $7.50, the national minimum wage. Or if the
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business absorbs the costs, that hourly rate goes up to about $13 an hour, he said. Another
industry to watch will be the nursing and home health-care sector, which relies on low-wage
workers as aids, often making between $9 and $12 hourly.
Haislmaier said small businesses are also waiting on regulations from the Treasury
Department on what will actually be considered adequate coverage. That $2,000 fee will
also be charged for companies not offering coverage that is up-to-par with the Affordable
Care Act’s standards. “That is going to determine how much you have to upgrade your
[health] plan for workers,” he said.
The companies to be affected by the new requirements will be those right above and below
that 50-worker threshold, he said. “This isn’t an issue if you have 10 employees, or if you
have 200 employees,” he said. “It’s when you are running something with 40 employees
that is where you have to be careful, because there are significant costs for crossing the
threshold.”
“The last thing you want to do is raise taxes in the middle of the recession because that
would just suck up and take more demand out of the economy and put businesses in a
further hole.”
- Barack Obama
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OBAMA'S $264 BILLION TAX FOR 2013 MAY SPARK NEW RECESSION
- DAVID A. PATTEN, NEWSMAX
With the fiscal cliff deal and many Obamacare taxes taking effect, Americans will be
slammed with an estimated $264 billion in new taxes this year alone — making 2013
memorable for delivering one of the largest one-year tax increases in American history. In
2013 alone, the new tax revenues would include:
$160 Billion Hike in Payroll Taxes. This is due to the expiration of the payroll tax
“holiday,” which increases the payroll tax that helps fund Social Security from 4.2
percent to 6.2 percent. According to the Tax Policy Center, this increase will actually hit
lower and middle-income taxpayers harder, in percentage terms, than the wealthy.
“I can make a firm pledge, under my plan, no family making less than $250,000 a year will
see any form of tax increase. Not your income tax, not your payroll tax, not your capital
gains taxes, not any of your taxes.”
- Barack Obama
$39.5 Billion in Income-Tax Rate Hikes. President Obama insisted on letting the Bush tax
cuts lapse on high-income earners. The tax impacts many high-spending professionals
and successful small business owners who pay taxes on the personal returns.
$15 Billion from Limiting Deductions. The new law calls for a “personal exemption phase
out,” or PEP, affecting the exemptions and deductions that wealthier families can claim.
$5.5 Billion in Capital Gain and Dividend Taxes. The new tax rate for capital gains and
dividends will rise from 15 percent to 20 percent.
$2 Billion in Estate Taxes. The law increases the top rate for gift and estate taxes from
35 to 40 percent. The Tax Policy Center reports taxes will go up for over 77 percent of
American households.
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$21 Billion in Medicare Taxes. The healthcare law calls for a nine-tenths of 1 percent
increase in Medicare payroll tax paid by couples earning more than $250,000 a year, or
$200,000 per year for single filers.
$11 Billion from Surcharge on Capital Gains and Dividends. Married couples earning
more than $250,000 per year, or single filers earning $200,000 will be slapped with a 3.8
percent surcharge in the tax rate for capital gains and dividends in addition to the
compromise that hiked taxes on capital gains and dividends from 15 to 20 percent.
$2 Billion in Excise Fees. A 2.3 percent excise tax on manufacturers and importers of
medical devices, which is expected to be passed along in higher costs to consumers.
$2 Billion in Limiting Healthcare Itemized Deductions. This reflects a reduction in the
amount that middle-class families facing high medical expenses can deduct from their
income taxes.
The tax burden associated with healthcare reform will climb even higher next year, when
the tax penalty for not complying with the mandate to purchase healthcare insurance
begins to kick in. Some experts predict millions of Americans may opt to pay the tax
penalty, rather than comply with the mandate. The CBO estimates the U.S. Treasury will
get $167 billion in such fines over the next 10 years. Some observers also argue that the
rising private insurance premiums due to Obamacare mandate are a hidden tax that will
directly hit insured individuals and companies. Overall, the House Ways and Means
Committee has estimated that all 21 tax increases associated with the healthcare law will
bring in over $675 billion over the next decade — an average of over $67 billion each year.
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NEW YORK TIMES: MIDDLE CLASS TAX INCREASE ‘NECESSARY’
- EDDIE SCARRY, NEW YORK TIMES
President Obama campaigned on raising the tax rate for the “top 2 percent” of income
earners. The New York Times editorializes today that eventually, the government will need
to tap into the middle income earners as well:
To reduce the deficit in a weak economy, new taxes on high-income Americans are a matter
of necessity and fairness; they are also a necessary precondition to what in time will have to
be tax increases on the middle class. …
Raising taxes at the top is neither punitive nor gratuitous. It is a needed step, both to
achieve near-term budget goals and to lay the foundation for a healthy budget in the future.
As the economy strengthens and the population ages, more taxes will be needed from
further down the income scale, both to meet foreseeable commitments, especially health
care, as well as unforeseeable developments, from wars to technological challenges. But
there will never be a consensus for more taxes from the middle class without imposing
higher taxes on wealthy Americans, who have enjoyed low taxes for a long time.
“I will cut taxes - cut taxes - for 95 percent of all working families, because, in an economy
like this, the last thing we should do is raise taxes on the middle class.”
- Barack Obama
Joel’s Insight: Commonly known for their liberal perspectives, even the New York Times acknowledges
that as “the population ages, more taxes will be needed from further down the income scale.” Thus, we
are no longer limited to just making wealthier Americans pay their “fair share.” Obviously, tax increases
are going to directly influence all working Americans earning a paycheck, especially the “middle class”
which politicians on both sides of the aisle claim they are fighting to defend.
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HOWARD DEAN: HONESTLY, EVERYONE'S GOING TO HAVE TO PAY HIGHER TAXES SOON
- GUY BENSON, POLITICAL EDITOR, TOWNHALL.COM
This candid assessment from former DNC Chairman Howard Dean comes after the election,
but better late than never. The truth comes out:
Whether or not they'll say so publicly, most recognize that across-the-board tax hikes are a
necessary ingredient in their broader project of unending government expansionism.
Beating up on "the rich" is a politically-convenient ploy for the moment, but the math
doesn't lie: Taxing only the upper echelons of income earners and small businesses would
reap an insufficient pittance in the final analysis. The government's unsustainable spending
will soon require many more people to pay their "fair share" to the federal government.
“But let me be perfectly clear, because I know you'll hear the same old claims that rolling
back these tax breaks means a massive tax increase on the American people: if your family
earns less than $250,000 a year, you will not see your taxes increased a single dime. I repeat:
not one single dime.”
- Barack Obama
Some voters who are currently on board with the Left's soak-the-rich crusade will one day
discover that they themselves are the new "rich," with their livelihood and income suddenly
in Big Government's crosshairs. Dean is at least doing everyone a favor by serving notice
early. He is very enthusiastic about middle class tax increases and deep defense cuts, but
very protective of all other spending.
When the accrued expenses of the government's entitlement programs are counted, it
becomes clear that to collect enough tax revenue just to avoid going deeper into debt would
require over $8 trillion in tax collections annually. That is the total of the average annual
accrued liabilities of just the two largest entitlement programs, plus the annual cash deficit.
Nothing like that $8 trillion amount is available for the IRS to target.
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According to the most recent tax data, all individuals filing tax returns in America and
earning more than $66,193 per year have a total adjusted gross income of $5.1 trillion. In
2006, when corporate taxable income peaked before the recession, all corporations in the
U.S. had total income for tax purposes of $1.6 trillion. That comes to $6.7 trillion available to
tax from these individuals and corporations under existing tax laws. In short, if the
government confiscated the entire adjusted gross income of these American taxpayers, plus
all of the corporate taxable income in the year before the recession, it wouldn't be nearly
enough to fund the over $8 trillion per year in the growth of U.S. liabilities.
Generally speaking, functioning societies make good-faith efforts to raise what they spend,
subject to fluctuations in economic fortune: Government spending in the United States is
42.2 percent, but revenues are 24 percent — the widest spending/taxing gulf in any major
economy.
Joel’s Insight: Oh dear, it looks like we have a serious mathematical problem! Surprise, it appears that
our government spends more than what we receive in revenue. And somehow increasing taxes, making
people pay their “fair share,” is going to resolve this double digit shortfall? Can you imagine how
successful your business would be if you managed your business in like manner as politicians do our
government?
Again, continue to evaluate and digest all of this information and draw your own conclusions. Consider
the political climate, the status of the economy, and the direction of policies that influence your business.
Using even the most basic laws of economics, if nothing changes and our economy continues on current
course, how long is it realistically sustainable? If and when a financial “day of reckoning” arrives, how
will your business affected?
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DO YOU NEED TO PROVIDE HEALTH BENEFITS TO YOUR EMPLOYEES?
The following are key terms and definitions to further understand the particulars of Obamacare
followed by a chart to help you further navigate the effects of Obamacare on your business.
Affordable: Employer-based coverage is considered affordable if the lowest cost single-coverage option
does not exceed 9.5 percent of an employee’s W2 wages. If the coverage doesn’t meet the affordability
requirement the employee could be eligible for a tax credit for health premiums – and the employer can
be hit with a $3,000 penalty for any full-timer who gets the credit.
Common Control: No, you can’t break your 60-person into two 30-person companies in order to avoid
the large-employer mandate. For purposes of determining “large employer” status, the Affordable Care
Act (ACA) makes clear that a group of companies under common control are to be treated as a single
company.
Dependent: The ACA requires large employers to offer health coverage to the dependents of
employees. According to the IRS proposed regulations put out in January 2013, dependents are defined
as children under the age of 26. There is no requirement to offer coverage to an employee’s spouse.
Full-Time Equivalent: A full-time employee is anyone on your payroll who works an average of 30 hours
or more per week. But under the ACA, you also must include part-timers in your company head count.
For example, two half-timers equal one full-timer, so a business with 40 full-timers and 20 half-timers
would have 50 full-time-equivalent employees, or FTE’s and, thus, would have to offer health benefits or
pay a penalty. The ACA does not require employers to cover part-time workers, only to count them in
determining their “large employer” status.
Grandfathered Plan: Employer health plans that were in effect on March 23, 2010, and haven’t
significantly reduced benefits or increased employee costs may be considered ‘grandfathered” and
exempted from certain provisions in the health care law, such as the requirement to provide 100
percent coverage for preventative care.
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Large Employer: A company with 50 or more full-time-equivalent employees is considered large. Only
large employers are subject to the ACA’s “play or pay” mandate to provide affordable health coverage
or pay a range of penalties.
Look-Back Provision: An employee’s status as a full-timer is determined by looking back at a defined
period of three to 12 months, as chosen by the employer. Any employee on your payroll for an average
of 30 hours per week or more during that period is considered full-time.
Minimum Value: The ACA requires large employers to cover at least 60 percent of an employee’s total
health care costs – not just premiums but copays, deductibles, and other qualified out-of-pocket
spending. If coverage does not meet that minimum value, the employee could be eligible to receive a
premium tax credit – and the employer could be hit with a $3,000 penalty for any full-timer who gets
the credit.
Shop Exchange: Beginning in 2014, each state is supposed to offer small employers access to a Small
Business Health Options Program, or SHOP, exchange that offers a variety of qualified health plans.
Note, different states define “small” differently.
Small-Business Health Care Tax Credit: Businesses that cover at least half of the cost of single coverage
for their employees, have fewer than 25 full-time-equivalent workers, and have average wages of less
than $50,000 a year may qualify for a tax credit of up to 50 percent of employer-paid premiums.
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Do you have 50 or more full-time-equivalent (FTE) employees?
YES NO
Do you offer health coverage to employees? You are not responsible. The AFA does not
require companies with fewer than 50 FTE
employees to offer health insurance.
However, you may be eligible to buy insurance
on a state exchange.
Do you have fewer than 25 FTE workers?
YES NO
YES NO
Does your plan
pay at least 60
percent of
coverage health
costs?
Will any
employee buy
coverage on a
state-based
insurance
exchange?
If the average wage of your
employees is below $50,000,
you may qualify for a small-
business tax credit of up to 50
percent of employer-paid
premiums, for up to two years,
if you buy insurance through a
SHOP exchange.
YES YES NO NO
Must any
employee pay
more than 9.5%
of W2 income for
single coverage?
Employees could qualify for
a tax credit or subsidy to
buy coverage on a state
exchange. You will be
responsible for an annual
penalty of $3,000 per FTE
worker receiving the credit
or subsidy, or $2,000 per
total number of FTE
workers, excluding the first
30, whichever is less.
YES
NO
Will any such
employee qualify
for a tax credit or
federal cost-
sharing subsidy?
You don’t
qualify for
federal
credits or
subsidies.
Congratulations, you provide what the
Feds consider affordable coverage and
will not face any ACA-related penalties.
YES NO
You will not be
penalized for failing
to offer health
insurance.
You must pay a penalty for not providing coverage.
The penalty is up to $2,000 a year per FTE employee,
not counting the first 30 employees.
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IRS TO EMPLOYERS: PAY OBAMACARE 'SHARED RESPONSIBILITY' OR ELSE
- MERRILL MATTHEWS, FORBES
As if concerns about the fiscal cliff, debt ceiling, higher taxes and a potential recession
weren’t enough to scare employers, the Obama administration has just handed them one
more headache: an IRS warning that any efforts to avoid the ObamaCare mandate to
provide coverage or pay a penalty (or is it a tax?) will not go unpunished.
Yes, the Internal Revenue Service has just released its “proposed regulations providing
guidance under section 4980H of the Internal Revenue Code (Code) with respect to the
shared responsibility for employers regarding employee health coverage.”
Of course, there has been a lot of confusion among employers about implementing the
coverage mandate and their responsibilities, just as there has been a lot of confusion among
states about the rules and regulations associated with the health insurance exchanges.
Just so everyone is clear, what the IRS says is:
Section 4980H generally provides that an applicable large employer is subject to an
assessable payment if either (1) the employer fails to offer to its full-time employees (and
their dependents) the opportunity to enroll in minimum essential coverage (MEC) under an
eligible employer-sponsored plan and any full-time employee is certified to the employer as
having received an applicable premium tax credit or cost-sharing reduction (section
4980H(a) liability), or (2) the employer offers its full-time employees (and their dependents)
the opportunity to enroll in MEC under an eligible employer-sponsored plan and one or more
full-time employees is certified to the employer as having received an applicable premium
tax credit or cost-sharing reduction (section 4980H(b) liability). Generally, section 4980H(b)
liability may arise because, with respect to a full-time employee who has been certified to
the employer as having received an applicable premium tax credit or cost.
Everybody got that?
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Essentially, employers with 50 or more employees must provide health coverage to their
employees. If they don’t they will have to pay an “assessable payment” of up to $2,000 per
employee.
The problem is that not all employer-worker relationships are that simple.
Some employees work part time, and some part-timers can put in full-time hours during
peak times for the company. Other companies often fill gaps with temporary employees.
And some companies have so many part-time workers that they equal 50 full-time workers.
Not to worry, the IRS has rules for all of them; and they are every bit as clear as the passage
cited earlier.
Basically, the IRS is skeptical that all employers will be as excited about these mandates as
the Democrats implied they would be early on. So the IRS is issuing these proposed
regulations as a way to keep employers from avoiding their shared responsibility. As the IRS
warned on December 28, “The Treasury Department and the IRS are aware of various
structures being considered under which employers might use temporary staffing agencies
(or other staffing agencies)… to evade application of section 4980H [the employer insurance
mandate].”
Joel’s Insight: As of this writing, I have a number of Transportation Providers with whom I have worked;
they have well in excess of 150 employees and vehicles. Needless to say, they are deeply concerned
about the ramification of Obamacare. Their initial instinct was to separate and fragment their business
in an effort to avoid paying health benefits that would bankrupt their business or warrant costly
penalties. However, as this article clearly articulates, the IRS is looking for just such strategies and is
ready and waiting to bring the full brunt of the Federal Government down upon you! One of the
Providers has resorted to hiring a team of attorneys to help them evaluate their business and develop
effective strategies that will keep them compliant with Obamacare. As of this writing, they have paid in
excess of $12,000 in legal fees for this endeavor and counting. Sorry, but when government policy
warrants that you spend money just to ensure your compliance, that is definitely an intrusive,
overbearing, and out of control Government!
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HEALTH INSURANCE BROKERS PREPARE CLIENTS FOR OBAMACARE STICKER SHOCK
- DR. SCOTT GOTTLIEB, M.D., FORBES
A California insurance broker, who sells health plans to individuals and small businesses,
told me that she’s prepping her clients for a sticker shock. Her local carriers are hinting to
her that premiums may triple this fall, when the plans unveil how they’ll billet the full brunt
of Obamacare’s new regulations and mandates. California is hardly alone. Around the
country, insurers are fixing to raise rates by double digits. They’re privately briefing
politicians in Washington on what’s in store. Those briefings are leaving a lot of folks up and
down Pennsylvania Avenue jumpy.
What’s gives? President Obama, after all, said he’d prevent these sorts of prices. His new
health law gave state regulators the power to block premium increases. It even created a
federal agency to oversee insurance rates. But these bureaucrats are spectators to the price
hikes. They’re mere wallflowers. Even in the bluest of states.
Their silence is the best evidence of who is culpable for the increases. It’s the policymakers.
It’s Obamacare. The President is accepting the premium hikes as an allowable consequence
of his healthcare policies. There’s buzz in Washington that to ease the price hikes, the
Obama team may slow down some of the most expensive regulations. This might include
the law’s mandatory community rating. One approach they’re said to be considering is
allowing some of the historically based underwriting to stay in place for a time.
But premiums will still rise because, in the end, everything has a price. The law’s prohibition
against traditional insurance underwriting is just one of its costly provisions. Washington can
try to force health plans to price insurance below the cost of these mandates. But then the
health plans will simply lose money and move out of markets. To keep the insurers whole,
and accommodate new rules, the cost of insurance must get re-priced higher. That re-
pricing is what’s coming this fall.
This lesson was learned by Massachusetts, after it adopted its own skinny version of
Obamacare. To meet the law’s costs, insurers hiked premiums. Massachusetts’s regulators
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blocked the increases. All the plans reported losses the very next quarter. This simple
economic axiom doesn’t mean the higher premiums were tolerated in Massachusetts, or
will be embraced by Washington. What Massachusetts did afterwards is a lesson for where
the entire nation is heading under Obamacare.
Massachusetts regulators went after the underlying source of spending – peoples’ use of
medical services. First and foremost, that meant taking on the providers. Massachusetts
moved to regulate the prices that doctors and hospitals could charge and the kind of
services that they could offer. Rates are rising nationally because, like Massachusetts,
Obamacare guarantees more free medical services while doing nothing to make the market
for these things more efficient, or competitive. Like Massachusetts, some form of price
controls is the next political chapter.
“Contrary to the claims of some of my critics and some of the editorial pages, I am an ardent
believer in the free market.”
- Barack Obama
The Obama team can’t merely squeeze the insurers. That’s why our political elite will
tolerate many of the looming premium hikes. In the end, health plans are mostly just
passing along the costs of the underlying services. That’s even truer today now that
Washington is directly regulating insurance company profit margins.
The prices Washington pays for medical services will gradually fall below the rates where
things will be readily supplied. That’s the legacy of Medicaid, and increasingly Medicare as
well. Don’t worry, though. The medical services that you’ll have a hard time accessing are
mostly the stuff you’ll only need if you get really sick.
Dr. Gottlieb is a physician and Resident Fellow at the American Enterprise Institute.
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RAMIFICATIONS OF OBAMACARE
The following articles are very important in helping you to understand the impending fallout of
Obamacare. My staff and I continuously invest in research to ensure that we are abreast of shifts and
changes in our industry. Of the thousands of news and trade articles, publications, and briefs that I have
reviewed in just the last few months, I have chosen these articles because they accurately articulate and
illustrate the impeding ramifications from Obamacare. It is imperative that you read the following pages
to better understand how Obamacare is going to affect you and your family in addition to your business:
AFFORDABLE CARE ACT TO PRESENT NEW CHALLENGES FOR MEDICAL PROFESSIONALS
- LEIGH IRVIN, DAILY TIMES
FARMINGTON — Implementation of the "Patient Protection and Affordable Care Act," more
commonly known as "Obamacare," has local physicians and administrators conjecturing
about what reform will mean for the future of healthcare.
While Rick Wallace, chief executive officer at San Juan Regional Medical Center, believes
healthcare reform will present new challenges, he says the act's push for better physician
accountability is a good one. "The focus behind the act is provider accountability," said
Wallace. "But the challenge is that there will be more patients and a shrinking availability of
physicians."
The demand for physicians will likely increase dramatically in early 2014, when the
individual insurance mandate of the act takes hold. This means that most Americans will
need to have insurance and will also have greater access to affordable health insurance
options. These factors will change the way many Americans access healthcare.
"Whereas many uninsured people particularly younger people have used urgent care
centers or the emergency room when they needed a doctor, people will now have to have a
medical home," he said. "The Affordable Care Act wants people to take responsibility for
their own health care and be proactive in managing their care."
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While Wallace acknowledges that requiring people to be responsible for their health care is
moving in a positive direction, it means a lot more people will be looking for doctors. And
many of those doctors already have full schedules.
The law also adds accountability measures for the quality of health care while lowering
reimbursement rates, Wallace said. "Reimbursements are reducing, but the cost of
healthcare is constantly rising," he said. "So now we're talking about the perfect storm,
which will hit around January 2014. I don't think they thought through these issues."
Under the act, hospitals are judged by the quality of care given, using 176 different "core
measures," as well as on the patient's hospital experience. If these factors are determined
to be superior, the hospital could receive a ten to fifteen percent bonus in reimbursement.
The flip side is that if service is judged to be sub-standard, the hospital could be penalized.
One of the stricter standards is that if a patient is treated at the hospital and released, but is
re-admitted within thirty days of discharge, the hospital will lose all of the reimbursement it
received for providing the first treatment.
"This sounds bad, but accountable care is not all bad," said Wallace. "People do need to be
accountable, and we (the hospital) have already been doing that. The challenge will be in
keeping track of all the numerous rules and making sure we check all the boxes the
government requires. It creates a lot of redundancy, and I don't' know if they considered the
amount of extra work that would require. We will just have to be better at what we do to
meet the expectations."
Though medical providers can be penalized under the new act for providing substandard
care, the actual patient, who may have been responsible for creating his or her own health
problems in the first place, cannot. For this reason, it will be imperative, Wallace said, to
spread the message that patients need to start taking more responsibility for their own well-
being.
"Unfortunately, the state of New Mexico is not a healthy state. There is a high incidence of
diabetes and hypertension," he said. "How can we convey to the public that we (medical
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personnel) can't take care of everything, and that people have to start taking responsibility
for their own health? It's important to reduce the actual need for healthcare by getting
people to take responsibility to become healthier, and people have to accept that."
Joe Pope, a physician with Pinon Family Practice on 30th Street, shares many of Wallace's
views on the health care changes. The dearth of family practitioners will become a major
issue as implementation of the federal law proceeds, he said.
"There have never been enough physicians, so we'll have to find other ways to increase our
capacity," he said, adding that a shift from doctors providing direct care to mid-level
practitioners such as physician assistants and nurses may be imminent.
"Physicians will not be able to keep up with the primary care need, and may take more of a
supervisory role, with physician assistants and nurses providing most of the care," he said.
Pope also believes that the act neglected to address some vital issues, such as the need for
medical liability reform.
"This was a glaring omission of the act in my opinion, and the fact that physicians are
paranoid and having to sometimes order unnecessary tests because they're afraid of being
sued," he said. And that, he said, is part of what is driving up costs.
In fact, a 2008 survey of Massachusetts doctors found that 83 percent admitted to
practicing defensive medicine — ordering tests and consultations as a way to protect
themselves from potential liability — resulting in an estimated $281 million in unnecessary
physician costs in that state.
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CALIFORNIA REDEFINES 'DOCTORS' TO COMPENSATE FOR OBAMACARE SHORTAGES
- DR. SUSAN BERRY, BREITBART
As a result of Obamacare and its expansion of coverage to millions, many states will begin to
experience doctor shortages. California is dealing with this problem by redefining who is a
“doctor.”
State lawmakers are working on legislation that would permit physician assistants and nurse
practitioners to set up independent practices. Pharmacists and optometrists could now act
as “primary care” providers. These role changes will be common in the age of Obamacare,
when even teachers will be “trained” to diagnose mental health and behavioral health
problems in “school-based healthcare centers.”
As State Senator Ed Hernandez (D) says, “What good is it if they are going to have a health
insurance card but no access to doctors?” The solution, to those who support Obamacare,
is to permit more people to do what “doctors” have done in the past.
California’s Health and Human Services Agency secretary, Diana Dooley, states, “We’re
going to have to provide care at lower levels. I think a lot of people are trained to do work
that our licenses don’t allow them to.”
Beth Haney, president of the California Association for Nurse Practitioners, said, “We don’t
have enough providers… so we should increase access to the ones that we have.” Turf wars
are becoming standard fare with Obamacare, as will questions of accountability. The big
question, of course, is where does the buck stop when the government is in charge of
healthcare?
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WILL ONLY SUCKERS BUY OBAMACARE INSURANCE
- JOHN MERLINE, INVESTOR'S BUSINESS DAILY
For years, Obamacare critics focused on its least popular feature — the mandate that
everyone buy insurance — taking their fight all the way to the Supreme Court. But as
Obamacare's official launch date approaches even its backers are beginning to admit that
the law could actually create powerful incentives for millions of people and thousands of
businesses to drop their coverage, despite the mandate.
There is growing concern, for example, that the law's market reforms will cause a huge "rate
shock," particularly for those young and healthy. A February survey of major health
insurance companies in five cities across the country found that they expect premiums for
this group to climb an average 169%.
Aetna CEO Mark Bertolini said late last year that he expects premiums to double for some
small businesses and some individuals as a result of the law. And state insurance
commissioners are worried as well.
"We are very concerned," California Insurance Commissioner Dave Jones told federal health
officials at a December meeting, "if there is so much rate shock for young people that
they're bound not to purchase (health insurance) at all." The cause of this rate shock is
simple: Obamacare imposes what is called "community rating" on insurance companies,
effectively forcing them to charge the young and healthy more so they can charge older and
sicker consumers less.
The five-city survey, for example, found that while the law will jack up rates for the young, it
will lower them an average 22% for older and sicker customers. At the same time,
Obamacare also forbids insurance companies from turning anyone down — a reform called
"guaranteed issue" — which also will provide an incentive for some to drop coverage,
knowing they can get it back any time.
"Even with the tax penalty ... some healthy people would avoid purchasing coverage until
they are sick," Howard Shapiro, director of public policy at the Alliance of Community Health
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Plans, told regulators . The problem is that if the young and healthy drop coverage, the
result would be what the industry calls a "death spiral." Premiums will climb as the pool of
insured gets sicker, causing still more to cancel their policies.
This is just what happened in states that imposed strict community rating and guaranteed
issue reforms in the past. In fact, of the eight states that did so, most ended up either
dropping the reforms or loosening the rules after they saw enrollment decline and
premiums climb.
Obamacare backers say the law's subsidies will keep premium costs down, while the
mandate to buy insurance will keep the young and healthy in the market. But even they
admit that the subsidies won't protect everyone from Obamacare-caused rate shocks, and
the mandate is likely to prove too weak to be very effective.
In fact, the annual penalty for not buying insurance will be as low as $95 in 2014, and even
when the mandate penalty is fully phased in by 2016 it will be modest relative to the cost of
buying insurance.
In one illustrative example provided by the IRS, a family earning $120,000 in 2016 would
owe just $2,400 in "shared responsibility payments" — the administration's new euphemism
for the penalty — while buying insurance would run them, in the IRS example, at least
$20,000.10
In addition, after 2016, the penalty amounts will be indexed to inflation, even though
insurance premiums have consistently risen much faster than the CPI, which means "shared
responsibility payment" will be less of a deterrent over time.
On top of all this, the IRS has virtually no ability to collect the penalties from those who
don't pay them. As the IRS itself explains, the law forbids the agency from imposing liens or
criminal penalties, leaving it few options beyond deducting the penalty from tax refunds.
The Obama administration knows this poses a potential problem. In fact, in late November it
asked the industry to offer ideas on how it could "discourage consumers from abusing
guaranteed availability rights." The industry's response: Make the penalties even tougher,
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something lawmakers are unlikely to want to do. The same problem threatens to
undermine Obamacare on the business side, if companies decide that paying a penalty is
cheaper than providing an increasingly expensive benefit to workers.
The Congressional Budget Office now expects that employers will dump coverage for 7
million workers as a result of Obamacare, nearly double its previous forecast. And it says the
figure could be as high as 20 million. At the same time, small companies will have an
incentive to cut their full-time workforce to below 50 to avoid the mandate altogether. In
fact, the IRS recently had to issue a warning to companies about using various tricks to
dodge the employer mandate.
Estimated Increases in Individual Market Premiums Due to Obamacare, by State
State Premium Increase State
Premium Increase State
Premium Increase
Alabama 61% Louisiana 56% Ohio 55% to 106%
Alaska 30% to 80% Maine 40% Oklahoma 65% to 100%
Arizona 65% to 100% Maryland 34% to 39% Oregon 27% to 55%
Arkansas 61% to 100% Massachusetts 39% Pennsylvania 39%
California 42% to 61% Michigan 35% to 65% Rhode Island 8% to 39%
Colorado 19% to 41% Minnesota 29% to 56% South Carolina 61%
Connecticut 39% to 64% Mississippi 61% South Dakota 56%
Delaware 61% Missouri 61% to 106% Tennessee 61% to 100%
Florida 61% Montana 61% Texas 35% to 65%
Georgia 61% to 100% Nebraska 61% Utah 56% to 90%
Hawaii 56% Nevada 50% to 56% Vermont ***
Idaho 65% to 100% New Hampshire 19% to 39% Virginia 75% to 82%
Illinois 61% New Jersey 39% Washington 39%
Indiana 61% to 106% New Mexico 56% West Virginia 56%
Iowa 56% to 100% New York *** Wisconsin 34% to 106%
Kansas 61% North Carolina 61% Wyoming 61% to 100%
Kentucky 65% to 106% North Dakota 56% ***Since these states already hyper regulate their insurance market, their significantly higher premiums are unlikely to change.
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BRACES FOR THE KIDS JUST GOT MORE EXPENSIVE: OBAMACARE TAX HIKE CASE STUDY
- AMERICANS FOR TAX REFORM
In 2013, the tax increases in Obamacare will increasingly conspire against kitchen-table
family healthcare decisions.
As just one example, below are some of the taxes that will impact the purchase of dental
braces:
Obamacare Medical Device Tax: As of Jan.1, Obamacare imposes a new tax of 2.3 percent
on medical device manufacturers, including those who make dental braces. The tax is
imposed on gross sales -- even if the company does not earn a profit in a given year. While
the tax will be paid to the IRS by the manufacturer, the tax will be passed along as a higher
cost of the product, ultimately to be borne by the parent buying the braces for their child.
With the cost of braces being as high as $7,625 this new tax could raise the cost of these
braces by $175.
Obamacare Flexible Spending Account Cap: As of Jan. 1, the 30-35 million Americans who
use a pre-tax Flexible Spending Account (FSA) at work to pay for their family’s basic medical
needs face a new government cap of $2,500. This will squeeze $13 billion of tax money from
Americans over the next ten years. (Before Obamacare, the accounts were unlimited under
federal law, though employers were allowed to set a cap.) A parent looking to sock away
extra money to pay for braces would find themselves quickly hitting this new cap, meaning
they would have to pay some or all of the cost with after-tax dollars. Needless to say, this
tax will especially impact middle class families.
Obamacare “Haircut” to the Medical Itemized Deduction: Faced with higher prices for
braces and a reduced ability to pay for them with their FSA, parents might decide to deduct
the cost of braces on their tax returns. Unfortunately, Obamacare makes this harder, too.
Before Obamacare, Americans facing high medical and dental expenses were allowed a
deduction to the extent that those expenses exceeded 7.5 percent of adjusted gross income
(AGI). As of Jan. 1, Obamacare imposes a threshold of 10 percent of AGI. Therefore,
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Obamacare not only makes it more difficult to claim this deduction, it widens the net of
taxable income.
According to the IRS, 10 million families took advantage of this tax deduction in 2009, the
latest year of available data. Almost all are middle class. The average taxpayer claiming this
deduction earned just over $53,000 annually. Americans for Tax Reform estimates that the
average income tax increase for the average family claiming this tax benefit will be $200 -
$400 per year.
This is just a small example of how a simple, everyday kitchen table decision has been
fundamentally altered by the tax hikes in Obamacare. It does not even take into account
the indirect effects of the rest of the tax hikes in the law, which will reduce family income
and kill jobs.
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A TAX EVEN CHUCK SCHUMER HATES
- SALLY C. PIPES, NEW YORK POST
The tax will also put a damper on medical innovation. Most new medical devices are
invented by small, venture-backed companies that invest heavily in research and
development — and so run losses for years before getting their device approved by federal
regulators and ultimately turning a profit. If they come up with a promising prototype, their
financial futures are still not secure. Bringing a new, low-risk medical device from concept to
market can cost around $31 million — $24 million for activities related to gaining regulatory
approval. Yet the tax applies to gross sales of applicable devices, regardless of a company’s
profitability or ability to pay. So companies with weak balance sheets (innovative small firms
among them) may face bankruptcy.
The tax will also precipitate a slowdown in a manufacturing sector where America still leads
the world. The medical-technology industry exports $5.4 billion more than it imports. And in
2008, the United States accounted for 40 percent of the world’s medical-technology market.
Congress has long known about the tax’s ugly impact on the economy — and on patients. In
2010, Richard Foster, the chief actuary at the Centers for Medicare and Medicaid Services,
wrote that the device tax “would generally be passed through to health consumers in the
form of higher drug and device prices and higher insurance premiums.” He predicted that
annual health-care spending would increase $18.2 billion by 2018 thanks to the tax and
other similar fees in Obamacare.
None of this — not even the pleadings of his own party — has moved President Obama to
reconsider the device tax. He explained in a recent interview, “The health care bill is going to
provide those medical device companies 30 million new customers . . . so this additional tax
essentially comes back to them as new customers.” Problem is, most of the new customers
who gain coverage through Obamacare will be young, healthy Americans — hardly the
device industry’s core customers.
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CONCIERGE CARE MEDICINE
As mentioned, Obamacare is not a change within the industry, Obamacare IS changing the industry!
One such change is literally the way doctors practice medicine. Like entrepreneurs, doctors are desirous
and deserving of making money. Doctors have endured years upon years of rigorous medical school and
are obligated to paying back small fortunes in student loans. Many are highly skilled in specialized fields,
further enhancing their value.
With Obamacare ushering in ever increasing policies and bureaucratic red tape, more and more doctors
are leaving direct primary care medicine in favor of offering concierge medicine. Concierge physicians
care for fewer patients than in a conventional Practice, ranging from 100 patients per doctor to 1,000,
instead of the 3,000 to 4,000 that the average physician sees annually. The annual fees vary widely,
ranging from several hundreds of dollars to $5,000 per individual.
Some Concierge Practices are cash-only and do not accept insurance of any kind. By refusing to deal
with insurance companies, these Practices can keep overhead and administrative costs low, thereby
providing affordable healthcare to patients. They become "Concierge" only if the Practice assesses an
annual or monthly fee instead of or in addition to a fee for each medical service. Other Concierge
Practices do take insurance, even Medicare, but ask for an annual fee for services beyond those covered
by insurance plans. This annual fee is not a substitute for medical insurance and generally does not
cover consultations outside the Practice, laboratory procedures, medicines, hospitalizations, or
emergency care from other Providers.
Without question, Concierge Medicine’s growing popularity is in response to Obamacare.
Unfortunately, it is further taking primary care physicians out of “circulation” from the general public at
a time when Obamacare is grossly expanding the Medicaid system. Needless to say, the coming years
are going to be very interesting! But honestly, can you blame doctors? Do the math. They can see a
fraction of the patients, make equally as much if not more money, and never have to deal with the
threats, headaches, and hassles associated with Obamacare? That’s not a difficult decision! We as
Entrepreneurs would do the same, why should Doctors be any different?
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A short-list of many of the benefits of Concierge Medicine is as follows:
Guaranteed same-day appointments
24/7 access to the physician - no waiting
Longer appointment times - quality time with physicians
Phones are answered by staff who know you personally
Annual preventive care physical examination - comprehensive wellness plan
Coordination and assistance with hospital care, if needed
Expedited testing results - lab work checked prior to complete physical
Support personnel dedicated exclusively to concierge medicine patients
Convenient prescription services
Enhanced coordination of any physician referrals
Travel medical services
Consider the following article illustrating the allure and convenience of Concierge Medicine:
A YEAR LATER, UTAH DOCTOR REFLECTS ON HER SWITCH TO CONCIERGE CARE MEDICINE WITH FEWER PATIENTS, UTAH DOC FORGES DEEPER RELATIONSHIP WITH THEM
- KIRSTEN STEWART, THE SALT LAKE TRIBUNE
It’s not every day that Hanlon makes house calls. But she’s making more exceptions these
days, now that she’s seeing a fraction — about 350 — of the 2,500 patients she had a year
ago. In late December 2011, Hanlon and another internist at Alpine Medical Group, Yong
Hui Ahn, joined a growing number of doctors embracing "concierge" health care.
Hanlon closed her traditional practice. She reopened at the same location under the banner
of MDVIP, a "concierge" company. Hanlon’s patients pay a $1,500 annual membership fee
on top of copayments for their regular insurance, if they have it. In return, she promises
them more personalized care and round-the-clock access.
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Twenty years into her career, Hanlon is professionally recharged, practicing medicine the
way she had always hoped – "the quintessential internist, always there when you need her,"
she says.
Proponents say concierge medicine could heal what ails the health care system. For all the
money that Americans pour into health care, the country has the worst health outcomes of
any developed nation, says Tom Blue, executive director of the American Academy of
Private Physicians, a professional association. It’s on the shoulders of primary care doctors
to reverse that through better preventive care, but too many suffer from "burnout," Blue
says. "They complain of the costs of indulging insurer chart audits and billing to collect a
fraction of what they charge. They can’t stay afloat. I hear it in every state."
Indeed, nine out of 10 physicians say they are unwilling to recommend health care as a
profession, according to a 2012 poll by The Doctors Company, the nation’s largest liability
insurer. Faced with new requirements to go digital and other federal health-reform rules,
many are closing their practices and hiring on with hospital groups. Based on current hiring
trends, hospitals will account for more than 75 percent of physician hires within two years,
predicts physician-recruiting firm Merritt Hawkins.
Blue predicts retainer-based practices will salvage the solo practice. There are about 4,400
concierge doctors in the U.S., up 30 percent since 2011. "The election results really fanned
the flames," Blue says. "But the true potential will be unleashed when people realize the
access and white-glove treatment is a byproduct of the business model, not the price."
Members don’t have to have insurance, though MDVIP recommends it for emergencies and
acute specialty care. Hanlon works with some single working moms whose employers don’t
offer health benefits and whose pre-existing conditions make it impossible for them to buy
coverage.
She has room for more patients, but she has met her enrollment goal. About half her
patients are retirees on fixed incomes and Medicare; all but a few renewed their
memberships this year.
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"People are investing in their health," says Murrison, noting MDVIP added 100 doctors to its
portfolio last year, which now spans 600 practices in 40 states. He predicts growth will
remain strong as the Affordable Care Act prods millions to buy insurance, taxing the nation’s
shortage of primary care doctors.
"Issues that have plagued primary care, such as the ability to get into a doctor quickly, will
be exacerbated. We’ll see more midlevel physician’s assistants providing care and longer
waits, which will set us apart."
Critics say by winnowing their patients, concierge practices will worsen the shortage,
especially for the poor. Proponents argue primary care doctors are running out of choices.
As insurance prices soar, more people are moving to high-deductible plans, which cover only
big-ticket surgeries and emergencies.
In December, MDVIP published data showing its patients are hospitalized 79 percent less
than the average Medicare beneficiary and 72 percent less than the average commercially
insured adult.
I fully appreciate and understand why an increasing number of doctors are practicing Concierge
Medicine. As I discuss in my “How to Land Private-Pay Clients in Your NEMT Businessiii” Report, doctors
are doing nothing more than practicing Select Profitability to transform their entire business model to
ensure profitability. Especially when you consider the many ramifications of Obamacare, are Doctors
not doing what we ourselves must do as business owners? We need to be even more prudent and
selective in the clients we service and the business opportunities we pursue. Just because a particular
demand exists, does not automatically mean that all demand is for YOU! More specifically, just because
Obamacare is expanding the size of Medicaid, a population that needs your services, it does NOT
automatically mean that they should be your client(s)!
Understanding Concierge Medicine presents you with potentially outstanding strategic partners.
Because their clientele are primarily Private-Pay, finding and befriending such doctors can provide you
with a very exclusive clientele.
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WHY YOU NEED TO DIVERSIFY YOUR BUSINESS
As I have said repeatedly in my Newsletter and associated correspondence, times have changed. The
way we have done business in the past is no longer feasible. Previously, there was no limit to the size
and depth we could build our business. Many Providers started with a single vehicle and grew fleets and
labor forces well into the hundreds. Our only limitations were self-imposed limitations.
Unfortunately, Obamacare and overbearing Government policies have changed everything. We risk
increased taxes, penalties and even potential IRS reprisal if we become too large; exceeding 50 full-time
employees. No longer can we focus on building our business vertically without limitations, adding more
vehicles and employees to meet our growing demand. Now, out of necessity, we need to focus on
building our venture horizontally – diversifying and offering complementary services to increase
additional sources of revenue and profit earning potential.
Consider the following article from the “Huffington Post,” an ardent left-leaning news source, illustrating
how Obamacare is backfiring and causing layoffs within the very industry it is targeted to help – the
medical industry! When the “Huffington Post” admits that “Obamacare is having some negative
effects,” you know there are inherent problems.
AURORA HEALTH CARE SAYS IT WILL LAY OFF EMPLOYEES BECAUSE OF OBAMACARE
- HARRY BRADFORD, THE HUFFINGTON POST
It looks like Obamacare is having some negative effects on the industry it was intended to
help.
Dr. Nick Turkal, CEO of Wisconsin-based non-profit Health Care Provider Aurora Health Care,
announced earlier this month that his employer would be cutting jobs due to Obamacare,
The Journal Times reports. In a letter to employees he wrote that the company would be
receiving $13 million less in government reimbursements forcing it to make “position
eliminations plus discontinuation of some positions in the coming weeks.”
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The cuts will be small considering Aurora’s 30,000 current employees but things could get
worse in the future. Already, staff has been instructed to cut costs by avoiding making color
copies; physicians serving Medicare patients may receive a cut in payments.
“We don’t want people to be afraid, but things are different,” Aurora spokeswoman Myrle
Croasdale told the Journal Times.
Aurora isn’t the only one in the Health Care Industry to claim Obamacare is forcing layoffs.
Orlando Health, a Florida network of community and specialty hospitals, said it would be
laying off 400 employees due to new Obamacare costs, One News Now reports. Likewise,
small medical device company ADM Tronics says Obamacare will mean the company will
have to lay off employees for the first time in over a decade.
Because many people reading this material voted for Obamacare, I know that some will take offense
when I say that Obamacare is an absolute disaster! I don’t apologize because overwhelming evidence,
statistics, professional opinions and historical failures of similar socialistic systems supports this reality.
Further compounding Obamacare’s dismal creation, it is going to grow worse in the coming years. What
is most offensive, though, is that such overburdening policies and government intrusion inflicts the most
harm on small business owners; the backbone of our economy. The good news, however, is that
Entrepreneurs are the resourceful engines that, despite being taken for granted, will always find creative
ideas, strategies, and solutions to solve problems and create wealth.
In presenting you with strategies for expanding and diversifying your business, I offer you a “choose
your own adventure.” To increase your profit earning potential, I put before you proven business
models that Providers from all over the country are using to enhance their brand recognition and
integrate their services into the daily lives of their clientele. In coming chapters, I present you with ideas
and information - you choose what is most feasible for you, meets your personal and business goals and
expectations, and satisfies the needs within your local community.
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LEVERAGING NEW OPPORTUNITIES, WAIVER PROGRAMS
After enduring the hardship of learning about the grim realities of Obamacare, it’s time to share some
good news. Despite Obamacare’s manifesto of expanding the size and scope of the Medicaid and
welfare systems, the good news is that Medicaid Waivers are unique programs that are administered at
the County level.
Medicaid Waivers are designed to be a cost-saving strategy to pay for long-term care services. For
Nursing Home qualified persons who choose to live at home or in a residential community, Medicaid will
pay for various services if they can be obtained at a lower cost. Because funding and management
varies between States and Counties, various names for such Waivers include Home and Community
Based Services, Waiver Funded Services, Medicaid Waivers. Regardless of all such names, they’re all the
same – Waivers!
Because so few entrepreneurs know about, let alone understand how Waiver programs work, this
section alone should excite you about your investment in this resource. The following email is from a
close friend, a very experienced and well-established Transportation Provider in Pennsylvania. In asking
him about his application for the Pennsylvania Department of Aging (PDA) Wavier program he
responded with the following very enlightening email:
Every state has an online submission process and that is the reason I don't have my original
application. All of the new programs have been opened up for Providers to apply. In PA they
provide FREE software to allow companies to submit all claims electronically. I believe most
states have that ability because the funding for the specific programs is from the Federal
Government.
Waiver Programs are different county to county based on the services. Remember PDA
(Pennsylvania Department of Aging) Waiver as well as MHMR (Mental Health Mental
Retardation) Programs are all funded by the State DPW (Department of Public Welfare). All
billing goes through the state DPW Program so the first step to getting enrolled to PDA,
MHMR, etc. is to apply for a billing code and approval through the state program. After
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approval they will send information on how to bill through their free site. At that point they
would need to log on to the site to get a username and password.
Our site has a tutorial and training and I am certain most do. They would need to learn a
little about Coding claims which for Para-transit they only use about 3 procedure codes, and
then a diagnosis code as well when submitting, but honestly, this is simple because PDA or
MHMR will provide this information. Billing is extremely simple. Once submitted it tells you
whether it was approved or not and payment is 2-3 weeks to process. We submit large
batches at a time so 50,000 to 70,000 a month.
They establish a "base" for each rate (ambulatory, wheelchair, stretcher, extra attendant, lift
assist) and this rate is different in each area because it is solely based on the "cost reporting"
by each contractor. Rate proposals can be submitted and they can be changed but it can
sometimes be time consuming but they are worth it. The rates I have established in several
counties are very lucrative and I have setup the transports on a "Share Ride" basis which is
making over a million dollars a year just on this program alone. I would tell your people to
start by contacting the County MHMR Unit.
Needless to say, my friend’s email should excite you – with even more good news to come! The irony is
that there are many creative ways to make money with Waivers in addition to Non-Emergency Medical
Transportation. In discussing such particulars in greater detail, consider the following article illustrating
the situation of an unsuspecting elderly couple, also from Pennsylvania, in need of relief and assistance:
ELDER LAW: UNDERUSED PROGRAM HELPS SENIORS STAY AT HOME
- JULIAN GRAY AND FRANK PETRICH, PITTSBURGH POST GAZETTE
Mr. Harris receives the bulk of the family income through his Social Security and pension
while Mrs. Harris receives around $600 a month in Social Security retirement benefits.
Absent any emergencies, they can live comfortably on their income and within their means.
Mr. Harris has taken on an increased role as his wife's caregiver, but realizes that with his
own bad back and other physical ailments from years of physical labor, he, too, may be
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limited in the care he can provide as time goes on. In addition, he is becoming concerned
about leaving his wife at home alone safely.
Mr. Harris has done some research and attended local events to learn about Home Health-
Care options in the event that his wife's needs escalate to more than he can handle.
However, with their limited savings and income, he feels that such home care would not be
financially sustainable for the long term. He also inquired with local government agencies as
to the availability for assistance in their home, only to be told that they did not qualify for
financial reasons.
The Harris' situation is quite common as many seniors are not prepared to take on the
financial burden of Private Home Health-Care costs. For many, the alternative of Facility
Care is a last resort. Fortunately, there are programs in Pennsylvania to assist those in need.
One such program is the Aging 60+ Waiver Program; more commonly referred to as the
"PDA Waiver" program. This program is funded through Pennsylvania's Medicaid program,
called Medical Assistance, as an alternative to Nursing Home Care.
A wide range of services is available under this program, including: personal care services,
Home Health Aides, medical equipment and supplies, transportation and home health visits,
to name a few. Generally, a person's situation dictates a formal care plan. Once the care
plan is established, the recipient will receive the designated services in her home at no cost
to the recipient. Depending on the number of hours per week prescribed in the care plan,
this can amount to thousands of dollars in benefits each month. Sounds too good to be
true? There are a few considerations that warrant further discussion.
Joel’s Insight: In “putting the cart before the horse,” can you see the opportunity for Home Care? “The
recipient will receive the designated services in her home at no cost to the recipient….this can amount to
thousands of dollars in benefits each month.” If this doesn’t scream diversification into Home Care, I
don’t know what will convince you!
Medicaid-funded programs such as PDA Waiver are tested for medical and financial
eligibility. The financial test for the PDA Waiver program is quite similar to the eligibility for
Nursing Home covered Medicaid, with one twist. Under the Pennsylvania Department of
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Aging (PDA) Waiver program, the applicant's income must not exceed the level prescribed
by the Department of Public Welfare, which is the gatekeeper for Medicaid benefits in
Pennsylvania.
Currently, the monthly income limit for the PDA Waiver program is $2,022. The spouse's
income is not counted. Therefore, Mrs. Harris would be income eligible for the program
because her income is only $600/month. In addition to the income test, there is an asset
test. The asset test is a bit more complicated, but there are many exemptions available to
assist applicants and their spouses to achieve eligibility.
Joel’s Insight: Because “The spouse’s income is not counted,” Waivers offer exceptional opportunities for
Entrepreneurs because it, essentially, expands our potential client base.
Unfortunately, most applicants are unaware of the options and the government cannot
provide legal advice to obtain the sought-after benefits. In the situation of Mr. and Mrs.
Harris, they feel that they would not be financially eligible for this program because they
own a home, a car, Mr. Harris' IRA worth $50,000 and have various CD's totaling about
$100,000. However, upon closer inspection, the Harrises would be surprised to learn that
eligibility for this program to help Mrs. Harris would not require them to "spend down" all of
their savings. In fact, there are federal spousal protections enacted for this very purpose.
Moreover, new legislation and recent case law in Pennsylvania now provide more options to
obtain eligibility for the PDA Waiver program.
Because the previous article discusses the PDA Waiver program and my friend who generates over
$1,000,000 per year in NEMT is from Pennsylvania, allow me to focus on Waivers in Pennsylvania. With
50 States and an untold number of Counties in the US, it is obviously not feasible to share Waiver
programs from across the country. Thus, one of your first tasks after reading this resource is to begin
researching the particulars of Waiver programs in your State/County.
Pennsylvania Department of Aging (PDA) Waiver Overview: This Medicaid Waiver provides home and
community based services to seniors who require nursing facility care but elect to live in their own
homes or in other community living arrangements and receive care in those locations. It is also referred
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to as the PA Council of Aging Waiver, the PDA Waiver or the Home and Community-Based Waiver for
Individuals Aged 60 and over.
Under this waiver, certain goods, supports and services can be participant directed or self-directed. This
means the individual chooses from whom they purchase goods or care services. Such freedom of choice
is ideal because, unlike the Broker system, customers are empowered; they have a choice of Provider
and it is not determined exclusively by lowest price. This also empowers you, the Provider, because in
providing a higher quality service you have the potential for increased clientele. Pennsylvania also has a
more robust program which allows the individual even greater control of their care Providers called the
Services My Way Program.
Aging Waiver Eligibility Guidelines: In addition to living in PA, residents must be at least 60 years old
and require the level of care typically provided in a nursing home. They also must qualify financially for
Medicaid in Pennsylvania, which is sometimes called "Medical Assistance" or abbreviated MA.
Pennsylvania Medicaid Eligibility Requirements: The income limit for an individual applying for
Medicaid is $2,130 / month. If one spouse is applying for Medicaid and the other is not, joint income can
be shifted to help the applicant qualify.
The asset limit for the PDA Waiver is $8,000. Resources in excess of that amount will need to be spent
down or re-allocated into exempt (non-countable) assets. In the situation previously described, where
one spouse of a married couple is applying, resources in excess of $8,000, up to a maximum of $115,920
can be allocated to the non-applicant spouse. This is referred to as the Community Spouse Resource
Allowance.
Applicants exceeding these Limits: Pennsylvania has a Medically Needy Medicaid program that enables
residents with unusually high care costs to qualify for the program. Alternatively, Medicaid planning
professionals can work with a family to arrange their assets and income into annuities and trusts so that
they meet the eligibility requirements. For example, by pre-funding a funeral using an irrevocable
funeral trust, one can reduce their countable assets by up to $15,000. Persons in this situation should
find Medicaid planning help.
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Services & Benefits: The services provided under Waivers are determined on a needs basis. Individuals
can be approved for a wide variety of services, so prepare for new ideas on diversification. Services
highlighted in red are specific strategies that we will be discussing because, under Waivers, individuals
can be approved for any of the following:
-Adult Daily Living Services (Adult Day Care)
-Attendant Care (Personal Care)
-Community Transition Services (Moving Assistance)
-Companion Services (Escort)
-Counseling
-Environmental Accessibility Modifications (Home and / or Vehicle)
-Financial Management Services
-Home Health Services
-Home Medical Equipment and Supplies
-Meal Delivery (Hot or Prepared)
-Non-Medical Transportation
-Personal Emergency Response (PER) System
-Respite Care Services (Temporary Caregiver Relief)
In the event you might think that such opportunities sound too good to be true under such Waivers,
consider the following article from the great State of Florida:
BIG CHANGES IN LONG-TERM CARE
- SUN SENTINEL EDITORIAL BOARD
The Obama administration last week gave Gov. Rick Scott one of the two Waivers he's
requested for managing Medicaid, the federal-state health program for the very poor. The
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Waiver affects long-term care for 87,000 low-income seniors and disabled people who now
receive Nursing Home or In-Home Care under Medicaid.
Given that Medicaid consumes about $21 billion of the state's $74 billion budget — and that
long-term care accounts for about 18 percent of Medicaid's budget — we all have a stake in
the efficient management of the program's long-term care services for our most frail
citizens.
Gov. Scott is certain that by contracting with a limited number of private companies, Florida
can deliver better services at a lower cost. Now, he's got the chance to prove it.
If Nursing Home patients, or those trying to stay out of Nursing Homes, get into a plan that
offers more meaningful coordination of care, they will be better off for this Waiver. For it
gives the state more flexibility in providing alternatives to Nursing Home Care, such as
attendant care, adult day care, homemaker and respite services, transportation, and much
more.
It's imperative that the state Agency for Health Care Administration provide strict oversight
of the companies selected to manage the In-Home Care of our poorest elderly and disabled
neighbors. For starters, The Agency should get much more aggressive about communicating
what the Waiver means for real people, including those now in Nursing Homes.
Gov. Scott scored a win in convincing the federal government to give Florida more flexibility
in managing nursing home and in-home care for low-income seniors. We hope it's a win for
patients and taxpayers, too.
Joel’s Insight: Only one word adequately speaks to the previous articles and Waiver programs in general
– Opportunity!
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LEVERAGING NEW OPPORTUNITIES, SCHOOL DISTRICTS & UNIVERSITIES
A niche market that very few Transportation Providers consider pursuing is the assisted transportation
needs of School Districts, Colleges and Universities. When I mention this niche to Providers, most have
never considered such possibilities. This is surprising because, depending on the size and number of the
school districts, they can be highly profitable! I can only assume that Transportation Providers simply
overlook this market; focusing more on elderly and disabled seniors. Rarely do Providers consider the
needs of children and students with disabilities. But you have to consider, how do students in
wheelchairs or with special needs get to and from school? Someone is taking them; why not you? You
need to contact surrounding School Districts to request potential future RFP’s.
Locally, we have a large State University, SUNY Binghamton, and a junior college, Broome Community
College. Over the years, we have transported an untold number of college students to and from school.
Reimbursement amounts were very good and typically came from the University or College, an
academic-related grant, or a combination of both. Initially, we received various Requests for Proposals
(RFP). Once we established a good reputation with the schools, we were rarely, if ever, offered another
RFP. Rather, they simply kept referring more and more students each semester. The best part,
reimbursements from New York State were very good and always on time.
The following several pages is an actual RFP awarded to a Transportation Provider to provide services to
and from elementary, middle, and high school. This is a great illustration of the content featured in a
standard RFP. I also include this RFP for other reasons to include:
1. You will notice that the date of this RFP is in the middle of the second semester. Why – because the
School District discontinued the previous Provider after several years in search of a more reliable
Service. This reinforces the principle that you never take providing exceptional service for granted.
2. The last page features the rates of reimbursement - which are outstanding! They are per student, per
one-way transport. When you consider this Provider transports multiple students in a single vehicle, it is
easy to see the profit-earning potential. How the previous Provider allowed this contract to be lost is
unbelievable. The new Provider is making very good margins on this contract.
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STATE OF [NAME]/[NAME] COUNTY PUBLIC SCHOOLS REQUEST FOR PROPOSAL:
RFP #: 1213-0000
TITLE / PROJECT: Transportation for Students
USING AGENCY: [Name] County Public Schools
ISSUE DATE: February 27, 2013
Proposals subject to the conditions made a part hereof will be received until 2:00p.m., on Wednesday,
February 27,2013 for furnishing the services incidental and implied, described herein.
SEND ALL PROPOSALS DIRECTLY TO THE ISSUING AGENCY ADDRESS AS SHOWN BELOW:
DELIVERED BY US POSTAL SERVICE HAND DELIVERY RFP #: 1213-0000
[Name] County Public Schools [Street Name & Number] Avenue West [City], [State] [Zip Code] Attn: [Name], Purchasing Agent
RFP #: 1213-0000
[Name] County Public Schools [Street Name & Number] Avenue West [City], [State] [Zip Code] Attn: [Name], Purchasing Agent
Bids submitted via facsimile (FAX) machine, or e-mail, in response to this Request for Proposals will be
accepted. Fax to: [Number], Attn: [Name], CLGPO, Purchasing Agent, or e-mail to:
[Name]@[emailaddress].us
Bids submitted after the above referenced deadline will not be accepted under any circumstance.
Direct all inquiries concerning this RFP to:
[Name], CLGPO, Purchasing Agent Phone: [Number], Ext: 2232
"It is the policy of the [Name] County Public School System not to discriminate on the basis of race, ethnic origin, sex, or
disability in its educational programs, activities, or employment policies."
Board of Public Education [Name], Chairperson [Name], Vice Chairperson [Name] [Name] [Name] [Name] [Name]
[Name] Superintendent
[Street Name & Number] Avenue West [City], [State] [Zip Code]
Fax [Number] or [Number] www.[name]countypublicschools.org
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THE PROCUREMENT PROCESS
The following is a general description of the process by which a firm will be selected to provide services.
1. Request for Proposals (RFP) is issued to prospective contractors.
2. A pre-proposal conference (if applicable) and/or deadline for written questions is five days prior to due date.
3. Proposals in one original will be received from each offeror in a sealed envelope or package. The original shall be signed and dated by an official authorized to bind the firm. Unsigned proposals will not be considered.
4. All proposals must be received by the issuing agency not later than the date and time specified on the cover sheet of this RFP.
5. At that date and time the package containing the proposals from each responding firm will be opened. The purchasing division will furnish bid tabs upon request.
6. At their option, the evaluators may request oral presentations or discussion with any or all offerors for the purpose of clarification or to amplify the materials presented in any part of the proposal. However, offerors are cautioned that the evaluators are not required to request clarification; therefore, all proposals should be complete and reflect the most favorable terms available from the offeror.
7. Proposals will be evaluated according to completeness, content, experience with similar projects, ability of the offeror and its staff, and cost. Award of a contract to one offeror does not mean that the other proposals lacked merit, but that, all factors considered, the selected proposal was deemed most advantageous to [Name] County Public Schools.
8. Offerors are cautioned that this is a request for offers, not a request to contract, and the [Name] County Public Schools reserves the unqualified right to reject any and all offers when such rejection is deemed to be in the best interest of [Name] County Public Schools.
GENERAL INFORMATION ON SUBMITTING PROPOSALS
1. EXCEPTIONS: All proposals are subject to the terms and conditions outlined herein. All responses shall be controlled by such terms and conditions and the submission of other terms and conditions, price lists, catalogs, and/or other documents as part of an offeror's response will be waived and have no effect either on this Request for Proposals or on any contract that may be awarded resulting from this solicitation. Offeror specifically agrees to the conditions set forth in the above paragraph by signature to the proposal.
2. CERTIFICATION: By executing the proposal, the signer certifies that this proposal is submitted competitively and without collusion (G.S. 143-540), that none of our officers, directors, or owners of an unincorporated business entity has been convicted of any violations of Chapter 781A of the General Statutes, the Securities Act of 1933, or the Securities Exchange Act of 1934 (G.S. 133-
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59.2), and that we are not an ineligible vendor as set forth in G.S. 144-59.1. False certification is a Class I felony.
3. ORAL EXPLANATIONS: The State/[Name] County Public Schools shall not be bound by oral explanations or instructions given at any time during the competitive process or after award.
4. REFERENCE TO OTHER DATA: Only information which is received in response to this RFP will be evaluated; reference to information previously submitted shall not be evaluated.
5. ELABORATE PROPOSALS: Elaborate proposals in the form of brochures or other presentations beyond that necessary to present a complete and effective proposal are not desired.
In an effort to support the sustainability efforts of the State of [Name] we solicit your cooperation in this effort.
It is desirable that all responses meet the following requirements:
All copies are printed double sided.
All submittals and copies are printed on recycled paper with a minimum post-consumer content of 30% and indicate this information accordingly on the response.
Unless absolutely necessary, all proposals and copies should minimize or eliminate use of
non-recyclable or non re-usable materials such as plastic report covers, plastic dividers,
vinyl sleeves, and GBC binding. Three-ringed binders, glued materials, paper clips, and
staples are acceptable.
Materials should be submitted in a format which allows for easy removal and recycling of
paper materials.
6. COST FOR PROPOSAL PREPARATION: Any costs incurred by offerors in preparing or submitting
offers are the offerors' sole responsibility; the State of [Name]/[Name] County Public Schools
will not reimburse any offeror for any costs incurred prior to award.
7. TIME FOR ACCEPTANCE: Each proposal shall state that it is a firm offer which may be accepted
within a period of 45 days. Although the contract is expected to be awarded prior to that time,
the 45 day period is requested to allow for unforeseen delays.
8. TITLES: Titles and headings in this RFP and any subsequent contract are for convenience only
and shall have no binding force or effect.
9. CONFIDENTIALITY OF PROPOSALS: In submitting its proposal the offeror agrees not to discuss
or otherwise reveal the contents of the proposal to any source outside of the using or issuing
agency, government or private, until after the award of the contract. Offerors not in compliance
with this provision may be disqualified, at the option of the State/[Name] County Public Schools,
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from contract award. Only discussions authorized by the issuing agency are exempt from this
provision.
10. RIGHT TO SUBMITTED MATERIAL: All responses, inquiries, or correspondence relating to or in
reference to the RFP, and all other reports, charts, displays, schedules, exhibits, and other
documentation submitted by the offerors shall become the property of [Name] County Public
Schools when received.
11. OFFEROR'S REPRESENTATIVE: Each offeror shall submit with its proposal the name, address,
and telephone number of the person(s) with authority to bind the firm and answer questions or
provide clarification concerning the firm's proposal.
12. SUBCONTRACTING: Offerors may propose to subcontract portions of the work provided that
their proposals clearly indicate what work they plan to subcontract and to whom and that all
information required about the prime contractor is also included for each proposed
subcontractor.
13. PROPRIETARY INFORMATION: Trade secrets or similar proprietary data which the offeror does
not wish disclosed to other than personnel involved in the evaluation or contract administration
will be kept confidential to the extent permitted by NAC T01:05B.1501 and G.S. 132-1.3 if
identified as follows: Each page shall be identified in boldface at the top and bottom as
"CONFIDENTIAL". Any section of the proposal which is to remain confidential shall also be so
marked in boldface on the title page of that section. Cost information may not be deemed
confidential. In spite of what is labeled as confidential, the determination as to whether or not it
is shall be determined by [State] law.
14. HISTORICALLY UNDERUTILIZED BUSINESSES: Pursuant to General Statute 133-38 and Executive
Order #140, the State/ [Name] County Public Schools invites and encourages participation in this
procurement process by businesses owned by minorities, women, disabled, disabled business
enterprises and non-profit work centers for the blind and severely disabled.
15. PROTEST PROCEDURES: If an offeror wants to protest a contract awarded pursuant to this
solicitation, they must submit a written request to the Purchasing Agent, [Name] County Public
Schools, [Street Address] Avenue West, [City], [State] [Zip Code]. This request must be received
by the Purchasing Division within thirty (30) consecutive calendar days from the date of the
contract award. Protest letters must contain specific reasons and any supporting documentation
for the protest. Note: Contract award notices are sent only to those actually awarded contracts,
and not to every person or firm responding to this solicitation. Contract status and award
notices are available through the Purchasing Division or the project designer with contact
information as shown on the first page of this solicitation. All protests will be handled pursuant
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to the [State] Administrative Code, Title 1, Department of Administration, Chapter 5, Purchase
and Contract, Section 5AB.15219.
16. TABULATIONS: Offeror's may call the Purchasing Division to obtain a verbal status of contract
award.
17. VENDOR REGISTRATION AND SOLICITATION NOTIFICATION SYSTEM: Vendor Link [State] allows
vendors to electronically register free with the State to receive electronic notification of current
procurement opportunities for goods and services available on the Interactive Purchasing
System. Online registration and other purchasing information are available on our Internet web
site: http://www.webaddress.us/pandc/.
18. RECIPROCAL PREFERENCE: G.S. 1433-519 establishes a reciprocal preference law to discourage
other states from applying in-state preferences against [State] resident offers. The "Principal
Place of Business" is defined as the principal place from which the trade or business of the
offeror is directed or managed.
[STATE] GENERAL CONTRACT TERMS AND CONDITIONS (Contractual and Consultant Services)
1. GOVERNING LAW: This contract is made under and shall be governed and construed in accordance with the laws of the State of [Name].
2. SITUS: The place of this contract, its situs and forum, shall be [State], where all matters, whether sounding in contract or tort, relating to its validity, construction, interpretation and enforcement shall be determined
3. INDEPENDENT CONTRACTOR: The Contractor shall be considered to be an independent contractor and as such shall be wholly responsible for the work to be performed and for the supervision of its employees. The Contractor represents that it has, or will secure at its own expense, all personnel required in performing the services under this agreement. Such employees shall not be employees of, or have any individual contractual relationship with the Agency.
4. KEY PERSONNEL: The Contractor shall not substitute key personnel assigned to the performance of this contract without prior written approval by the Agency's Contract Administrator. The individuals designated as key personnel for purposes of this contract are those specified in the Contractor's proposal.
5. SUBCONTRACTING: Work proposed to be performed under this contract by the Contractor or its employees shall not be subcontracted without prior written approval of the Agency's Contract Administrator. Acceptance of an offeror's proposal shall include any subcontractor(s) specified therein.
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6. PERFORMANCE AND DEFAULT: If, through any cause, the Contractor shall fail to fulfill in timely and proper manner the obligations under this agreement, the Agency shall thereupon have the right to terminate this contract by giving written notice to the Contractor and specifying the effective date thereof. In that event, all finished or unfinished deliverable items under this contract prepared by the Contractor shall, at the option of the Agency, become its property, and the Contractor shall be entitled to receive just and equitable compensation for any satisfactory work completed on such materials. Notwithstanding, the Contractor shall not be relieved of liability to the Agency for damages sustained by the Agency by virtue of any breach of this agreement, and the Agency may withhold any payment due the Contractor for the purpose of setoff until such time as the exact amount of damages due the Agency from such breach can be determined.
In case of default by the Contractor, [Name] County Public Schools may procure the services from other sources and hold the Contractor responsible for any excess cost occasioned thereby. [Name] County Public Schools reserves the right to require a performance bond or other acceptable alternative performance guarantees from successful offeror without expense to [Name] County Public Schools.
In addition, in the event of default by the Contractor under this contract, [Name] County Public Schools may immediately cease doing business with the Contractor, immediately terminate for cause all existing contracts [Name] County Public Schools has with the Contractor, and de-bar the Contractor from doing future business with [Name] County Public Schools.
Upon the Contractor filing a petition for bankruptcy or the entering of a judgment of bankruptcy by or against the Contractor, [Name] County Public Schools may immediately terminate, for cause, this contract and all other existing contracts the Contractor has with it, and de-bar the Contractor from doing future business.
Neither party shall be deemed to be in default of its obligations hereunder if and so long as it is prevented from performing such obligations by any act of war, hostile foreign action, nuclear explosion, riot, strikes, civil insurrection, earthquake, hurricane, tornado, or other catastrophic natural event or act of God.
7. TERMINATION: The Agency may terminate this agreement at any time by 15 days notice in writing from the Agency to the Contractor. In that event, all finished or unfinished deliverable items prepared by the Contractor under this contract shall, at the option of the Agency, become its property. If the contract is terminated by the Agency as provided herein, the Contractor shall be paid for services satisfactorily completed, less payment or compensation previously made.
8. PAYMENT TERMS: Payment terms are Net not later than 30 days after receipt of correct invoice(s) or acceptance of services, whichever is later, or in accordance with any special payment schedule identified in this RFP. The using agency is responsible for all payments to the contractor under the contract.
9. AVAILABILITY OF FUNDS: Any and all payments to the Contractor are dependent upon and subject to the availability of funds to the Agency for the purpose set forth in this agreement.
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10. CONFIDENTIALITY: Any information, data, instruments, documents, studies or reports given to or prepared or assembled by the Contractor under this agreement shall be kept as confidential and not divulged or made available to any individual or organization without the prior written approval of the Agency.
11. CARE OF PROPERTY: The Contractor agrees that it shall be responsible for the proper custody and care of any property furnished it for use in connection with the performance of this contract or purchased by it for this contract and will reimburse [Name] County Public Schools for loss of damage of such property.
12. COPYRIGHT: No deliverable items produced in whole or in part under this agreement shall be the subject of an application for copyright by or on behalf of the Contractor.
13. ACCESS TO PERSONS AND RECORDS: The State Auditor shall have access to persons and records as a result of all contracts or grants entered into by State agencies or political subdivisions in accordance with General Statute 1417-641.7. The Contractor shall retain all records for a period of three years following completion of the contract.
14. ASSIGNMENT: No assignment of the Contractor's obligations nor the Contractor's right to receive payment hereunder shall be permitted. However, upon written request approved by the issuing purchasing authority, Henderson County Public Schools may: a. Forward the contractor's payment check(s) directly to any person or entity designated by
the Contractor, or b. Include any person or entity designated by Contractor as a joint payee on the Contractor's
payment check(s). In no event shall such approval and action obligate [Name] County Public Schools to anyone other than the Contractor and the Contractor shall remain responsible for fulfillment of all contract obligations.
15. COMPLIANCE WITH LAWS: The Contractor shall comply with all laws, ordinances, codes, rules, regulations, and licensing requirements that are applicable to the conduct of its business, including those of federal, state, and local agencies having jurisdiction and/or authority.
16. AFFIRMATIVE ACTION: The Contractor shall take affirmative action in complying with all Federal and State requirements concerning fair employment and employment of people with disabilities, and concerning the treatment of all employees without regard to discrimination by reason of race, color, religion, sex, national origin, or disability.
17. INSURANCE: During the term of the contract, the contractor at its sole cost and expense shall provide commercial insurance of such type and with such terms and limits as may be reasonably associated with the contract. As a minimum, the contractor shall provide and maintain the following coverage and limits:
a. Worker's Compensation - The contractor shall provide and maintain Worker's Compensation Insurance, as required by the laws of [State], as well as employer's liability coverage with minimum limits of $500,000.00, covering all of Contractor's employees who are engaged in any work under the contract. If any work is subcontracted, the contractor shall
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require the subcontractor to provide the same coverage for any of its employees engaged in any work under the contract.
b. Commercial General Liability - General Liability Coverage on a Comprehensive Broad Form on an occurrence basis in the minimum amount of $1,000,000.00 Combined Single Limit. (Defense cost shall be in excess of the limit of liability.)
c. Automobile - Automobile Liability Insurance, to include liability coverage, covering all owned, hired and non-owned vehicles, used in connection with the contract. The minimum combined single limit shall be $1,000,000.00 bodily injury and property damage; $150,000.00 uninsured/under insured motorist; and $1,000.00 medical payment.
Providing and maintaining adequate insurance coverage is a material obligation of the contractor and is of the essence of this contract. All such insurance shall meet all laws of the State of [Name]. Such insurance coverage shall be obtained from companies that are authorized to provide such coverage and that are authorized by the Commissioner of Insurance to do business in [State]. The contractor shall at all times comply with the terms of such insurance policies, and all requirements of the insurer under any such insurance policies, except as they may conflict with existing [State] laws or this contract. The limits of coverage under each insurance policy maintained by the contractor shall not be interpreted as limiting the contractor's liability and obligations under the contract.
The Contractor shall furnish a Certificate of Insurance as proof of the above coverages. Certificate will contain provision that the insurance coverages cannot be canceled, reduced in amount or coverage eliminated without 30 days written notice to Henderson County Public Schools. Owner's Protective insurance must list [Name] County Public Schools as "Additional Insured" as its interest may appear. Owner's approval of Certificate of Insurance does not decrease or relieve the contractor's responsibility for maintaining insurance coverage as required in this Request for Proposal.
18. ADVERTISING: The offeror shall not use the award of a contract as part of any news release or commercial advertising.
19. ENTIRE AGREEMENT: This contract and any documents incorporated specifically by reference represent the entire agreement between the parties and supersede all prior oral or written statements or agreements. This Request for Proposals, any addenda thereto, and the offeror's proposal are incorporated herein by reference as though set forth verbatim.
All promises, requirements, terms, conditions, provisions, representations, guarantees, and warranties contained herein shall survive the contract expiration or termination date unless specifically provided otherwise herein, or unless superseded by applicable Federal or State statutes of limitation.
20. AMENDMENTS: This contract may be amended only by written amendments duly executed by the Agency and the Contractor.
21. TAXES: G.S. 1413-519.1 bars the Secretary of Administration from entering into contracts with vendors if the vendor or its affiliates meet one of the conditions of G. S. 1105-1164.8(b) and refuse to collect use tax on sales of tangible personal property to purchasers in [State].
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Conditions under G. S. 1105-1164.8(b) include: (1) Maintenance of a retail establishment or office, (2) Presence of representatives in the State that solicit sales or transact business on behalf of the vendor and (3) Systematic exploitation of the market by media-assisted, media-facilitated, or media-solicited means. By execution of the proposal document the vendor certifies that it and all of its affiliates, (if it has affiliates), collect(s) the appropriate taxes.
22. YEAR 2000 COMPLIANCE/WARRANTY: Vendor shall ensure the product(s) and service(s) furnished pursuant to this agreement ("product" shall include, without limitation, any piece of equipment, hardware, firmware, middleware, custom or commercial software, or internal components, subroutines, and interfaces therein) which perform any date and/or time data recognition function, calculation, or sequencing, will support a four digit year format, and will provide accurate date/time data and leap year calculations on and after December 31,1999, at the same level of functionality for which originally acquired without additional cost to the user. This warranty shall survive termination or expiration of the agreement.
23. GENERAL INDEMNITY: The contractor shall hold and save the [Name] County Public Schools, its officers, agents, and employees, harmless from liability of any kind, including all claims and losses accruing or resulting to any other person, firm, or corporation furnishing or supplying work, services, materials, or supplies in connection with the performance of this contract, and from any and all claims and losses accruing or resulting to any person, firm, or corporation that may be injured or damaged by the contractor in the performance of this contract and that are attributable to the negligence or intentionally tortious acts of the contractor provided that the contractor is notified in writing within 30 days that the Henderson County Public Schools has knowledge of such claims. The contractor represents and warrants that it shall make no claim of any kind or nature against the [Name] County Public Schools agents who are involved in the delivery or processing of contractor goods to [Name] County Public Schools. The representation and warranty in the preceding sentence shall survive the termination or expiration of this contract.
24. OUTSOURCING: Any vendor or subcontractor providing call or contact center services to the State of [Name] shall disclose to inbound callers the location from which the call or contact center services are being provided.
If, after award of a contract, the contractor wishes to outsource any portion of the work to a location outside the United States, prior written approval must be obtained from the State agency responsible for the contract.
Vendor must give notice to the using agency of any relocation of the vendor, employees of the vendor, subcontractors of the vendor, or other persons performing services under a state contract outside of the United States.
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Title: Transportation for Students
Term of Contract: The initial contract period shall be for a period of 4 months, beginning March 1, 2013
and ending June 30, 2013. The contract may be renewed for 2 additional 1 year terms if mutually agreed
upon by both parties.
Pricing: Pricing shall be guaranteed for the initial term of the contract. There shall be no additional
charges billed to HCPS other than those listed on the bid form.
Default: [Name] County Public Schools may, by 15 days written notice of default to the Contractor,
terminate the contract if the Contractor fails to perform the services as listed in this agreement. [Name]
County Public Schools reserves the right to make determinations as to whether service is being
performed satisfactorily. Failure to satisfactorily perform any or all services outlined in the contract will
be grounds for cancellation of the contract.
In the event [Name] County Public Schools terminates this contract as provided herein, they may
procure, in such manner as seems appropriate services similar to those so terminated.
Contractor's Responsibility: The Contractor shall be responsible for performing the services as described
in this RFP on school premises during the hours which have been mutually agreed-upon by CPS and
Contractor.
Certificate of Insurance: The contractor is responsible for issuing a Certificate of Insurance as proof of
the coverages as specified on Page 6, Section 17 of the RFP.
Scheduling: The successful contractor will coordinate with the CPS Homeless Liaison or designated
employee in regards to scheduling of services required.
Minority Business: [Name] County Public Schools promotes and encourages participation by Historically
Underutilized Businesses. Historically Underutilized Businesses (HUB) consist of minority, women,
disabled business firms, and socially and economically disadvantaged individuals or corporations that
are at least fifty-one percent owned and operated by persons of the aforementioned categories. Please
indicate on your proposal bid sheet if your company does, or does not, fall within one of these
categories. If applicable, specify classification.
References: List below references where your company has provided services similar to those listed in
this Request for Proposal. [Name] County Public Schools may contact these individuals to determine the
level of services provided. Such information may be considered in the evaluation of the bid.
COMPANY CONTACT PERSON TELEPHONE #
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
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SCOPE OF SERVICES TO BE COMPLETED:
[Name] County Public Schools (CPS) is seeking transportation services to transport students to and from
schools, as requested, for the remainder of the 2012-2013 school year.
During this period, the Contractor will insure that the following requirements are met;
Motor vehicles used to transport student shall meet all [State] Division of Motor Vehicles Safety Inspection requirements.
Drivers shall have a minimum of 3 years driving experience, have maintained a good driving record, and must hold a valid [State] Driver's license.
It is required by CPS that all drivers who are assigned to transport students must pass a criminal background check. Contractor is responsible for having background checks completed and for all costs incurred.
Contractor shall provide to CPS;
a. A complete list of all drivers responsible for transporting students. b. A copy of the [State] Driver's License for each driver.
c. A copy of background check for each driver.
If Contractor hires new drivers, CPS must be notified and a background check completed prior to driver transporting students.
Drivers shall be experienced, professional individuals who are of good character.
Contractor shall notify CPS whether or not random drug testing is required for their drivers.
Contractor shall provide and maintain the proper liability insurance coverage required to transport individuals (See Section 17, page 5 of the attached [State] General Terms and Conditions for types and limits required).
Contractor shall furnish a Certificate of Insurance as proof of the above coverages prior to the effective date of this contract. CPS shall be listed as the Additional Insured on the Certificate.
Contractor shall assume total responsibility for the safety of the Student during the time the Student is being transported.
Contractor shall be familiar with, and required to, follow all Child Passenger Safety Laws for the State of [Name] when transporting students.
Current Law: All children ages 7 & under who weigh less than 80 pounds must be secured in an appropriate child passenger restraint system.
CPS will provide car and/or booster seats to Contractor if needed.
Contractor may not transport any student of CPS in a vehicle which is classified as a Van.
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Detailed invoices shall be submitted to the school system every two weeks. Detailed billing shall include; the date of each trip, name of student/s, pick-up and drop-off locations with mileage per trip, and total cost per trip.
If more than one student is picked up at the same location, Contractor shall not duplicate charges from pick up location to drop off location for first student.
Contractor shall notify HCPS immediately if they cannot provide transportation at the times designated so there is sufficient time to contract with an alternative Contractor.
Mileage count begins from Contractor's place of business, or at location of taxi if closest to pick up area.
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(NOTE: THIS PAGE MUST BE FULLY EXECUTED AND RETURNED FOR CONSIDERATION OF PROPOSAL)
COST PROPOSAL/EXECUTION OF PROPOSAL
Transportation for Students - RFP# 1213-0000
By submitting this proposal, the potential contractor certifies the following:
This proposal is signed by an authorized representative of the firm.
It can obtain insurance certificates as required within 10 calendar days after notice of award.
The cost and availability of all equipment, materials, and supplies associated with performing the services described herein have been determined and included in the proposed cost.
All labor costs, direct and indirect, have been determined and included in the proposed cost.
The offeror has attended the (if applicable) conference/site visit and is aware of prevailing conditions associated with performing these services.
The potential contractor has read and understands the conditions set forth in this RFP and agrees to them with no exceptions.
Therefore, in compliance with this Request for Proposals, and subject to all conditions herein, the undersigned offers and agrees, If this proposal is accepted within 45 days from the date of the opening, to furnish the subject services at prices listed below:
Charge per mile: $_________/mile OR $_________/trip (attach list) **Please Indicate whether or not drug testing is required for drivers ** Yes_____ No_____
OFFEROR: _____________________________________________________
ADDRESS: _____________________________________________________
CITY, STATE, ZIP: ________________________________________________
TELEPHONE NUMBER: ___________________ FAX: ___________________
FEDERAL EMPLOYER IDENTIFICATION NUMBER: _______________________
E-MAIL: _________________________ MBE Status:____________________
Principal Place of Business if different from above (See General Information on Submitting Proposals, Item 18.):________________________________________________________________
BY: _____________________________ TITLE: ____________________ DATE: _________________ (Signature) _____________________________________ (Typed or Printed name)
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[Name] Middle School 18.50 each way
[Name] Elementary School 20.50 each way
[Name] School 18.50 each way
[Name] Elementary School 16.50 each way
[Name] Elementary School 28.50 each way
[Name] Elementary School 31.50 each way
[Name] High School 18.50 each way
[Name] Elementary School 31.50 each way
[Name] Elementary School 31.50 each way
[Name] Middle School 18.50 each way
[Name] Elementary School 31.50 each way
[Name] Elementary School 31.50 each way
[Name] Elementary School 16.50 each way
[Name] High School 16.50 each way
[Name] Middle School 16.50 each way
[Name] Elementary School 18.50 each way
[Name] Elementary School 31.50 each way
[Name] High School 18.50 each way
[Name] Middle School 18.50 each way
[Name] Elementary School 28.50 each way
[Name] Elementary School 18.50 each way
[Name] High School 18.00 each way
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DIVERSIFYING YOUR BUSINESS MODEL, STRATEGY 1
If I were challenged to start a new business with the goal of becoming operational and generating
revenue within 6-8 weeks, I would definitely start a Non-Medical Home Care Agency. A Non-Medical
Home Care Agency is not complicated and the synergy with NEMT is phenomenal.
The Home Care Industry is the fastest growing segment of Health Care in America. Due to our aging
population and the desire of older Americans to remain in their homes for as long possible, Home Care
Agencies continue to increase in demand and popularity. With population and life expectancy
increasing, more and more families find themselves seeking outside assistance in the form of Home Care
Professionals to assist in essential services. Consider the following article:
HOME HEALTH AIDES SERVE A GROWING POPULATION; HERE’S WHAT YOU NEED TO KNOW
- CONSUMERS UNION OF UNITED STATES, THE WASHINGTON POST
The demand for home-care aides — also known as personal-care aides and home health
aides — is skyrocketing as the number of seniors continues to grow. The Department of
Labor projects that in-home assistance will be the nation’s fastest-growing occupation by
2020. Those workers help seniors, the infirm and people with intellectual or developmental
disabilities with personal hygiene, taking medication, preparing meals, doing household
chores and other tasks.
Getting help
To find the right help for a family member, ask his or her doctor for a referral to a social
service worker. The doctor also may be able to provide a list of home-care agencies that
serve your area. If the services required are primarily medical, such as wound care or home
chemotherapy, the best choice might be a visiting nurse; to learn more, contact one of the
organizations affiliated with the Visiting Nurse Associations of America.
If necessary services are more personal than medical, a home-care aide might be best. He or
she can help with shopping, cooking, cleaning and laundry as well as personal activities such
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as dressing, eating, bathing and using the toilet. A homemaker aide might be the right
choice if needs are housekeeping, laundry, shopping and meals, but not personal hygiene.
Who will pay?
Once you’ve determined what type of aide is best and you’ve established that your relative
is on board, check to see whether he or she is covered for home care through a private
health or long-term insurance policy, the Veterans Administration, Medicare or Medicaid.
Note that Medicare typically covers home health aides for just 60 days at a time and only if
patients are housebound and require a certain level of care (for instance, intermittent,
skilled nursing care). It won’t pay for personal or homemaker services if that’s the only care
needed. In contrast, some states allow Medicaid recipients to hire almost anyone for home
care, including relatives. Eligibility and benefits vary by state, so check with your state
Medicaid office.
Home care becomes important whenever a person needs
assistance that cannot be readily provided by a family member
or friend. There are many situations and conditions for which
home care and hospice are especially appropriate. Advances in
treatment and technology have allowed more people to leave
or never even enter nursing facilities and institutions. They can
be cared for effectively and efficiently at home even with illnesses that once were only treatable in a
hospital or institutional setting.
According to Colleen Teixeira Moffat of the US Bureau of Labor and Statistics, who studies the
occupation of personal and Home Care Aides, “Increasing health care costs partly explain this growing
demand for a shift in need to more in-home care. It's a lot more cost-effective to leave a hospital
sooner when all a senior might need is assistance with daily activities," she said. "A visiting Nurse, Home
Health Aide, and personal and Home Care Aide all will be cheaper than a stay in a residential care
facility."
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In discussing this particular business model it is important for me to mention a few things. At least 50-
60% of the business owners I work with own a Home Care Agency. Thus, in working with this many
successful entrepreneurs in this industry and having access to their Profit & Loss Statements and
associated strategic details, I can definitely confirm the data and statistics provided in the following
chart:
When you consider the margins both in dollars and percent, it is easy to see why a Non-Medical Home
Care Agency is a great business investment. I have several clients who have started and sold Home Care
Agencies multiple times over. In fact, one particular client with whom I continue to work has built and
sold not one, not two, but three multi-million dollar Non-Medical Home Care Agencies. Each time they
have moved to a different State where they continue to experience compounding success.
It’s also important to reiterate that the statistics provided by the “Private Duty Benchmarking and State
of the Industry Report” are averages. This means that many Non-Medical Home Care Agencies are even
more profitable, especially those that operate an NEMT business and can consolidate associated
overhead expenses.
Non-Medical Home Care versus Home Healthcare: “Home care” is a very broad and generic term
encompassing various levels of care. Therefore, it is essential that we distinguish between “Non-
Medical Home Care” and “Home Healthcare.”
Terminology does fluctuate between States, but generally speaking, Non-Medical Home Care is a type of
“custodial" care focusing on helping individuals with their activities of daily living. Although there
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remains very little oversight and regulation for custodial care, some States distinguish between hands on
assistance offered by a “Caregiver” such as dressing, grooming, and bathing, with that of “Homemaker”
assisting with meal preparation, errands, housekeeping, and companionship. Essentially, anyone can
serve as a Homemaker. But in regulating States, where clients need hands-on assistance it must be
performed by experienced Home Health Aides.
Home Healthcare, however, is typically physician-prescribed care involving skilled nursing, physical
therapy, speech therapy, social work, dieticians, nutritionists or other treatments performed by licensed
medical professionals.
Why Non-Medical Home Care? There are a handful of key reasons why I focus on Non-Medical versus a
Home Healthcare Agency. However, it is important to mention that in an effort to expand their services
and profit earning potential, some entrepreneurs who start out as a Non-Medical Home Care Agency do
expand into becoming a Home Healthcare Agency. So by all means, as I continue to discuss this
particular business model, I do not want you to gather the impression that one type of Agency is better
than the other. Both Agencies serve very important roles in meeting the needs of the elderly and
disabled.
The first reason why starting a Non-Medical Home Care Agency is so appealing is because it doesn’t
require skilled care. This makes getting started in the industry much easier and more cost effective. It is
easier to find, recruit, and train your caregivers. Also, as of this writing, there are approximately 28
states that have some form of licensing and registration for starting a Non-Medical Home Care Agency.iv
The remaining 22 states require no formal licensing or registration which means you can literally start
laying the foundation almost immediately!
Second, Non-Medical Home Care Agencies play an undeniably large role in filling gaps in Home Care
Services which further increase demand. Un-skilled Home Care services such as personal care assistance,
cooking, cleaning and companionship assistance are often what many seniors need the most in order to
remain in their homes. These types of services are perfect for families needing temporary relief, or
respite care. Agencies afford family members time away while ensuring that loved one’s receive safe,
reliable assistance and companionship in their absence.
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Offering respite care leads to a very important third reason for starting a Non-Medical Home Care
Agency, you can literally earn money 24 hours a day, 7 days a week! There are many seniors or people
with disabilities who need assistance in turning over in bed or help getting to the bathroom in the
middle of the night. Such assistance requires Caregivers throughout the night, on weekends and
holidays. Thus, your business will literally be generating money 365 days a year.
Fourth, roughly 80% of reimbursements in the Non-Medical Home Care industry are derived from
Private-Pay. Similar to what we discussed in the NEMT business model, Private-Pay clients in the Home
Care industry are ideal because they tend to be more profitable and require far less bureaucratic
regulation.
Another appealing factor that makes starting a Home Care Agency a great opportunity is that it is a
service based business that goes out into the community to meet the demand. This means that, like an
NEMT business, you don’t need expensive or lavish office space or store front. The easiest way to make
money is to save money and when you can limit your overhead expenses you are in great position to
increase your profit margins.
What Forms and Rates of Reimbursement for Non-Medical Home Care? Much like the NEMT industry,
there are many sources of reimbursement. However, more great news about this specific business
model is that, according to the “Private Duty Benchmarking and State of the Industry Report,” roughly
80% of reimbursement for Non-Medical Home Care is Private-Pay.
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As we discussed previously, Private-Pay clientele are ideal because the rate of reimbursement tends to
be higher and it requires less hassle to collect your money. Such a staggering number, 80.4% Private-
Pay, makes focusing your marketing efforts easy. Obviously, the bulk of your marketing efforts and
resources should be towards the recruitment of Private-Pay clients. However, this doesn’t mean that
you should neglect the possibilities of other sources of revenue. Especially if you are already in the
NEMT industry, recruiting clients and gaining approval from other sources of revenue such as Medicaid
and the Veterans Administration is much easier.
In terms of hourly rates of reimbursement, they will vary depending on the economic conditions and
market dynamics of your local community. Also, like any business, the more a client uses your service
the more inclined you are to offer discounts.
For example, in using random numbers for demonstration purposes, if you charged a client $20 per hour
with a three hour minimum ($60 total) you would offer a discount for more hours. So if a client needed
8 consecutive hours of care you could offer them a 10% discount or $18 per hour for a total of $144. If
your standard hourly rate is $23 per hour, for an 8 hour period with 10% discount you would charge
$165.60.
As you can see, this is a volume based business. The more clients you have, the more hours you will
serve and, thus, the more revenue-generating potential. When you consider the exponentially growing
elderly population, it’s easy to see why the average Private-Pay Home Care Agency generates almost
$1,500,000 in annual revenue. Some clients need round-the-clock care. Others may need a full shift on
a daily basis. When you have a growing number of at home clients, this can add up to a lot of money.
The good news, you’re still saving clients a lot of money because the alternative, a nursing home, is
significantly more expensive! Consider the following article published in the great State of Ohio:
MORE ‘FISCAL CLIFFS’ TO COME AS POPULATION AGES
- MARY MCCARTY, DAYTON DAILY NEWS
By 2050, analysts predict two-thirds of Ohio’s counties will have an over-60 population that
is greater than 30 percent. In urban counties like Montgomery and Clark, where that
percentage was around 17 or 18 percent two decades ago, that represents a major shift.
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But it will be even greater in high-growth counties like Warren, which saw many young
families move in during the 1990s, a trend that continued over the first decade of this
century.
“If things continue at the present rate, Medicaid would contain the largest part of the state
budget, and that’s simply not feasible,” said Suzanne Kunkel, director of the Scripps
Gerontology Center. “We should be worried about these demographics. They should be a
wake-up call to take action and think differently about the way we do things. Now is the
time to look at what does and doesn’t work with the existing system.”
Fifteen years ago, 90 percent of Medicaid reimbursements for long-term care went toward
nursing homes; today that figure has been reduced to 58 percent, with more and more
seniors staying in their homes with the help of home health care and other direct services.
Joel’s Insight: These are staggering statistics. In a highly populated state like that of Ohio, 15 years ago
90% of their Medicaid reimbursements went towards long-term care in nursing homes. This number is
down to 58%, illustrating the huge shift towards a rapidly growing in-home care industry! Again, this is
only in one state, Ohio. Imagine the growth for in-home care in other, more populated states such as
Texas, Florida, California, and more.
“That’s very significant when you compare the cost — $60,000 a year for nursing homes
compared with less than $20,000 for home health care,” said McGarry, whose agency serves
seniors in Champaign, Clark, Darke, Greene, Logan, Miami, Montgomery, Preble and Shelby
Counties. “It’s the seniors’ preference and it’s what taxpayers should want because it is
already saving the state $1 billion annually.”
Joel’s Insight: The Private-Pay savings for families deciding on the type of care to offer a loved one
doesn’t compare; Nursing Home versus in-home care, $60,000 versus $20,000 per year? An increasing
elderly population coupled with an obviously growing transition from Nursing Home to Home Care
presents huge opportunities.
As the population ages, more jobs are created in the health care field, said Kantor-Burman.
But more importantly, she said, “It enriches families when we are able to care for our elders,
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and the family unit is strongest when generations are able to interact with each other. We
want our society to think about aging as an exciting, normal part of life where decline is not
inevitable.”
What Qualifications Do My Caregivers Need? Many times, when people think of Home Care they
associate it with Skilled Care which requires the help of nurses, therapists and more. But to reiterate,
one of the greatest appeals and attractions to starting a Non-Medical Home Care Agency is that you are
not providing direct medical assistance, therapy or treatment. Therefore, a Non-Medical Home Care
business model does not require Caregivers to be nurses or therapists. In sharing with you primary job
responsibilities, I am not exaggerating on the overall level of simplicity. Yet, these tasks are very much
beneficial and essential for clients and profitable for you. Some of these various non-medical tasks that
your Caregivers will provide are as follows:
Personal Care Services - Personal care services provide non-medical hands-on assistance with daily
activities such as bathing, dressing, eating, and a range of other daily tasks. In essence, the personal
Caregiver does tasks for the individual that patients are unable to independently do for themselves
because of disability due to illness, disease, trauma, or the natural progression of aging.
Companionship/Sitter Services - Provide multiple services such as reminding patients of dates, routines,
and when to take medication. Companions monitor patient’s comfort level, assist with meals and
feeding, converse with and entertain the client. They also monitor patient’s activities such as ensuring
the patient stays in bed, perform prescribed exercises, and more. Companions ensure family members
that their loved one is safe when they are unable to be there personally.
Homemaker/Home Management Services - A Homemaker handles household responsibilities to
maintain the home environment. Services include cooking, housekeeping, laundry, and simple home
repairs and maintenance.
Caregiver Respite - Respite care is the provision of short-term, temporary relief to those who are caring
for family members who might otherwise require permanent placement in a facility outside the home.
Home Care Agencies are in high demand for respite care. Such programs provide planned short-term
breaks for families and Caregivers while providing a positive experience for the person receiving care.
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Live-In Care Services - Live in-care Providers reside in the home of the client to provide services for a set
number of hours or a 24 hour period. Live-in care can help with a variety of tasks including domestic
responsibilities, personal care, shopping services, home administration, medication reminders,
transportation, providing companionship and much more. Although clients in need of 24 hour care may
receive a per-hour discount, overall, round-the-clock clientele can be very profitable for your Agency
and Caregivers.
Where can you find competent Caregivers? One of the best aspects about Non-Medical Home Care is
that not all Caregivers need to be full-time employees. Especially for those starting a new business, this
is a significant convenience both financially and logistically. Unlike an NEMT business where you will
send drivers from one appointment to the next for the duration of their shift, with Home Care,
Caregivers will spend several hours at each appointment. Therefore, it is very realistic to have a number
of part-time employees that work a few days a week, a few mornings, or maybe just the weekends to
attend to the needs of particular clients.
Because we can leverage part-time employees, especially in a down economy, it allows us greater
flexibility in finding competent and qualified applicants that meet our expectations. Certified and Non-
Certified Aides are prime applicants for Non-Medical Home Care. Even if they are working full-time
elsewhere, they may need additional work to supplement their income.
In working with many business owners, consensus indicates that ideal applicants for Caregivers and
Homemakers are middle-aged women. First, consider modesty issues. An elderly woman needing
hands-on assistance typically prefers the help of another woman. Likewise, elderly men also prefer the
help of women. For this reason, in excess of 90% of caregivers are female! Second, middle-age women
and single mothers tend to be more responsible and in need of stable and reliable work.
Another great source for part-time Caregivers is nursing students. Because they’re in school, they
obviously can’t work full-time, but they most likely can use the extra money in working part-time.
Further, many prospects such as Aides, nursing students, and the like may have prior experience.
Nursing Homes and hospitals are full of excellent prospects, Aides in need of earning additional money.
What is very common throughout the medical industry in general is the degree of transient staff. It’s
very common for nurses, Aides, social workers, and associated staff to move to different positions or
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altogether different facilities in seeking promotions or change of environment. Especially when some
facilities are understaffed and overworked, this willingness to change jobs makes it very possible to find
experienced Aides that, for comparable wages, would welcome the opportunity to work for a smaller,
more intimate Agency.
Networking is important. As mentioned, employees are transient. Sure, you want a good employee to
work for your company indefinitely. But that’s not realistic. Thus, in seeking qualified applicants you
want to further build and expand your network of strategic partners. If you have a Nursing School or
Trade Schools in your area, these could be excellent resources for reliable Caregivers. Another popular
resource for finding applicants is faith based venues such as churches and outreach programs.
One recruiting venue that I have always appreciated for convenience, cost, and presence is Craigslist.
Yes, there are the traditional forms of print marketing and recruiting such as newspapers, mailing lists,
and direct mail. Speaking from first-hand experience and in working with other business owners,
Craigslist can provide you with an overwhelming number of prospects. What I have seen several
business owners do, which has even surprised me at how well it works, is schedule a job fair for a
specific date and time at their office. They will post their ad on Craigslist several times and applicants
show up to fill out applications, discuss job particulars and more.
The Synergy between Home Care and NEMT: If you already own and operate a medical transportation
company, not only do you have the “hot market” in terms of potential clientele, but you probably
already have some awesome contacts at doctor offices, social workers, hospitals, dialysis centers, senior
centers, Office of the Aging, and a host of other community based organizations. These will be excellent
initial sources of potential referrals, as well as clients who can benefit from your Home Care service
directly. The good news about these contacts is that you have already established what is essential for
successful networking; you have already proven to be reliable, dependable, and hard working. You have
already been establishing brand recognition that you’re going to continue to expand via your Home Care
Agency. Doctors, nurses, social workers, secretaries, and various other representatives are infinitely
more likely to take your calls and solicitations when you contact them to discuss your new business
because of your proven track record and reputation. What you have accomplished in one business gives
you infinitely increased chances for networking success as compared to someone without.
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DIVERSIFYING YOUR BUSINESS MODEL, STRATEGY 2
After discussing the profitable possibilities associated with a Non-Medical Home Care Agency, let us now
consider another synergistic business model that of Residential Care Homes. Momentarily, I am going to
share with you an outstanding approach to Residential Care Homes. We will discuss one particular
husband-wife team who is leveraging to exponentially increase their net worth. It’s awesome! But first,
let’s discuss the particulars of this specific business model the ways how Assisted Living bridges the gap
between living independently and needing Nursing Care.
Residential Care Homes serve a variety of populations ranging from elderly and disabled to troubled
youths and adults. Especially for seniors - whose family members reside out of state - who need daily
assistance, Residential Care Homes are proving to be an increasingly ideal living arrangement. Facility
staff is better trained to care for seniors suffering from mild cognitive impairment to Alzheimer’s, heart
disease, stroke, cancer, Parkinson’s, diabetes, and those seniors undergoing rehabilitation.
As diverse as the population of each Residential Care Home, so too are the names of such facilities;
Adult Family Homes, Shelter Homes, Board & Care Homes, Transition Homes, Group Homes, Hospice
Homes, Respite Care Homes, and more. Although the names are diverse, the mission of each Home is
similar - to provide lodging in a comfortable home setting, meal preparation and service, dressing,
bathing, rehabilitation, medication monitoring, housekeeping and laundry in addition to personal
assistance with other daily living activities. Residential Care usually offers local transportation to Non-
Emergency Medical appointments and social activities.
Living expenses in a Residential Care Home are often half the cost of Nursing Home Care. However, cost
can vary significantly depending on the geographical location of the Home and the level of care provided
in the Home. Cost also varies depending on room accommodations - single or shared. Rent for a typical
Residential Care Home ranges between $2,500 and $5,000 per month and includes cost of care, meals,
laundry, and general services.
Most Residential Care Homes are located in traditional homes and neighborhoods and provide care for
fewer patients than Assisted Living Communities; typically between 6-12 seniors. Staff to resident ratios
of 1:3 is very common making Residential Care Homes an ideal choice for mentally and physically
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challenged seniors. Staff is highly trained to care for seniors with memory loss from mild cognitive
impairment to Alzheimer’s, heart disease, stroke, cancer, Parkinson’s, diabetes, and those seniors
undergoing rehabilitation.
The Supply of Residential Care Services
Assisted Living Facilities grew rapidly starting in the 1990s and continues today with exponential growth.
It is estimated that three quarters of all senior housing built during the 1990s were Assisted Living or
Supportive Housing Units. Large, for-profit facilities account for only a portion of the supply. Most
facilities are small, independent, for-profit operations that are often run by independent business
owners. Another component of the industry is Residential Care Homes owned and operated by not-for-
profit organizations. Growth in the small for-profit and not-for-profit sectors has been slower as
compared to large for-profit chains as these types of facilities do not have the same access to capital.
However, a lack of capital does not reduce market opportunity and demand.
Not-for-profit facilities can receive loans from banks under the Community Reinvestment Act for
construction of moderate-income housing for the elderly in addition to loan subsidies under programs
run by the U.S. Department of Housing and Urban Development (HUD). In addition, not-for-profits can
engage in community fundraising.
The Demand for Residential Care Services
While comprehensive data is not available on residents in all forms of supportive housing, a recent
survey by the American Seniors Housing Association suggests that the average age of a Residential Care
Home resident is roughly 83, and that 60 percent of residents need help with one or more activities of
daily living. Along with favorable demographics, increasing wealth among the elderly is likely to provide
a further impetus for growth in the demand for Assisted Living Facilities. It is estimated that between 40
and 60 percent of individuals over the age of 75 have the financial resources to live in an Assisted Living
Facility of some type for at least two years.
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Regulatory Trends
State governments play the primary role in regulating the Residential Care Industry. They influence the
supply, demand, and quality of care in these facilities through a number of policies and regulations. A
recent survey conducted by the National Academy of State Health Policy offers insights into several
areas including the following:
Stimulating demand for services through income-subsidy programs, most often through the
State Medicaid program
Setting resident eligibility criteria by defining allowable levels of care and resident acuity within
Residential Care Homes
Setting reimbursement rates for State-Funded payments to Residential Care Homes (primarily
through Medicaid)
Increasing supply of Residential Care Home beds by encouraging the conversion of Nursing
Home beds to Assisted Living Facilities
Maintaining adequate levels of quality through quality assurance processes
Protecting residents by mandating disclosure of the terms of residencies, including move-out
requirements
Income Subsidy Programs
While the predominant source of payment for Residential Care and Assisted Living Services is Private-
Pay, the federal government and virtually all States provide some level of subsidy to assist low-income
individuals in accessing these services. The most common public income subsidy program available is
the combination of the Federal Supplemental Security Income (SSI) program with State Supplemental
Payments (SSP). SSI/SSP directly pay the rent for low-income residents, at a payment level below the
market rate for Residential Care Housing. This inadequacy of the SSI/SSP payments has led most States
to apply for Waivers, allowing the use of Medicaid funds to financially support low-income individuals in
need of Residential Care Housing care.
As we discussed, Medicaid Waivers are popular for two reasons. First, they are considered a strategy for
reducing Nursing Home expenses by encouraging movement to lower-cost facilities. Second, they
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provide more choices to beneficiaries. Are you seeing how the various strategies we continue to discuss
are interrelated and synergistic? You would be amazed how the majority of Providers have no
understanding of these opportunities.
Types of Group Homes
Although there are variations between regulation and terminology between States, there are many
commonalities. In general, there are four types of Residential Care Homes that State governments will
license and regulate. Type 1, the least restrictive, is synonymous with Boarding Homes. An example is
an “Adult Foster Care Home.” These Homes provide shelter, daily personal grooming and meals. This is
referred to as a Type 1 Facility.
Type 2 provides a higher degree of services. An example is a Home for mentally disabled adults that
provide shelter and a homelike atmosphere. It also provides social and therapeutic programs for
residents. These residents can share chores and hold employment outside of the Home. Although the
residents are self-sufficient, they do not live independently. The Residential Care Home is their home
address, but they often go to their job during the day.
A Type 3 Facility requires 24/7 staff. Such a Home may house residents with emotional or mental
disease or issues requiring shelter, monitoring, therapy, and social programs. Some States require a
Type 3 Facility to be locked, not allowing residents to move freely in and out of the Home.
The most restrictive Residential Care Home, Type 4, is for residents considered to be severely disturbed
individuals. These residents could hurt themselves or others. Such a Facility must provide an intense
social and therapeutic program, a locked facility with 24/7 staff and possibly even a locked room.
Again, the Type of Home depends on the level of needs of the resident population and State regulations.
As expected, the reimbursement for residents is higher for those needing greater assistance. As
demand for Residential Care Homes continues to increase so too does the range of services. However,
individual Residential Care Homes serve a single resident Type; a single population of common need.
For example, a Type 3 Residential Care Home will not cater to the needs of residents needing only Type
1 level of care. Serving a single residency type is more convenient for the residents and staff and is
more cost-effective. Additionally, focusing the level of care helps to provide the best possible care and
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environment for the residents.
Licensing and Reimbursement Policies
As levels of care and services increase with Residential Care Homes, so also do changes in licensing and
reimbursement policies. In researching the licensing and registration requirements within your State,
start by contacting the Department of Aging and Disability Services within your County. In regards to
Medicaid reimbursements, historically, States used flat daily rates of reimbursement. However, an
increasing number of States are creating tiered categories where licensing and reimbursement are
adjusted to reflect the level of service of individual Residential Care Homes.
Nursing Home Conversions and Transfers to Assisted Living
Proponents of Residential Care Homes and Assisted Living Facilities, including policymakers and industry
advocates, believe that such facilities can serve as a substitute for higher-cost Nursing Homes without
having a negative effect on the health status of residents. The Agency for Health Care Policy and
Research estimated that between 25 and 35 percent of Nursing Home residents are in such facilities
primarily because of limitations in their ability to perform personal care tasks such as bathing, dressing,
and ambulating - that a number of these individuals could potentially live independently or in supportive
Housing settings with community-based support. This is leading to increasing changes that include an
increased investment and growth in for-profit corporations.
A handful of States are trying different strategies to stimulate the movement of qualified residents from
Nursing Homes to more appropriate Assisted Living Facilities. One approach used by States with an
excess supply of Nursing Home beds is to make funds available to convert them to Assisted Living
Facilities.
Some states, such as Oregon, are explicitly following a policy of diverting Nursing Home-certifiable
residents from Nursing Homes into residential settings. In fact, as early as 1991, Oregon reported
relatively little difference in the functional characteristics of those in Nursing Homes and those in
Assisted Living Facilities.
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Consider the following two articles:
A BETTER WAY TO SERVE SENIORS
- MICHELLE NORRIS, MCKNIGHT’S LONG-TERM CARE NEWS & ASSISTED LIVING
The struggle to lower healthcare costs, especially Medicare and Medicaid, affects us all –
from Congress to long-term Providers to the very seniors we serve. As an Affordable
Housing Provider for low-income seniors, we know first-hand that many senior residents
could live more independently if only they had the right support. When I joined National
Church Residences 20 years ago, our goal was to combine practicality and caring with a
successful housing approach – and that's been the goal since our founding in 1961.
Our experience, especially when we began offering health care services, demonstrated that
housing with support services wouldn't cost more at all. In fact, it would cost less. Today,
we know that Affordable Housing with services is a viable, successful platform to deliver
healthcare more cost-effectively — and with better results. How? We were so certain of
our care model (especially at a time when families were asking for alternatives to a nursing
home bed), that we tested it by developing attractive, safe and affordable housing paired
with support services.
The proof came when the Kresge Foundation provided National Church Residences and the
Ohio State of Office of Health Transformation with a $150,000 cost-study grant to study cost
savings at our affordable assisted living communities (created with HUD grants). The result:
not just cost savings. Substantial cost savings.
The study, conducted by Health Management Associates, found that our model provided a
49% savings over the cost of a nursing home bed — all while saving the state $73.08 per
person per day vs. living in a Nursing Facility. For perspective, a Nursing Home bed cost
(including other medical costs incurred outside the bundled rate) averaged $149.44 per
person per day. The average cost for individuals in an Assisted Living apartment, including
other medical costs incurred outside the waiver rate, was $76.37 per person per day.
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Additionally, the report concluded that the affordable, assisted-living environment allows
seniors to live in communities more independently. This is incredibly exciting news for all of
us providing the continuum of housing services and long-term care. It's a road map for
substantially reducing Medicaid costs while also improving health outcomes.
Here's the reality. About 20% of those in skilled Nursing Facilities could actually live in
affordable senior housing, but they don't. Why? Almost all of Ohio's Assisted Living
Facilities are Private-Pay and don't accept Medicaid-eligible residents. The truth is if
Medicaid committed even a small percentage of the dollar difference to community-based
housing with services, more seniors could move to a much more cost-effective model – with
improved results.
Now that we can demonstrate the initial Medicaid savings, we all must work in collaboration
with others to seek creative financing options to expand such lower cost, high-quality
solutions.
Michelle Norris is the senior vice president of business development & public policy at
National Church Residences.
AGING POPULATION DRIVES DEMAND FOR SENIOR HOUSING
- CHELSEA SCHNEIDER, NWI.COM
When Frances Wulf, 92, made the decision to stop driving and sell her car, she began to look
for her next step. Wulf, who moved to Valparaiso from Wisconsin to be near her kids about
three years ago, had lived independently until the age of 91. One day Wulf surprised her
daughter by saying she wanted to look at the rooms at Rittenhouse Senior Living in
Valparaiso. Wulf moved in late September after picking the facility, because she said it felt
like she was checking into a hotel and not a hospital.
Statewide, one in five Hoosiers will be older than 65 by 2030, and the number of seniors is
expected to grow locally in the next 20 years as well. In 2010, seniors comprised 13 percent
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of Lake County’s population and 12 percent of Porter County’s population. Those numbers
jump to 20 percent for Lake County and 21 percent for Porter County by 2030, according to
state estimates.
“In regards to the industry, there is still a tremendous demand that is needed and supply is
not there,” Fairbanks said. “I think what's happened, there is a tremendous influx of supply
on your primary, large markets and your big cities have a lot of supply. There are still a lot
of pockets in and around the country where the demand far outpaces the supply.”
Growth in Senior Industry
Construction of Assisted Living Facilities has returned to pre-recession levels, notching up
activity for the overall industry, McGraw said. In the first three months of this year,
construction of new units represented 2.5 percent of the existing inventory for Senior
Housing. While the percentage is down from the pre-recession peak of 4.8 percent in 2008,
it’s up from the 2 percent recorded in early 2011.
Following the recession, the center is seeing fewer freestanding independent living
properties break ground but instead more developments that bundle together independent
living, assisted living and memory care.
Affordable Housing a Challenge
The Indiana Housing and Community Development Authority, which oversees the
distribution of tax credits for new construction and remodeling of affordable rental housing,
saw a high demand among senior projects in its latest round of funding, authority
spokeswoman Emily Duncan said. Of the 20 projects that got such tax credits this year, 14
competed in the elderly category of housing developments serving residents 55 and older,
Duncan said.
In Gary, a 38-unit senior housing project — Gardens on Carolina — by Volunteers of America
is in the final stages of construction. The organization is the leading nonprofit to provide
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affordable housing for seniors in the country, said Tim Campbell, president and CEO of
Volunteers of America of Indiana. “With the aging of the baby boomer generation, we see
this as a real area of focus,” Campbell said. “There are going to be so many individuals go
into retirement not financially prepared, and having the availability of low-cost, decent
housing is something we think many folks will need.” In trying to address that need, some
communities have developed policies that privately developed housing must set aside a
percentage of units that meet affordability standards, Stafford said.
With this understanding about the Assisted Living business model, as promised, let me share how one
husband-wife team, John and Renee, are creatively customizing their Residential Care business to
exponentially increase their net worth. Note, John and Renee are not their real names. Because they
have a long-term strategy for increasing their number of community-based Residential Care Homes,
they have requested that I protect their anonymity and location. In assisting with their NEMT and Home
Care businesses, I have discovered and definitely appreciate John and Renee’s unique strategy.
Starting in 2008, with a Non-Medical Home Care Agency, as of this writing, John and Renee employ
more than 80 Caregivers - and yes, they are very much concerned about how Obamacare is going to
affect their business and bottom line. They have been working to restructure their entire Human
Resources in an effort to limit their exposure to Obamacare penalties and taxation.
Needless to say, with the success of their Home Care Agency, John and Renee are skilled in providing
care to seniors and in managing Caregivers. Thus, expanding into Residential Care Homes becomes a
relatively seamless progression. Intent on increasing their portfolio, in September 2012, John and Renee
invested in their first Residential Care Home. The following are some of the particulars of this Facility:
John and Renee purchased a 4 bedroom, 3 ½ bath suburban home for $234,000
Their Residential Care Home is dedicated to serving seniors diagnosed with Alzheimer Disease
This Care Home is staffed 24/7 by a single Caregiver working eight hour shifts
John and Renee assist with daily care as needed, but primarily serve as support service in
keeping the Facility operational
Unlike typical Residential Care Homes that house between 6-12 residents, John and Renee limit
their Home to four residents
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John and Renee accept only Private-Pay clients drawing prospects from their Home Care Agency
As of this writing, rent for each of the three residents is $4,200 per month for which each
resident has their own room
What makes this Care Home unique and, in my opinion, ingenious, is illustrated in John’s response when
I asked him why he limits this Residential Care Home to only four residents. John explained, “We are not
just in the relationship business, we are also in the real estate business.” In explaining their business
model, John and Renee shared the following goals and objectives:
John and Renee are dedicated to finding quality homes in suitable neighborhoods that will
continue to appreciate in value
They limit the number of residents to four because they wish to leave a “small footprint” on the
property. Focused on the resale value of the property, John and Renee are very conscientious
with any remodeling or upgrades
Because of the financial success of their Home Care and NEMT businesses, John and Renee use
all profits from their Residential Care Home to aggressively pay down the principal on their 30
year note. They anticipate having this property paid off in between 6-7 years!
With a growing waiting list of prospective residents, John and Renee’s goal is to leverage each
Facility to purchase and start a new Residential Care Home each year for the next 7-10 years.
This will allow them to serve the needs of their community while passively increasing their net
worth to well in excess of $2,000,000
What I really like about John and Renee’s strategic approach to Residential Care Homes is what they are
leveraging. First, they are leveraging demand, a growing elderly population and their associated
essential needs and services. Second, they are leveraging what they already do, providing Non-Medical
Home Care and managing Caregivers. Third, they are leveraging time, aggressively paying off mortgages
while allowing their properties to appreciate in value – Awesome!
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DIVERSIFYING YOUR BUSINESS MODEL, STRATEGY 3
While achieving success in the NEMT industry, I diversified into a
Courier and small package Delivery Service for the two hospitals we
were contracted. It was a natural and seamless progression as the
hospital’s Support Services initially enlisted our help to deliver files,
oxygen tanks, wheelchairs and sometimes linen between the two
hospitals and surrounding facilities. Over time, these services naturally progressed and expanded to
delivering blood, lab results, and on occasion, human organs!
For my company, diversifying by adding the courier business was easy because we already had the core
infrastructure; a fleet of vehicles, drivers and hospital contracts and an established reputation to
leverage. This courier work was an excellent and welcome source of additional revenue. With a few
exceptions that included bulk mail delivery services for a Business Process Outsourcing (BPO) and
Consulting Firm, most of our courier work was primarily dedicated to servicing hospital and medical
facilities. However, you definitely do not need to limit yourself to serving only as a Medical Courier.
Many of you may recognize the name, Carlos Banks, author of the popular ebook “How to Start a
Successful Courier & Small Package Delivery Servicev.” With 20 years of experience in working for UPS,
Carlos took his own courier service to an even more advanced level, one in which he became a
Subcontractor for large delivery companies in addition to serving local businesses. Because most courier
entrepreneurs do not have a fleet of vehicles or drivers for which to leverage, Carlos explains that the
easiest way to enter the courier industry is to start as an Independent Operator or Freelance Courier.
Ironically enough, in the midst of a recession and down economy, Carlos explains how it is actually an
ideal time to start a courier service. Why? Because as the economy slows, more and more companies
are outsourcing work and transportation needs in an effort to reduce overhead expenses. With
fluctuations in fuel, insurance, and labor costs, companies and services are enlisting the help of smaller,
Independent Operators because of their specialized versatility and ability to make numerous deliveries.
Consider the following email that I recently received from Carlos explaining how his courier business is
continuing to expand into growing freight opportunities:
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I want to give you a little insight on the type of freight deliveries that exist. My first
opportunity is with a courier broker which hires Independent Operators. They needed
someone to take over a daily route delivering office supplies. This contract is for roughly
$850.00 per week, $3,683 per month, or $42,000 per year.
My second opportunity is with a company that supplies lighting for restaurants and other
commercial properties. The lighting is palletized and they were looking for someone that
could be a little more flexible and readily available than the bigger trucking companies. This
contract is for $1,200.00 per month or about $14,000 per year.
A third opportunity is with a textile plant that makes twine and threads wrapped on bobbins.
The owner needs someone more flexible than the "Big trucking" companies that could
handle about 2,000 lbs. of palletized freight per trip. This contract makes roughly $400.00
per month on a low end or about $4,800 per year.
As you can see, this is only three companies that produce more than $60,000 per year in
revenue of which I make roughly $40,000 in profit on the low end.
We will discuss Carlos’ email in greater detail momentarily. But as you can see, there are other
attributes that attract hospitals, corporations, law firms, banks, and businesses of all industries to local
courier services versus global delivery services such as UPS, Fedex, and USPS. These attributes include
(1) same day delivery, (2) reduced cost, (3) flexibility, (4) multiple deliveries and pickups per day, and (5)
fewer regulation or shipping procedures. But even more interesting, most people don’t realize that
larger global delivery services outsource portions of their work in strategic locations. Yes, it’s true, even
the popluar FedEx, UPS, USPS, and many trucking companies seek Independent Operators to
strategically assist their exhaustive operations.
Think of the massive infrastructure and routes of distribution required for these large companies. Do
you really believe that they can service every corner of the country and beyond? Absolutely not! Now,
coupled with rising overhead expenses compounded with a recession, it screams subcontracting. Even
these large, industrial sized delivery operations need to cut costs. When large delivery services can
subcontract work, especially in more rural areas, they reduce their fuel, vehicle and labor related
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overhead expenses. Think back to the Broker-Subcontracting section of this resource. Much the same
way, it is ideal for global delivery services to subcontract to smaller, more Independent Courier Services.
Large delivery services have global brand recognition. However, you do not have to worry about your
courier service being overshadowed because, as Carlos explains, there are fewer direct competitors than
you think – especially as you build strong, strategic relationships within your local community. As we
experienced in working with local hospitals and medical facilities, there is always room for local, smaller
Delivery Services that offer same day delivery with much more flexibility.
Becoming a Subcontractor for Larger Delivery Services: Large Delivery Companies subcontracting work
to your service will require you to sign an Independent Operator Agreement identifying you as “The
Courier“ instead of an employee of “the Company.” This is a very common practice for the legal and
liability protection of both parties in addition to defining expense responsibilities.
Stipulations of such Agreements usually include some or all of the following:
1. You, The Courier, own or lease your own vehicle. The lease or loan payments are not contingent
upon your performing services for The Company
2. If you need any equipment to service deliveries, you are required to purchase or rent any auxiliary
equipment required
3. You are paid based on deliveries accomplished and not by the hour or fixed time period. You are not
paid if the customer doesn’t pay because of your failure to deliver or a late delivery
4. Subject to applicable insurance requirements, you are free to substitute another driver to complete
deliveries
5. You pay for all vehicle expenses (fuel, maintenance and repair, insurance, etc.) to include possible
tolls or tickets
6. In most instances, you are free to set your own hours and subcontract for multiple companies
provided you fulfill all accepted delivery requests for The Company
7. You may accept or reject available dispatch requests without penalty
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8. You can wear your own uniform but may be required to carry identification as rquired by The
Company
9. You are not required to sign a Non-Compete Agreement. The company may require you to sign a
confidentiality or nondisclosure agreement that includes provisions prohibiting you from using The
Company’s confidential information such as customer list for personal benefit
10. Subject to customer requirements, The Company does not specify particular routes that you must
follow or the order in which deliveries are to be made
Reimbursements for Subcontractors: When serving as a Subcontractor for a large Delivery or Trucking
Company one of two things is going to happen. Either they are going to dictate how much they
reimburse you or they are going to ask you for your proposed rates. If the company tells you how much
they are willing to pay, it is usually because they already have predetermined and negotiated rates with
their clients whom you will serve. Thus, in turn, The Company will reimburse you a sizeable percentage
of the delivery. If The Company asks you how much you plan to charge, that is an open invitation for
negotiation. However, this is where “knowing your numbers” is very important. You need to know your
cost to provide service plus how much money you need to make on each transport to make it worth
your time and effort.
Never be afraid or intimidated to negotiate. I know that it can be more uncomfortable in the beginning
when you’re first starting out and you don’t have much of a track record. But be honest with your
prospective client, the Company. Work to create open dialogue and get a sense from them in regards to
“ball park figures.”
Some more important advice, regardless of the type of business or industry, whenever you’re
attempting to subcontract and you are meeting with the Company, you are interviewing them just as
much as they are interviewing you! The relationship is a two-way street. If it is not feasible and
profitable for you, then the deal is not worthwhile. Likewise, if there are any conditions or stipulations
that put you at a disadvantage, then the deal should not be pursued. As I always say, “Some of the best
deals are the deals that don’t happen!”
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Flat Fee Rates of Reimbursement: When discussing rates with a client, always keep it as simple as
possible. This is not only for your benefit, but also your customers. Think in terms of your customers.
Whether you’re subcontracting for a Company or providing direct services to a business or facility, the
last thing they want to do is struggle when trying to calculate their cost for your services. Furthermore,
you don’t want to confuse yourself when trying to calculate how much a client owes you!
Many Courier Services charge a flat fee plus mileage. This is a very convenient process for both you and
your clients. For example, if you have a flat pickup fee of $12.00 plus $1.50 a mile and your delivery is
10 miles then your total invoice is $27. This flat fee rate strategy is very convenient and easy to itemize.
The only “problem” is making sure that you always monitor and calculate your mileage. Obviously, your
charges are based upon mileage so you need to be diligent in documenting your start and end mileage.
The common practice is to round up and round down. If the ending mileage is 10.3 you only charge $15
for mileage (10 miles). If the ending mileage is 10.7 then you will charge $16.50 (11 miles).
Payment Arrangements: Depending on your client and the type of deliveries, you will typically bill your
clients weekly or monthly. Should your client’s customer fail to pay them, it is your client’s responsibility
to absorb the loss – not yours - unless failure to pay is due to your non-performance. In such an event,
you will absorb the loss.
Startup Vehicles: Obviously, if you already own and operate a NEMT
business, using your existing vehicles is ideal. There is no reason to
incur additional cost in new vehicles and assets. Leverage what you
already have. However, in the event you are entering the
transportation industry via a Courier Service it is most cost effective to
start with your own vehicle. If your primary deliveries entail messages, small packages, and the like,
then the type of vehicle you use is relatively inconsequential. You do not need a big vehicle that will
incur excessive fuel or maintenance costs. This also means that finding a great deal on vehicles is never
going to be a chore since deals on smaller more fuel efficient vehicles are endless.
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However, if you anticipate delivering larger products such as mail tubs, auto parts, luggage, and more,
then you will need, as a minimum, a small truck, a cargo van, or an open bed minivan. If given the
choice, I recommend using an extended cargo van with an open bed. Some companies will not consider
subcontracting to you unless you operate a van-type vehicle. The company wants to ensure that,
relatively speaking, you are not limited in the number of packages you can transport.
Especially with a down economy, you need to be all the more pragmatic and financially prudent as you
pursue any business venture. For this reason, starting a courier and small package delivery service can
be a very cost effective way to penetrate your local transportation market. Especially if you already
have a reliable and presentable vehicle, getting started can be relatively easy and very cost effective. I
say a “presentable” vehicle because the last thing you want to do is start a business, promote your
name, and begin building brand awareness with a “rust bucket.”
In going back to Carols’ email that we discussed previously, a personal vehicle, let alone his existing
NEMT and courier cargo vans would not accommodate his three freight contracts. Consider how Carlos
resolved the problem in the second half of his email:
I wasn't prepared with the right vehicle for these freight jobs. I regularly us my NEMT and
cargo vans for courier work, but these vehicles don’t adequately serve the purpose of hauling
freight. I considered renting a box truck, but honestly, you just can’t always rent such a truck
on short notice to do a job. When some calls for a same day delivery or pick up, box trucks
especially may not be readily available. Rental companies also charge a basic rate, a
mileage fee, potential fuel charges, and insurance deposit. Rental fees are fine in the short-
term, but not long-term. All the additional costs add up and can cut into your profit margin.
I searched Craigslist feverishly and, lo and behold, I found a box truck for around $3,700
dollars. It was a 14 foot vehicle, Non-CDL meaning I didn’t need a commercial driver’s license
to operate this vehicle. This van was perfect for what I needed and the insurance is much
more cost effective than NEMT insurance. Insurance requirement is 100/300/50 and I also
purchased $60,000 cargo insurance for only $1,100 per year – not bad compared to the
insurance on NEMT!
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DIVERSIFYING YOUR BUSINESS MODEL, STRATEGY 4
A few years ago, a client named Devon enlisted my help to work with him One-on-One in building his
NEMT business. After experiencing years of success in the Durable Medical Equipment industry, Devon’s
business of equipment sales and rentals was heading in reverse because of reduced rates of
reimbursement and continued increases in bureaucratic “red tape” from insurance companies,
Medicare, and Medicaid. Not only were rates of reimbursements decreasing, but in an effort to fight
fraud, Medicare and insurance companies continued to increase collection policies and procedures. As a
result, he “saw the writing on the wall” and knew that transformation and diversification of his business
was essential.
In learning more about Devon’s Durable Medical Equipment business and reviewing his Profit & Loss
Statements for the previous years it was easy to see his plight and concern. His overall volume of sales
and rentals continued to increase annually which was an outstanding testament to his efforts as a
business owner. The problem, however, is that his profit margin and overall bottom line continued to
decrease for three consecutive years! Volume was increasing but, due to reduced premiums and
demanding collection procedures, profits were decreasing. Obviously, this is not the pattern that we
aspire to achieving as business owners!
The good news, however, is that there were specific elements and portions of Devon’s business that
were very much successful and, if dissected and re-branded, could prove to be very lucrative. More
specifically, when we analyzed the various
portions of his business, it was obvious that his
Private-Pay clientele was highly profitable –
much more profitable than his Medicare and
insurance-based business. This was for a few
reasons. First, the increase in time and
overhead expenses to process claims for reimbursement were dramatically increasing. The paperwork
and bureaucratic hurdles were growing. Second, the lengthy delays in awaiting payment were also
increasing. At the time I was working with Devon, some of his “Approved” transactions remained
almost six months in arrears! Third, the number of reimbursement denials for “technicalities” were
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increasing. Thus, Devon and his staff were forced to spend additional time contacting and coordinating
with doctors and processors, chasing down signatures and authorization, and more in an effort to collect
reimbursement. Fortunately, with Private-Pay clientele, there were no such hassles, policies or
procedures.
In response to these growing problems, Devon and I developed a well-devised two-prong strategy to
transform his entire business. Although it was a dramatic change in Devon’s business model, it was
essential for his survivability and profitability. While leveraging many of his existing contacts, clients,
and relationships to build his NEMT business, Devon was going to systematically wean his Medical
Equipment business out of the Medicare and insurance sector and focus exclusively on profitable
Private-Pay clientele. In so doing, we also reduced the overall number of items featured in inventory.
Items that statistically sold or rented the least in volume were not restocked in inventory and were no
longer featured. Essentially, all of “the fat” from his business was being eradicated; we were
streamlining. All efforts were focused on targeting and expanding profitable sources of revenue -
exclusively!
Working with Devon and studying his business was a great opportunity to witness first-hand the
profitable and almost passive source of revenue that equipment rentals can produce. After sharing
Devon’s story at one of my live Seminarsvi, ironically enough, Carlos Banks, the entrepreneur we
discussed in the previous chapter, took the inspiration and started his own medical equipment business
when the opportunity essentially fell into his lap.
When purchasing a used NEMT vehicle, Carlos acquired two FREE used electric wheelchairs; equipment
that the seller no longer needed nor wanted. Thus, free of charge, Carlos quite literally had two
excellent pieces of equipment that would serve as seeds of his rental business. After having the
wheelchairs refurbished and prepared for money-making use, Carlos established his rental rates and
created professionally designed brochures featuring his power wheelchairs along with manual
wheelchairs.
Carlos’ marketing efforts started by distributing his brochures and associated information to key
facilities and contacts where he provides medical transportation. Needless to say, by leveraging existing
contacts and relationships, it wasn’t long before Carlos needed to expand the number of wheelchairs in
his inventory to keep up with demand.
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As Carlos’ rental business grew he began to test and add new items and types of equipment to his
inventory. However, unlike Devon who eventually found himself overwhelmed with excessive inventory
and unable to readily determine which items were profitable, Carlos kept a keen eye on his sales and
statistics. As his business grew, Carlos was able to determine which items were most popular and
profitable. Items that were less popular were removed from inventory. Because Carlos’ rental business
remains exclusively Private-Pay, he does not have to wait to collect his money or comply with excessive
bureaucratic “red tape.”
There are two additional key points worth mentioning regarding Carlos’ rental business model that
demonstrates additional possibilities. First, by having an NEMT business and courier service, Carlos is
able to market equipment delivery and pickup services. This helps Carlos to generate additional revenue
as well as provide added value and convenience to customers. Second and ironically enough, because
he already has a fleet of vehicles and drivers, a much larger and more diverse equipment company has
enlisted Carlos’ help by subcontracting some of their deliveries through his transportation business!
Thus, Carlos continues to diversify his sources of revenue as well as his referrals.
The following pages feature a handful of screen-captured images that illustrate the level of ease and
convenience required to begin a rental business. The pictures are from a website that offers a select
number of mobility rentals in addition to delivery options. When you consider the infrastructure that
you already maintain via your NEMT business, possibly your courier business, your vehicles and
personnel, you will see how starting a rental business, even if only limited in size and inventory, is very
feasible. Further, when you consider the growing demand for Home Care and Assisted services, I trust
that you will see nothing but great opportunity.
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DIVERSIFYING YOUR BUSINESS MODEL, STRATEGY 5
During the many years of working with entrepreneurs and Transportation Providers, I have been privy to
many interesting and profitable possibilities. As I mentioned previously in this resource, creative and
motivated entrepreneurs will always find profitable solutions to satisfy demand. I believe I am skilled in
predicting many opportunities associated with the NEMT industry, yet I can honestly say I never
anticipated the synergistic possibilities between a Non-Emergency Medical Transportation Company and
a Moving Service. To my surprise, I was completely enlightened when I learned the particulars of how
Dexter, a Provider I had worked with previously in starting his NEMT business, began doubling his
monthly profit in less than one year with his new venture. Further, Dexter quite literally discovered the
idea of starting an Elderly Moving Service by complete accident.
Some of you may be asking “What’s an ‘elderly’ moving service? What distinguishes an ‘elderly’ moving
service from a typical moving service? What does it have to do with the medical industry?” Those are all
valid questions – questions that I was asking when Dexter
was first explaining his growing success.
An elderly moving service is simply another exclusive niche
business that is helping meet the needs of seniors. In a
very unique resource that Dexter and I recently published,
“How to Build a Local Moving Company with 69.1% Profit
Marginvii,” Dexter shares his story - how he has diversified his NEMT business into a moving service that
started by helping seniors downsize and move into Independent Living Facilities.
Now, before you dismiss this idea or, like I did, you question the market potential of an elderly moving
service, let me share with you the following article published in a New Jersey newspaper:
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INCENTIVES HELP N.J. SENIORS GET MOVING, RETIREMENT COMMUNITIES REACH OUT WITH A HOST OF SERVICES
- DAN GOLDBERG, THE STAR-LEDGER
As people sell their homes and look for new ones, some continuing-care retirement
communities across the state are offering new services and incentives to entice senior
citizens. These services include personal moving consultants, lists of preferred real estate
agents and cash loans, all offered to seniors, who make up about 20 percent of the seller’s
market.
These communities are part independent-living, part assisted-living and part-skilled nursing
homes, providing care that progresses as the needs of an individual resident increase. There
are 27 such communities in the state, with more than half concentrated in five counties:
Burlington, Camden, Monmouth, Ocean and Somerset, according to a state report.
Earlier this year, when Bob and Marilyn Macrae were ready to sell their home in North
Haledon where they had lived for 38 years, they were aided by Margaret Semezko, a
personal moving consultant employed by Cedar Crest Village, a 130-acre continuing care
retirement community in Pompton Plains.
"She meets with everyone," said Ray Guarino, director of sales at Cedar Crest. "She acts as a
quarterback and helps them through this process." The Macraes credit her with their
success. In six weeks, the Macraes, both 79, had put their home on the market, sold it,
signed the paperwork and moved into their new apartment in Cedar Crest. And they cleared
more than $50,000 more on their home than they had asked.
There are no statistics tracking the market for these continuing-care communities, but as
more homes sell across the state, Sales Directors report increased interest. "We are
definitely seeing a trend recently in Monmouth and Ocean counties," said Rick Kiernan,
Director of Sales at Seabrook Village, a scenic 98-acre campus in Tinton Falls. "The real
estate market has picked up, and the homes for our perspective residents are selling much
quicker."
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Some of this trend has as much to do with real estate sales as it does with demographics.
From 2000 to 2010, New Jersey’s population grew by 4.5 percent, according to the U.S.
Census. But the 55-and-older population grew by nearly 20 percent. The demographic
realities and some improvement in the real estate market have breathed new life into the
Continuing-Care Industry, which is still trying to rebound from the worst of the recession.
In Somerset County, Fellowship Village recently partnered with Moving Station, a company
that provides seniors with a list of preferred real estate agents who can help sell the home.
Nina Updegrove, Fellowship Village’s vice president of marketing, said the partnership is
meant "to get people to overcome their fears of listing their home, and fears of not being
able to sell it."
About a year ago, Monroe Village, a Continuing-Care retirement community in Monroe
Township, partnered with a "financial concierge," said Bill Brottman, Director of Sales and
Marketing. They will price a home and loan the owners up to 70 percent of what they deem
to be a realistic sale price, which can be used to cover the cost of moving into Monroe
Village, which pays the interest.
Again, I probably never would have thought of this niche business, helping seniors downsize and
transition into independent living facilities. Ironically enough neither did Dexter! But ultimately, you
can’t argue with his results. Dexter has been taking a $2,000 per week salary from his growing NEMT
business. However, within eight months of incorporating his moving service, Dexter was generating
over $8,000 per month in additional profit. He went from a monthly salary of roughly $8,000 to $16,000
in less than eight months!
As Dexter explains in “How to Build a Local Moving Company with 69.1% Profit Margin,” this opportunity
literally “fell into my lap.”
One day one of the Social Workers, Grace, contacted me and asked if we could help one
of their former residents move from her home into one of their independent living
facilities. This particular nursing home is part of a chain or family of facilities and
independent living facilities that we have a great relationship with. We do a lot of
business with them. Well, at first I didn’t understand what she was talking about. I
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thought that maybe Grace wanted us to help a moving company to carry stuff. Then I
realized she actually wanted us to be the moving service. My initial reaction was to
kindly say no because you can only do so much with an ambulette. But out of respect
because we have a great relationship with Grace and this facility, I asked what all she
needed moved. Grace told me that it was a lady that we transported a few months ago
and we had gone back later in the evening to move some of her stuff. When she
mentioned the name I remembered because I was the one to go back and pick up her
stuff later in the day and deliver it to her residence.
Grace went on to tell me that this elderly woman’s daughter lived out of state and that
the daughter asked her for help in coordinating her mother’s move from her residence
into their independent living facility. The mother was obviously downsizing. The
daughter was going to be in town to pack things up and help supervise the move. Like I
said, I remembered this lady and her house because I’m the one that went there to drop
stuff off.
Now, a few years ago when my wife and I were moving we rented a U-Haul truck and
between us and my brother we moved our entire house in a day. So long story short, this
same idea popped in my head. I told the Grace that if the daughter was interested I
would rent a U-Haul and one of my drivers and I would do the job. I told her I would call
her back later on and let her know how much we would charge. So I called U-Haul and
asked about their pricing to help figure out my game plan. I then called Grace back and
told her we would do it for $120 per hour which included both drivers and the cost of the
U-Haul plus $2 per mile over 20 miles with a minimum of 4 hours. Grace said that she
would pass along the info to the daughter and let me know. The following day Grace
called me back and said that she spoke to the daughter and that we got the job.
Without exaggeration, this is exactly how we got started. I’m not exaggerating. It was
that simple. I know it’s not an exciting story, but that really is how it happened.
After successfully completing this specific job with great satisfaction, Grace, the social worker, contacted
Dexter later that same month to see if he could do another move for another senior moving into their
Independent Living Facility. Using one of his NEMT drivers, between the two separate jobs Dexter made
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$1,680 in total revenue. According to Dexter, “that’s when the light went on.” He began brainstorming
how he could make this a viable business.
Following his October success, Dexter sat down with Grace to inquire into the possibilities and prospects
of expanding and creating a more formalized moving service for the seniors moving into their chain of
facilities. With the message and opportunity well received, Dexter had a handful of additional moves in
the months of November and December. He then incorporated his new business for the first of the year
and began marketing to the general public.
Needless to say, according to Dexter’s numbers below, his efforts and this entire business opportunity
have proven to be a great success.
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As you can see, the success of Dexter’s moving business should serve as motivation for any
entrepreneur seeking a profitable business opportunity in a potentially short period of time. Again,
within eight months of his incorporating Dexter was literally doubling his personal profits.
We couldn’t have predicted any of this. So I don’t ever proclaim I’m some genius that
came up with this idea. All this really came about by accident - just trying to provide
added value to our customers. The next thing you know I’m renting a U-Haul to help a
client, then doing it again and again and now I own my own moving truck and run two
crews. So did we anticipate any of this? No, absolutely not. But so far, it’s been an
awesome year because [Name of NEMT Company] continues to grow and now we’ve
built a second business with even higher profit margins that’s doubling our personal
income.
What Type of Truck Should You Use for a Moving
Service? Starting in the month of May, Dexter began
using his own truck. He kept track of his truck expenses
which included his monthly U-Haul rental fees. Once this
number exceeded the cost of operating his own truck,
Dexter purchased a used GMC 3500 Savana 14' box
moving truck with a ramp.
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Despite operating his own moving truck, twice in the month of July and three times in the month of
August Dexter had to again rent a U-Haul because he had multiple jobs requiring two different moving
crews operating at the same time! As can be expected, when these additional rental fees exceed the
cost of another moving truck, Dexter will invest in another.
Why a 14 Foot Truck Versus a Smaller or Larger Size? According to Dexter, there are actually a couple
reasons as follows:
First, when I rent from U-Haul the 14’ trucks are very cheap. Overall, I think the 14’
trucks have the best price-point in terms of cost. It costs me $19.95 for a day for rental
fees and $.99 per mile from the time I pull off the lot. Plus I also have to top off the gas.
So just off of price alone you can’t go wrong with this size truck.
A second reason is because 14’ trucks are very manageable to operate, park, backup,
and maneuver in driveways. Years ago when my wife and I were moving we rented a 24’
truck and it was a pain in the butt because of where we lived. We didn’t have the widest
of streets and between the cars parked on the street and passing traffic we had to play
traffic cop half the time. It was a pain in the ass - a hassle and a distraction that I have
no desire to deal with again. So just from personal experience, a 14’ truck is more
convenient and manageable. And now that I’ve been using a 14’ truck for business I’m
even more used to it and find it to be an ideal size.
Another reason is because 14’ trucks are big enough that you can move a lot of stuff yet
small enough that it requires more trips – and more trips means more time and more
money.
And remember, my company is still very young right now. I’m just shy of one year and
this will be my fifth month with owning my own truck. So I’m still very much learning
things and working to come up with creative ideas to better build my business. As we
grow, which I fully intend to explore all options, I may determine that bigger size trucks
are needed. But I will cross that bridge when I get there. For now, I’m doing great with
a 14’ trucks. I definitely think that anything less than that is too small and anything
bigger than this is really not necessary as of right now. So if I had to suggest a particular
size of truck for anyone thinking about expanding into this business I would definitely say
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go with a 14’ to 17’ truck to start with and then go from there. If you think you need
something bigger then go bigger, but only after you feel more comfortable and you see
the need for larger trucks.
There a few reasons, in my opinion, that makes diversifying into a local Moving Service so appealing.
First, moving trucks are versatile and give you various revenue-generating options. When discussing the
Courier business model, Carlos mentioned his $3,700 investment for a used 14 foot truck for his freight
deliveries. As of this writing, Carlos has been significantly expanding his freight clientele to include
making local furniture deliveries for Big Lots, a national retailer. Another Transportation Provider I have
worked with started with NEMT and expanded into Courier. Using a box truck, he landed an exclusive
Agreement with a company that manufactures wooden pallets. Today, he has a small fleet of box trucks
and delivers all over the Northeast.
Dexter invested $11,000 for a truck similar to Carlos’ for residential moving. After gaining experience
working with one Independent Facility, Dexter began marketing to and servicing other facilities.
I’m trying to build a common brand that includes both my moving service and NEMT, I’m
actively marketing our service to other independent living facilities – and it’s paying off. I
actively started to market to other independent living facilities. We actually have a
government subsidized chain of facilities that’s pretty big in our State. They have 27
independent senior living facilities across the State with 9 of them being in our county. Most
of these 9 facilities are rehabilitated old schools and office buildings. So in January I met
with the “Director of Resident Services” to introduce our services and to see if they could do
something similar to what Grace has done for us. But because they receive government
funding she said they can’t actively promote our service – they can use us, but according to
her they cannot show favoritism by endorsing any particular service.
The irony is that they actually do use us, but not like I anticipated. I went in there thinking
that they could refer us to some of their prospective elderly tenants that would be moving in.
So far I think we have only done one of those moves – moving someone into their facility.
But if you look at our P/L, you’ll see quite a few of those 4 hour jobs. A lot of those 4 hour
moves are the [Name of Independent Living Facilities] hiring us to move residents out of their
facility. So when I went to meet with the “Director of Resident Services” I was hoping that
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they’d use us to move people in yet they’re pretty much using us to move people out. It’s
funny, but I’ll take it.
Are you seeing the synergistic possibilities between all of these various business opportunities?
A second reason why I applaud the moving business model is because, like Dexter, you can reimburse
your movers as Independent Contractors and issue them 1099’s at the end of the year. When asked
how he reimburses his movers, Dexter says the following:
I basically pay them straight wages by check. I don’t have them on payroll. I don’t withhold
any taxes or anything like that. This was an issue that I consulted with my accountant on a
while back and basically, because my movers are not working regular hours or scheduled
regular hours like my drivers are, they aren’t regular employees – as of yet. Because our
moving jobs are not scheduled regularly I can basically hire movers when jobs come up. This
is how I’m able to pay them as independent contractors.
Think in terms of Obamacare and the impending labor-related burdens thereof. Any business
opportunity that allows you to make money while avoiding such burdens should be of serious
consideration.
A third reason why I like the prospects of a moving business is, despite the opportunity to assist elderly
people, Independent Living Facilities, and the like, a moving service is mutually exclusive from the NEMT
industry! Yes, the elderly population is booming. Yes, the demand for NEMT is continuing to increase.
But the NEMT industry still remains a niche market. Conversely, people of all ages, marital status, job
status, location, and more are all potential clients for a moving service. Essentially, your prospective
market is significantly greater – especially when you consider that the average family moves once every
four years!
Consider Dexter and how empowered he is in having two separate businesses that net $8,000 per
month respectively. Should anything happen to or cause revenue fluctuations in either business, Dexter
will remain stable and profitable. Such diversity offers significant leverage and peace of mind.
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WHY YOU NEED TO BUILD, GROW, SAVE AND CREATE WEALTH
I truly enjoy working with entrepreneurs from around the country for many reasons. Two primary
reasons: first, helping people to improve their business, increase efficiency, create new opportunities,
and ultimately, make more money changes people’s lives -- nothing is more rewarding or gratifying!
Second, working with such a diverse group of people, blesses me with a unique opportunity -- a macro
perspective with insight into evolving trends and strategies.
One growing and common concern that I continue to receive from entrepreneurs, regardless of location,
education, years of experience, or level of success, is fear of the unknown. Their concerns and
apprehension are not about market demand. To the contrary, the growth potential of our market, the
elderly population and the medical industry in general, is undeniable. In fact, the future of our industry
is paved with opportunity. The problem, however, is actually much greater. Over the past few years, an
increasing number of entrepreneurs express anxiety and concern over their ability to not only make
money, but to keep, build and create wealth. Why -- because business owners of all industries are under
continuous assault on many fronts.
We’re facing increased taxes, increased inflation, increased regulation, a devalued dollar, an economy
on life support, and a climate where policies of mediocrity are the norm versus a drive and expectancy
of excellence. Sadly, we’re in a climate where successful business owners are almost vilified, accused of
being mean-spirited and tyrannical, taking advantage of employees versus being congratulated for
empowering people through employment.
“They keep telling us that if we just let business pollute more and treat workers and
consumers with impunity, that somehow we’d be better off. We’re told that when the
wealthy become even wealthier and corporations are allowed to maximize their profits by
whatever means necessary, it’s good for America.”
- Barrack Obama
I have worked with an untold number of business owners from a variety of industries. In so doing, I can
assure you, I have never encountered a business owner who seeks to “pollute more” or “treat workers
and consumers with impunity.” To the contrary, I regularly encounter optimistic business owners who
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seek nothing more than to create profitable solutions to improve the lives of all of those around them,
including their employees and consumers!
Further, I have yet to meet a successful business owner who is not committed to honest, hard work. As
we all know, especially in the early stages of your business, it is the business owners who arrive early
and leave late. It is business owners who, during startup phases, work without pay yet, accept all
financial and legal responsibility. Unfortunately, in similar slanderous fashion, wealthy people, most of
them successful business owners, are accused of not doing enough - not “paying their fair share." Yet,
nothing could be further from the truth. Consider the following article revealing the “fair” and equitable
situation of our current tax structure:
WHAT IS YOUR ‘FAIR SHARE’? OBAMA THINKS HE KNOWS BEST
- MATT WALSH, FLORIDA’S BUSINESS OBSERVER
If there is one issue that surely has the attention of Florida business owners, you can bet it is
Barack Obama’s rants about “the rich” paying “their fair share.” As noted in his speech to a
room full of America’s daily newspaper editors, we “as a country” cannot succeed if you do
well and others struggle. As the president told the editors, “Everyone” must get “a fair
shot” and “everyone” must do “their fair share.”
Surely you note that Mr. Obama is never specific on what he means by “fair shot” and “fair
share.” He cleverly avoids explicit definitions. In one breath: “I believe deeply that the free
market is the greatest force for economic progress in human history.” And yet, in his next
sentence, he said “… through government we should do together what we cannot do as well
for ourselves.”
“Through government?”
Through “the state,” through the force of law, through central planning in Washington,
through collectivism, and socialism the state will decide what is “fair” and “just?”
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In Mr. Obama’s beliefs, you and all Americans acting in your day-to-day self-interests
apparently are not morally driven or capable of taking care of those in need — in spite of
the historical record to the contrary, which shows Americans are the most charitable and
generous people in the world.
Mr. Obama asked in another speech last week: To extend existing tax rates — or, give
another tax break to “the rich”? To raise taxes on those that “invest in” schools, teachers,
more police officers and alternative energy sources?
Unless we tax more, Mr. Obama infers, there won’t be enough teachers, schools and cops.
In his vision, government spending is untouchable and its growth should be unstoppable.
This is scary for Americans — Obama’s vision of what is required to “succeed as a country.”
His is a vision that shows disdain for you, your efforts and fruits of your labor, your ingenuity
and success.
While you believe in the self-evident truths that all Americans are created equal and
endowed by their Creator with the unalienable rights of Life, Liberty and the pursuit of
Happiness, unfortunately our incumbent president clearly does not.
LOOK WHO’S PAYING HIS ‘FAIR’ SHARE
The figures below are based on adjusted gross incomes (AGI) for 2009, the most recent data
available:
Percent Income Income Threshold Percent of Federal Taxes
Top 1% $343,927 36.73%
Top 5% $154,643 58.66%
Top 10% $112,124 70.47%
Top 25% $66,193 87.3%
Top 50% $32,396 97.75%
Bottom 50% <$32,396 2.25%
Source: IRS, National Taxpayers Union
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When you consider that 50% of our working population pays almost 100% of the tax base and the top
10% pays more than 70%, it is nothing short of astonishing! “Fair” – most definitely not! Further, the
statistics and the associated verbal assaults on equitable distributions are equally appalling. Such
numbers, coupled with high unemployment, the changing dynamics in population and the growing
reduction in the labor force, are simply not sustainable long-term. All of these variables lead to an
already weak economy morphing into an even more precarious and potentially disastrous situation.
Thus, you have no alternative but to diversify and maximize your profit-earning potential. You need to
make, grow, and save money now! As mentioned previously, times have changed. No longer can you
focus exclusively on just building your business vertically. Now, you need to explore all options for
building your business horizontally. Again, don’t just take my word for it. Listen to what “experts”
suggest about the status of the economy and prospects for the future:
U.S. IS ALREADY BROKE
- PIERRE LEMIEUX, THE FINANCIAL POST
Many analysts believe that the U.S. federal government is bankrupt. They include, among
others, economists Jeffrey Hummel of San Jose State University and Laurence Kotlikoff of
Boston University. As early as 2006, Kotlikoff wrote an article in the journal of the Federal
Reserve Bank of St. Louis, asking the question “Is the United States Bankrupt,” to which he
answered affirmatively.
Even official government agencies such as the Congressional Budget Office (CBO) and the
Government Accountability Office (GAO), which have each produced scenarios of their own,
are less optimistic.
Social Security (the federal public pensions system) faces increased expenditures over the
next 20 years due to population aging. Even more consequential, is the weight of federal
health programs. U.S. governments, and especially the federal government, spend more on
public health care (Medicare for the old, Medicaid for the poor, and CHIP for children) as a
proportion of GDP than the average country. The new public health insurance system,
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dubbed Obamacare, will likely fail at reducing the growth of these expenditures, as the
CBO’s and GAO’s realistic scenarios admit.
These realistic scenarios calculate that maintaining the federal debt at 70% of GDP would
(without different tax policies than those pursued in the past) require an immediate and
permanent cut of about one-third in non-interest federal expenditures compared to their
current trajectory. Any delay would mean still larger cuts in the future. This is a tall order.
The CBO’s and GAO’s realistic scenario estimates that closing the fiscal gap with taxes would
actually require the equivalent of increasing by 50% all federal tax rates on everybody,
bringing to European levels the total tax burden in America. It is far from sure that
Americans would accept this.
The financial liabilities on the U.S. federal government’s official balance sheet are already
five times the amount of its financial assets, not counting its future commitments on
entitlements (Social Security, Medicare, etc.). This government is technically bankrupt.
When investors realize this, a fiscal crisis will develop.
The goal of all my resources is to equip, educate and enable you with techniques and strategies to build
new opportunities, to keep more of your earned income, to build wealth, and to increase your net
worth. My hope is that you will structure your business model to sustain and increase you versus
exposing you to undue risk or liability. I understand that some of the information presented in this
resource can be quite disturbing. Especially when it comes to discussing the economy, impending taxes
and healthcare laws; I apologize for being the bearer of bad news. For me, the actual research and
creation of this resource has, in many ways, been very difficult and troubling. I am a true capitalist and
believe that our country was designed to provide equal opportunities for one and all – not guarantee
equal results via wealth redistribution. For those in disagreement or believe I am exaggerating, I simply
point to the previous article expressing how 50% of our population is burdened with almost 100% of our
tax revenue. Sorry, but that is fiscal abuse and most definitely wealth redistribution!
Despite the policy barriers and regulatory burdens that we face, as business owners, it is essential that
we focus on doing what we do best – press forward and use our God-given creative abilities to build,
grow and develop creative ideas and workable solutions. I realize impending circumstances can be
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discouraging, but there are several reasons why growing, diversifying, and integrating your business is
absolutely essential:
Can you afford not to? We are under continued assault via higher taxes, increased inflation,
rising operation and variable costs and more. Seriously, can you really afford not to build, grow,
save and create wealth?
Every business experiences a natural loss of customers regardless of the quality of service. In
the medical industry, clients will pass away, some will transition into full-care facilities, and
some may simply choose another provider. Therefore, it is imperative that you remain on
offense and actively grow, promote, and build your clientele
Competition is a part of a healthy market. You need to remain competitive and provide
exceptional service or your competition can eliminate you
You cannot afford to become vulnerable in any capacity! Being dependent on a single source of
revenue, such as a Broker, puts your business in a very precarious situation. We choose
entrepreneurship in pursuit of self-determination, not to consciously increase our vulnerability
Do NOT allow your business portfolio to become dependent on a single business
In building your business, always remember, anyone can make money. Making money is not hard,
especially when you engage in the growing demand such as we have in our industry. Making and
keeping money are two totally different skills. I can't tell you how many people say "Joel, we're making
$50,000 a month" - or whatever the amount. When I ask, "How much money are you keeping?" a hush
grows over the room. Or, sadly, when I ask "What is your profit margin," all too often I hear "I don't
know, I will have to check with my accountant." If you can't articulate how much money you're keeping
or your profit margin, it is probably because you're not making any profit! As an entrepreneur, you
should knowledgeably know your numbers - it is not the responsibility of someone else! You should
always know the amount of money coming in, going out, how much you’re keeping, and your margins.
Equally important is understanding that keeping money is not the same as building and creating wealth.
When entrepreneurs are profitable; their businesses afford them very comfortable and convenient
lifestyles. But when asked about their net worth, sadly, a hush grows over the room. Essentially, as
quickly as money comes in, so too does it go out. Their savings become limited as is their net worth.
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They rely on cash flow to sustain their lifestyle. Needless to say, such a strategy is highly precarious.
Should anything adverse happen to your business it will directly influence your lifestyle.
Consider the strategy of John and Renee, the husband-wife team diversifying into the Residential Care
Home industry. They are not focused exclusively on cash flow. Rather, they are committed to
increasing their net worth via tangible assets, the actual properties used as Care Homes. Should
anything happen to the cash flow of one or all of their three businesses, they still have tangible
appreciating assets. Again, I applaud John and Renee for their excellent, consistent wealth-building
strategy. Their strategies illustrate the old adage “Success is the corner where opportunity meets
preparation. Commitment counts. Great job, John and Renee!
i Dispatching Made Easy, www.dispatchingmadeeasy.com ii “How to Build a Million Dollar Home Care Agency,” www.milliondollarhomecare.com
iii “How to Land Private-Pay Clients in Your NEMT Business,”
http://milliondollartransportation.com/privatepay.html iv “How to Build a Million Dollar Home Care Agency, www.milliondollarhomecare.com
v “How to Start a Successful Courier & Small Package Delivery Service,” www.startcourierservice.com
vi “Joel’s Million Dollar Transportation Seminar,” www.mdtseminar.com
vii “How to Build a Local Moving Company with 69.1% Profit Margin,” www.startprofitablemovingcompany.com