On May 22, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule on Medicaid Program; Medicaid Managed Care State Directed Payments and Medicaid Fee-for-Service Targeted Medicaid Practitioner Payments in the Federal Register. This rule was proposed in response to the Medicaid reforms from the One Big Beautiful Bill Act (OBBA; P.L. 119-21). Specifically, it caps most Medicaid add-on payments at the Medicare reimbursement rate. Many EMS leaders are concerned that this rule will cap Medicaid payments under Ground Emergency Medical Transportation (GEMT) programs.
The GEMT program was started under the Obama Administration to address the gap between the costs of providing ambulance services and the reimbursement rate of state Medicaid programs. Historically, this program covered only public entities such as fire departments and government-run third-service EMS agencies, but some states have expanded their GEMT programs to include private EMS agencies. Under the GEMT program, states can submit State Plan Amendments (SPAs) to CMS to receive higher reimbursement rates and the federal match defined by the Federal Medical Assistance Percentage (FMAP) rate. In implementing their GEMT programs, many states use an “actual cost approach.” These states determine the actual cost of providing the ambulance service for a Medicaid beneficiary and reimburse the fire or EMS agencies for that amount. Other states have used GEMT changes to align their Medicaid reimbursement with the Medicare Ambulance Fee Schedule or some other reimbursement benchmark.
The OBBBA included several cost-cutting provisions in the Medicaid program to offset some of the spending provisions in the overall new law. This CMS draft would implement the OBBA by capping some provider taxes and state-directed payments used to find supplemental payment programs. However, the IAFC is concerned that the rule may go beyond the scope of OBBBA. Specific to EMS, the rule generally caps supplemental payments made by states for treating Medicaid beneficiaries to the corresponding Medicare fee schedule. This draft regulation could cap reimbursement in GEMT states to the rates under the Medicare Ambulance Fee Schedule (AFS). This draft regulation would be a major cut to fire and EMS systems that currently receive reimbursements higher than the AFS under their state’s GEMT program to close the cost of providing ambulance services.
The rule includes potential exemptions for state GEMT programs that use the actual cost approach to provide cost-based reimbursement for public fire and EMS agencies but also use standard fee schedule-based payments to reimburse private providers. This exemption would likely cover state GEMT programs that use cost-based reimbursement methodologies for public agencies only. The CMS did not specify what specific cost calculation methodologies need to be used to fall under the exemption; more clarification on the exemption is needed. The GEMT programs that do not utilize this actual cost reimbursement methodology would be subject to the proposed CMS rule and capped at the Medicare AFS rates. States that use Intergovernmental Transfers (IGTs) to increase the state's Medicaid payment contribution will likely be affected by this rule.
The draft CMS rule is proposed to begin taking effect in 2029 and then be phased in over several years. Funding will not be immediately cut, but instead slowly brought into line with the Medicare AFS.
Fire service leaders still have time to influence this proposed rule. The public comment portal is open until July 21, 2026. Leaders may submit comments as individuals or on behalf of their organizations or agencies. The IAFC also has pre-written comments that IAFC members can submit to CMS through our Legislative Action Center.
The IAFC encourages its members to engage with CMS through the public comment process. Effective comments should explain how the proposed rule would affect fire-based EMS agencies, including both potential financial losses and practical impacts on departments and the communities they serve. Comments are due on July 21. Please refer to file code CMS-2449-P in your comments.