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BREAKING: Modvicare FIles for Bankruptcy with more than $1.4 BILLION Dollars in Debt!

BREAKING: Modvicare FIles for Bankruptcy with more than $1.4 BILLION Dollars in Debt!

BREAKING: Modvicare FIles for Bankruptcy with more than $1.4 BILLION Dollars in Debt!

BREAKING: Modvicare FIles for Bankruptcy with more than $1.4 BILLION Dollars in Debt!

BREAKING: Modvicare FIles for Bankruptcy with more than $1.4 BILLION Dollars in Debt!

BREAKING: Modvicare FIles for Bankruptcy with more than $1.4 BILLION Dollars in Debt!

Modivcare Files for Bankruptcy - More than $1.4 BILLION Debt

Modivcare Bankruptcy and Its Industry Context

Modivcare, the nation's largest Medicaid broker in the non-emergency medical transportation (NEMT) industry, has filed for bankruptcy with more than $1.4 billion in debt. The filing took place in the Southern District of Texas after months of financial distress and unsuccessful efforts to stabilize operations. The company announced it would receive $100 million in debtor-in-possession financing and reduce its debt load by 80%, approximately $1.1 billion, as part of its restructuring. Ownership of Modivcare will shift to a consortium of investors, while its stock faces delisting from the Nasdaq following a steep 70% drop in share value. 

What Modivcare Does

Modivcare provides a wide portfolio of healthcare-related services, including in-home and on-site care, remote patient monitoring, and, most notably, NEMT services. Each year, it coordinates millions of rides for low-income patients and individuals with mobility challenges across 48 states and Washington, D.C. With more than 23,600 employees, the company has long been the dominant broker for Medicaid NEMT transportation, relying heavily on state contracts and subcontracted providers to move patients to non-emergency medical appointments. However, Modivcare also has a long history of squeezing its subcontracted transportation providers, driving down reimbursement rates, enforcing strict performance requirements, and creating administrative burdens that make it difficult for smaller operators to remain profitable. This pattern has left many providers dependent on thin margins and vulnerable to financial collapse whenever brokers tighten their grip or state funding shifts. 

Industry Headwinds Hitting NEMT

The NEMT industry as a whole has been under increasing financial strain. Providers face rising labor costs, shortages of qualified drivers, and reimbursement rates from Medicaid and Medicare that have failed to keep pace with inflation. In particular, changes to Medicare Advantage plans and looming Medicaid cuts are squeezing companies like Modivcare that rely on public funding streams. These same pressures are rippling across the healthcare industry at large, leading to elevated bankruptcy filings among healthcare operators in 2023 and 2024. 

Why Modivcare Is Struggling

For Modivcare, the overreliance on Medicaid has been devastating. Declining state reimbursement rates, coupled with projections of further cuts in federal healthcare funding, created an unsustainable business model. In 2024, Modivcare generated roughly $2.8 billion in revenue but still recorded a net loss of $201.3 million, weighed down by $1.4 billion in funded debt and high operational expenses. Attorneys for the company described its leverage ratio as “unsustainable,” with obligations including a $75 million payment due in early 2026. 

Impact on Subcontracted Transportation Providers

The bankruptcy poses significant challenges for the thousands of local transportation providers who subcontract under Modivcare’s broker system. These small to mid-sized businesses already operate on thin margins, dependent on timely payments and steady trip volume from Modivcare. For many, the bankruptcy came as a complete shock, subcontractors never saw it coming and were blindsided by the announcement.  Most providers had no warning that the nation’s largest broker was on the verge of collapse, leaving them scrambling to assess the stability of their contracts and the security of their receivables. With restructuring underway, providers may face delayed payments, contract renegotiations, and reduced trip reimbursements. Many subcontractors could be forced out of business altogether if revenue from Modivcare decreases or if Medicaid reimbursement cuts deepen. The ripple effect will not only impact providers but also reduce patient access to reliable transportation. 

Continuity of Service vs. Financial Risk

 While Modivcare has promised that services will continue uninterrupted during bankruptcy proceedings, providers know that such assurances often mask deeper risks. Behind the scenes, many transportation providers are already feeling the strain - experiencing interruptions in trip assignments, sudden drops in trip volume, and inconsistent reimbursement rates that make cash flow unpredictable. Subcontractors shoulder the burden of fluctuating finances while Modivcare attempts to stabilize its own position, and the uncertainty only grows as bankruptcy proceedings unfold. At the same time, Modivcare has signaled it intends to prioritize technology adoption and portfolio streamlining, moves that may further reduce opportunities for smaller operators who rely heavily on steady trip assignments to sustain their businesses.  

The Larger Lesson for NEMT Providers

Modivcare’s collapse highlights a critical truth about the NEMT industry: overdependence on Medicaid brokers is dangerous. For decades, many operators have tethered their business models to state contracts administered by brokers like Modivcare. But as this bankruptcy demonstrates, those revenue streams are vulnerable to policy shifts, funding cuts, and corporate mismanagement. Providers who fail to diversify risk being caught in financial turmoil not of their own making. The reality is that no matter how reliable a broker may appear, providers have little to no control over decisions that directly affect their revenue and survival. A single policy change, rate adjustment, or corporate misstep can wipe out years of hard work. For providers who want stability and long-term growth, the lesson is clear: dependence on brokers is not a business strategy, it’s a liability. 

Cash Flow & Accounts Receivable Risk

Providers need to understand the practical impact that Modivcare’s bankruptcy could have on their money. Bankruptcy often results in delays or even losses on outstanding invoices. Any subcontractors with unpaid balances from Modivcare may become “unsecured creditors,” meaning they may recover little or nothing once the court distributes what remains. For small and mid-sized operators, even a short interruption in cash flow can be devastating, fuel, insurance, payroll, and vehicle maintenance costs do not stop simply because a broker can’t pay on time. This makes it critical for providers to review their accounts receivable immediately, separate out exposure to Modivcare, shore up cash reserves, and prepare contingency plans for slower or reduced payments. Failure to do so could leave providers unable to cover day-to-day operating expenses, pushing some out of business entirely. 

Technology Adoption & Competition

Modivcare’s push toward new technology may sound like progress, but in reality it gives brokers even more control over subcontractors—tightening oversight, tracking performance, and potentially reducing trip assignments. Providers who rely on broker-linked systems risk becoming an extension of the very business model that is now proving unstable. To build resilience, operators must invest in exclusive, closed-network dispatching platforms that do not integrate with Modivcare or any other broker or third-party system. Owning your own technology safeguards sensitive trip data, protects client relationships, and ensures your operations aren’t dictated by a middleman.


Closed-network platforms empower providers to control scheduling, pricing, and customer service, while opening the door to direct-pay and contracted markets such as hospitals, nursing facilities, dialysis centers, schools, senior programs, veterans’ organizations, and private insurers. In contrast, those tethered to broker-driven systems will remain stuck in a cycle of low reimbursements, delayed payments, and shrinking margins. The future of NEMT will belong to providers who protect their independence, diversify their contracts, and leverage stand-alone technology to scale stronger and more profitably.

Impact on Patient Access & Community Reputation

If Modivcare scales back trip volume or cuts subcontractor payments, patients will feel it first. Missed rides, long wait times, or outright service disruptions don’t just harm the broker’s reputation—they directly damage the trust and credibility of the local provider who is face-to-face with the passenger. For many patients, especially seniors, dialysis patients, and those with chronic conditions, reliable transportation is not a luxury but a lifeline. When that lifeline is broken, patients suffer medical setbacks, facilities lose confidence in their transportation partners, and providers risk losing long-term community relationships. To guard against this, operators should be proactive in reassuring facilities and patients of their reliability, while also offering clear alternatives such as private-pay options, direct contracts, or subscription-based transportation packages. By doing so, providers not only protect their brand but also demonstrate leadership and stability in a time of uncertainty. 

Leverage the Moment as a Marketing Opportunity

Hospitals, nursing homes, dialysis centers, and even families may lose trust in Modivcare as news of bankruptcy spreads. This breakdown of confidence creates a unique opening for local providers to step in, reassure facilities, and position themselves as the stable alternative. By emphasizing financial strength, personalized service, and independence from a national broker whose reputation is now tarnished, providers can establish themselves as indispensable partners. Instead of waiting for assignments funneled through a broker, operators should proactively meet with facility administrators, patient care coordinators, and discharge planners to present themselves as a direct solution. This is the time to highlight flexibility in scheduling, faster response times, and the ability to tailor services to each facility’s needs—advantages that brokers, with their one-size-fits-all systems, cannot match.


The opportunity is not simply to replace Modivcare’s role, but to fundamentally shift the relationship. By cutting out the broker middleman, providers gain direct access to decision-makers, stronger margins, and long-term stability. Facilities benefit too: they get a reliable partner who is accountable to them alone, not to Wall Street investors or distant corporate executives. If providers seize this moment to cultivate direct contracts, they won’t just survive the fallout of Modivcare’s collapse—they will emerge stronger, with a business model that is more resilient, profitable, and trusted within their communities.

A Path Forward Through Diversification

To safeguard your futures as NEMT providers, you must look beyond Medicaid brokers and diversify your revenue streams. This includes pursuing direct contracts with hospitals, nursing facilities, dialysis centers, and private-pay clients, as well as exploring non-traditional opportunities such as school transportation, municipal shuttle services, senior center partnerships, veterans’ organizations, and private insurance arrangements.  By following the strategies taught by Joel Davis, building direct-pay contracts, cultivating healthcare partnerships, and offering premium services outside the broker system, you can regain control over pricing, cash flow, and long-term growth. The future of NEMT will belong to those who think bigger than brokers and create multiple, stable sources of income. 

Medicaid Brokers in the medical transportation industry

Brokers Are "Profit Centers" .... for themselves, and not for Transportation Providers!

The growing success of Medicaid brokers is nothing new, but especially as the pool of brokers becomes increasingly crowded and competitive, the stories of transportation providers being squeezed by brokers only continue to increase.  Stories of brokers not paying transportation providers, the actual "laborers" who directly serve the clients, or haggling and then withholding money after trips were pre-approved and successfully completed is prevalent.  


Share your experience with Medicaid brokers below in as much detail as you feel comfortable sharing, and we will publish your story while protecting your identity and information.

UMTPG Insurance agent-partner shares truth about Modivcare

Modivcare maintains hidden requirements that can increase premiums and restrict your operation:

As an insurance agent, I find the numerous requirements Modivcare imposes on NEMT operators very frustrating. In order to be "awarded" their contract, they have insurance requirements for the Auto and General Liability policies. These are just a few examples.

 

The first item they impose is that auto liability coverage must have concrete auto symbol ratings.  These physical damage rating symbols are codes that indicate the relative risk of loss for each vehicle for a given model year. Each symbol has a corresponding symbol relativity, or factor, that insurers can use to develop premiums for comprehensive and collision coverage.


They require all policies to be Symbol 1 (any auto) or Symbols 2,8,9 (Owned, Hired, and Non-Owned Autos). This results in increased premiums, on the most expensive part of the policy, and a complete lack of flexibility concerning vehicle changes. Due to this broad coverage, most insurance carriers are very hesitant to remove vehicles from the policy because they could still have exposure should those vehicles be used.  This means ModivCare is dictating our client's fleet, and when a vehicle is going to be out of service for a couple of months, the transportation provider is still required to pay premiums on that unit despite being out of service.

Modivcare can also require a Wavier of Subrogation which protects them - NOT you!

A Wavier of Subrogation is a contractual provision whereby an insured transportation provider waives the right of their insurance carrier to seek redress or seek compensation for losses from a negligent third party (Modivcare). Typically, insurers charge an additional fee for a waiver of subrogation endorsement.

The transportation provider’s policy is Primary and Non-Contributory:

“Primary” designates that the transportation provider’s liability policy is responsible for responding to a claim first before another entity's (Modivcare) policy applies. “Noncontributory” stops the transportation provider from seeking contribution from Modivcare’s insurance policy for paying a claim.


These items allow Modivcare access to coverage under the transportation provider’s policy and even allows Modivcare to file a claim using the transportation provider’s policy.    

 

Obviously, these mandated stipulation drive up my costs for transportation provider who, in most instance, are completely unaware of what Modivcare is mandating and the rights they are surrendering in exchange for increased exposure to liability and cost. 


Sadly, in most instances when we try to educate transportation providers on these disproportionate and costly liabilities, if they are eager to sign up with Modivcare thinking it is a money-maker, they will typically just say something like “Do whatever Modivcare wants so we can get the contract.” 

You can't build, grow, and scale with low ROI from Medicaid Brokers!

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