Why PACE Transportation Costs Keep Climbing, and What's Actually Driving the Spend

Most PACE program directors can quote their per-member-per-month transportation spend within five percent. They cannot tell you why it keeps going up.

The capitation rate moves once a year. Trip volume rises every quarter. Vendor invoices land in three different formats. Trip data lives in a scheduling system, a billing system, and the head of whoever staffed the dispatch desk that morning. The result is a line item that grows faster than reimbursement, and a finance team that can describe the trend but cannot point at the cause.

Transportation Is Not a Side Service in PACE

It is statutory. Every Program of All-Inclusive Care for the Elderly participant is entitled to transportation to the day center, to specialist appointments, to dialysis, to imaging, to the pharmacy, and back home. The National PACE Association reports more than 180 active programs across 32 states serving roughly 80,000 participants as of early 2026, with a federally-supported expansion pipeline that has added new sites every quarter under the PACE Innovation Act framework.

Most programs run between 200 and 400 trips per participant per year. At a 250-participant site, that is 50,000 to 100,000 legs a year, usually coordinated by two or three staff and a whiteboard. The day-center side of PACE is built for clinical care. The transport side is rarely built at all. It accumulates.

The Capitation Math Does Not Work Anymore

PACE is fully capitated. CMS and state Medicaid pay a fixed monthly rate per enrolled participant. Whatever a program spends on care, including transport, comes out of that envelope. When transport costs grow and the rate does not, margin shrinks. For programs operating at four to six percent margin, a 10 percent rise in trip costs cuts that margin by a third.

The 2026 CMS PACE rate adjustments came in around a 3.4 percent blended national average. Published NEMT rate inflation for the same period sits between six and nine percent depending on the market. The arithmetic is straightforward. Programs cannot raise rates. They cannot ask participants to pay. They can only run their transport operation more cleanly, or absorb the gap. Most have absorbed the gap quietly for two budget cycles. The third one is harder to hide.

Where the Money Actually Leaks

The cost rarely leaks where directors think it leaks. Per-trip rate matters, but it is almost never the biggest driver. Four operational gaps show up in nearly every PACE transport audit.

No-show waste. A typical PACE program sees 8 to 12 percent of scheduled trips end in a no-show or last-minute cancellation. Vendor contracts almost always charge for trips dispatched, not trips completed. At $35 per leg and 60,000 legs a year, a 10 percent no-show rate is $210,000 of pure waste before any inefficiency in routing.

Double-booking and overlap. Programs running multiple vendors without a unified scheduling view will dispatch two vehicles for the same participant, one from the day-center transport line and one from a contracted NEMT vendor. Audits across 12 PACE sites in 2024 and 2025 surfaced an average overlap rate of 4 to 7 percent of scheduled trips. That is invoiced cost for a ride the participant did not need.

Vendor lock-in pricing. Programs that signed multi-year exclusive contracts before transparent rate benchmarking became standard are paying 15 to 30 percent above current market for the same services. Renegotiation is hard because the program does not have its own data on what the trip should cost. The vendor's number is the only number on the table.

Reconciliation drag. Most PACE programs reconcile transport invoices manually against their own trip log. Discrepancy rates of 5 to 8 percent are normal. Catching every disputed charge means a finance team has to comb through three thousand line items a month. Most programs do not catch them. The vendor wins by default.

Add those four together. A 250-participant site running 60,000 trips a year at $35 average per leg has roughly $2.1 million in annual transport spend. The four drivers above typically waste $250,000 to $400,000 of it. That number is bigger than the line item most PACE finance teams are trying to cut from elsewhere in the budget.

The Fix Is a Data Problem, Not a Vendor Problem

The instinct when transport costs climb is to renegotiate vendor contracts. That helps, but it solves the smallest part of the problem. The larger gap is that the PACE program does not have clean trip data of its own.

Most PACE scheduling lives in one of three places: the EHR (Epic, TruChart, or a PACE-specialized stack), a separate transport scheduling tool, or a spreadsheet. None of those are built for cross-vendor optimization. None of them produce the trip data a finance team needs to challenge a vendor invoice in real time. None of them can answer the question "did this participant actually take this ride" without a phone call to the driver or the day center.

Until that data is in one place and structured for analysis, the program is negotiating from a position of weakness. The vendor knows what the trips cost. The program does not.

What Changes When Scheduling Sits Inside the EHR

When the trip schedule, the trip log, and the participant's care plan all live in the same source of truth, three things change.

The schedule reconciles itself against attendance automatically. A no-show in the day-center clinical system is a no-show in the trip log. The vendor invoice can be matched to the actual record without a human in the loop. Reconciliation drag goes from days to minutes.

Routing decisions can use clinical context. A participant whose physical therapy is in the morning and dialysis in the afternoon should not be routed home in between. A clinician note about a recent fall should not produce a route in a vehicle without a wheelchair lift. These decisions need both clinical and logistical data in the same place. Outside the EHR, they almost never are.

Vendor performance becomes measurable. On-time pickup, completion rate, billing accuracy, and per-trip cost can be tracked by vendor over time. The program walks into renegotiation with its own numbers, not the vendor's.

This is the structural case for SMART on FHIR scheduling inside the EHR. It is also the architecture VectorCare's PACE Logistics module is built on. The brand is not the point. The point is that without the data in the EHR, the cost problem stays opaque, and PACE finance teams keep negotiating against a vendor who knows more than they do.

A Six-Week Starting Point for PACE Finance and Ops

Programs that want to measure their actual spend before signing a new contract can run the following exercise.

Week one: pull the last 12 months of vendor invoices and the program's own trip log. Reconcile them line by line. Note every discrepancy.

Week two: calculate the no-show rate, the overlap rate, and the discrepancy rate. Multiply each by the average per-leg cost. That is the annualized waste estimate.

Weeks three and four: pull current market NEMT rates for the service area. Several state PACE associations and regional NEMT brokerages publish them. Compare to contracted rates by route type and acuity.

Weeks five and six: build the operational case. The number to walk into the next vendor conversation with is no longer "we want a discount." It is "we have measured 8 percent overlap, 11 percent no-show, and 4.2 percent billing discrepancy. Here is what we are paying for that we should not be paying for."

Programs that run this exercise honestly surface 10 to 15 percent recoverable cost in the first cycle. The recoverable amount grows once trip data is structured well enough to optimize routes, vendors, and scheduling continuously rather than once a quarter.

Key Takeaway

PACE transportation will not get cheaper because vendors get nicer. It gets cheaper when the program owns its own trip data, sees its own cost drivers, and runs its transport operation with the same rigor it applies to clinical care. The capitation rate is fixed. Transport is the most controllable variable cost on the books.

The programs that figure this out before the next CMS rate update protect their margin. The programs that do not are funding the gap from somewhere else, usually staffing or capital improvements they cannot afford to delay.