Less than a year after Bowling Green was left without a major taxi service for about a month, new Yellow Cab owner Dan Spears says the business is in deep trouble again, due to wrangles over who’s allowed to provide rides to the doctor for Medicaid patients.

He says Green River Intra-County Transit System, the local broker that handles federal reimbursement payments to the firms that provide those rides, is breaking the rules by keeping a large number of those runs – and the resulting payments – for itself.

That’s costing him so much, he said, that he’s considering reducing his seven-month-old taxi service in Bowling Green, cutting costs by cutting out weekday nights at the least.

GRITS and the Kentucky Transportation Cabinet acknowledge that a dispute over new federal rules is going on, but won’t go much further than that.

“It’s fair to say that we have differing interpretations of the law,” said Chuck Wolfe, spokesman for the transportation cabinet. “Nothing has been resolved.”

The state certainly intends to comply with those rules, but the most important thing is to make sure there are enough safe rides available for Medicaid patients, regardless of who provides them, said Mark Brown, also a cabinet spokesperson.

Medicaid patients needed 6,000 rides in Warren County during March alone, Brown said, and there have to be enough providers – and vehicles – on hand to meet that demand.

Dan Lanham, transit system manager for GRITS, said interpretation of the federal rules is the state’s business, not his, and offered no comment on the dispute.

“That’s something they’re working on,” he said.

According to Spears, however, federal officials have told him the issue is critical. They’ve told him that the state was given 10 days to get in compliance – and that was 15 days ago.

“The state’s getting ready to lose a whole lot of money from the federal government,” he said.

If a state is not complying with the program rules, it’s always a possibility that federal funding could be cut off, said Mary Kahn, spokesperson for the federal Centers for Medicare & Medicaid Services, but “it almost never comes to that.”

New federal Department of Health and Human Services regulations for non-emergency medical transportation went into effect Jan. 20, but had been in the works for two years, Spears said. The rules specifically state that a broker should be independent of the firms actually providing the rides.

“GRITS cannot be the broker and provide trips,” Spears said.

Those pending guidelines were known when GRITS took over as local broker, Spears said, yet the state allowed GRITS to bring in several vehicles, take over many Medicaid runs from Yellow Cab, and “more or less pushed them out of business.”

Now that Spears is operating taxis under the Yellow Cab name, GRITS won’t give the old company’s share of such runs to him, arguing that he doesn’t yet have permanent authority to provide rides for Medicaid patients, he said.

Spears said federal officials have told him that’s no excuse; he’s been operating seven vehicles in Bowling Green under temporary certificates, and has actively sought permanent ones.

“We were hoping we’d have permits by now,” Spears said.

Spears said he’s taken great pains to meet all legal requirements for a full-service taxi company, putting hundreds of thousands of dollars into his Bowling Green business, including safety and medical training for employees and more than $100,000 a year for insurance.

“It’s not a cheap operation,” he said.

He was hoping to have 15 vehicles running here now, but has held back, unsure about the safety of the investment.

Spears said he did get Saturday Medicaid runs for a while, which made him about $4,000 per month; that dropped off, and now he’s losing about $3,500 per month to run cabs in Bowling Green, so he may cut back service.

“I’m about ready to stop all my night operations, period,” Spears said. “I was better off when I had three cabs running around in Franklin.”

The federal government pays to take Medicaid patients on non-emergency doctor visits, and those runs for roughly 29,000 Medicaid clients in the six-county region make up the most reliable source of income for taxi companies with the proper permits and insurance. Assigning those trips and paying for them is in the hands of a regional broker, with that contract being bid out by the Office of Transportation Delivery (part of the Kentucky Transportation Cabinet) every few years. It was last bid in 2008, and the local winner was Owensboro-based Audubon Area Community Services. That firm took over from Somerset-based LKLP on July 1.

Audubon Area Community Services subsidiary GRITS serves as Medicaid broker for Butler, Edmonson, Hart, Logan, Simpson and Warren counties. Along with that task came permission to provide emergency backup rides for Medicaid patients – if private taxis couldn’t handle the workload.

“We brought four vehicles and four drivers,” Lanham said. “We certainly didn’t come down here with the intention of putting anybody out of business.”

Three companies were certified to carry Medicaid patients here, he said: Adaptive Enterprise, Carl Rogers Transportation, and Royal Coach Enterprises/Yellow Cab.

Just 23 days later, Royal Coach suddenly shut down. Joe Boyd, the taxi company’s primary owner, said his Medicaid reimbursement had immediately dropped by half. Royal Coach was already struggling under debt and high gas prices, and its Louisville Road office had recently burned down. Boyd said he would have lost another $25,000 to $30,000 by keeping his 42 vehicles running another week.

Boyd and Spears both contend that GRITS used a different method than LKLP to calculate how much cab companies should be paid. Lanham and Wolfe said the current method should have been used all along, but after Royal Coach went out of business, the mileage rate increased $1.30 per mile to $1.50 per mile, while the previous $85 reimbursement cap on one-way trips went up to $150.

When Royal Coach suddenly shut down, GRITS had to scramble to find rides for about 260 Medicaid patients within two days. The two smaller firms took up some of the slack, but much of it fell on GRITS, Lanham said. The broker hired drivers and brought in more vans; by August, there were 17 vehicles bearing the GRITS logo at its State Street office.

Meanwhile, Franklin Taxi owner Spears bought Yellow Cab’s licenses and a few of its vehicles at auction Aug. 19. Working under a temporary state permit, he went back into business in Bowling Green under the Yellow Cab name. Spears began buying Toyota Scion xB cars and vans for disabled riders, and said he wanted to operate 15 vehicles here. To fill many of those cars, he counted on Yellow Cab regaining a sizable share of the Medicaid business.

Yet that hasn’t happened. Lanham says some Medicaid rides have gone to the new Yellow Cab – and that Spears’ Franklin Taxi handles almost all such runs in Simpson County – but acknowledges that GRITS has not tried to push its Medicaid runs back into the hands of for-profit firms.

“Basically, we’ve left the situation as it is,” he said. “We’re happy to be in Bowling Green. We’re happy to be providing the service.”

That leaves GRITS assigning rides to its own drivers, and reimbursing itself for that travel.

Medicaid reimbursement is handled through brokers to prevent fraud and waste by separating the payer from the provider, Spears said, but that purpose is defeated if the broker competes with other providers, as GRITS does.

“They are a classic reason for why this new federal law was written,” he said.