Rural transit provider warns of service cuts after Medicaid reimbursement halved

Mountain Valley Transit officials told Chaffee County partners that recent changes to Medicaid reimbursement and repeated subcontractor failures have severely strained the small rural operator’s budget and could force reductions in service.

At a stakeholder meeting, a presenter identified in the transcript as Speaker 1 said the Medicaid mileage reimbursement rate was reduced from $6.49 per mile to $3.00, which she described as "a 54% reduction," cutting anticipated monthly Medicaid reimbursements from about $20,000 to roughly $10,000. She said the loss is affecting the agency’s required matching funds and amounts to approximately $120,000 less per year from Medicaid alone.

Speaker 3, who described long experience as a regular transit user and operations observer, raised safety and reliability concerns tied to an intercity subcontractor. He said the vendor’s on-time performance had deteriorated, leaving drivers and passengers stranded and pushing the provider to cover overtime and out-of-pocket costs — “December alone, we had nearly 30 hours of overage” and roughly $8,500 in unreimbursed expenses, he said.

Officials said the agency had a modest ridership increase systemwide (about 14% year-over-year), with Chaffee County representing a large share of trips, but that ridership in the San Luis Valley declined. The presenters attributed the post-July drop in part to policy changes and to an unusually large July event that artificially inflated that month’s numbers.

The provider described internal steps taken to stabilize operations, including updating HR and drug-and-alcohol policies to meet CDOT requirements, upgrading dispatch from paper to electronic systems, a planned strategic plan (to finish in May) and a fleet analysis due in June. The agency is also pursuing relocation to a facility near Poncha Springs (Welcome Center on Highways 50 and 285) and exploring electric vehicles and targeted grant opportunities.

Board members and county staff discussed options for short-term support and potential state and federal funding sources. Several participants urged outreach to state and federal representatives and transportation-planning partners to seek formula changes or emergency assistance for small rural operators.

What happens next: officials said they are scrambling for grants and will continue coordination with local hospitals, health-and-human-services navigators and regional partners; the provider warned that, without additional funds, “we’re probably 2 to 4 months out from making some really drastic cuts.”