How to Start a Medical Transportation Business in Texas

To start a medical transportation business in Texas, you form a Texas LLC, obtain federal tax and healthcare identifiers, enroll as a Medicaid provider through the Texas Medicaid & Healthcare Partnership, meet the state’s vehicle and driver requirements, and then separately credential with the managed care organizations that actually assign trips in your service area. The 2026 Medicaid enrollment fee alone is $750, and the full path from an empty folder to a first billable ride usually runs several months.¹

Set Up the Legal Entity

Most Texas non-emergency medical transportation (NEMT) operators organize as a limited liability company. You form one by filing a Certificate of Formation (Form 201) with the Secretary of State. The fee is $300 by mail or $308 through the SOSDirect online portal. Your chosen name has to be distinguishable from every entity already on file, so check availability before you submit.

Form 201 requires a registered agent with a physical Texas address who can accept legal documents for the company. You also pick whether the LLC is member-managed or manager-managed. That choice follows you into Medicaid paperwork, because it tells the state who counts as a governing person.

Every Texas LLC owes an annual franchise tax report due May 15, even in years it owes no tax. For the 2026 report year, businesses with total revenue at or below $2,650,000 file a no-tax-due report; you still file, you just pay nothing.² Miss that deadline and the Comptroller can forfeit your LLC’s right to do business in the state, which would immediately pull the rug out from under your Medicaid enrollment.

Get Your Federal Tax and Healthcare IDs

Two federal numbers come next. The first is an Employer Identification Number from the IRS, which you request on Form SS-4. You can complete it online in a few minutes if you have the Social Security Number of the responsible party.³ The EIN is your company’s tax ID for everything from opening a bank account to filing payroll returns.

The second is a National Provider Identifier through the National Plan and Provider Enumeration System run by CMS.⁴ During the application, select taxonomy code 343900000X, which designates non-emergency medical transport. Getting the taxonomy right tells the healthcare system what kind of provider you are and lines you up with the correct reimbursement rules. You need both numbers in hand before you can start the Texas Medicaid application.

Enroll as a Texas Medicaid Provider

Medicaid enrollment is the heaviest step. The Texas Health and Human Services Commission (HHSC) oversees enrollment, and the Texas Medicaid & Healthcare Partnership (TMHP) processes applications through its Provider Enrollment and Management System, known as PEMS.⁵ PEMS runs the application electronically, but the documentation load is heavy.

Ownership Disclosure

Federal rules require every Medicaid provider to disclose any individual or entity with a 5 percent or greater ownership interest.⁶ Texas enforces that through its Disclosure of Ownership and Control Statement, which collects the name, address, date of birth, and Social Security Number of every qualifying owner, officer, and director.⁷ Indirect ownership counts. If someone holds an interest in a company that holds an interest in yours, and the combined stake reaches 5 percent, you must report them. Leaving a qualifying person off is grounds for immediate denial.

Background Checks and Fingerprinting

Every principal in the business must consent to a criminal background check, with fingerprinting where state or federal law requires it.⁸ Prints go through a state-approved vendor. Convictions for fraud, patient abuse, and certain financial crimes are disqualifying. Each principal also signs an attestation to the accuracy of the application under penalty of perjury.

Everything Else PEMS Wants

The application asks you to define the specific counties or regions you intend to serve, show the financial capacity to perform your contracts, and prove you have a physical location in Texas or a bordering state. You also upload your formation documents, insurance certificates, and tax records. PEMS lets you save progress, which helps because gathering everything typically takes weeks.

Fee, Site Visit, and Timeline

The 2026 institutional enrollment fee is $750, up from $730 the year before.¹ After you submit, HHSC reviews for deficiencies and may send someone to confirm your office and fleet actually exist.⁵ Processing usually takes several months, driven by how clean your application is and whether additional review gets triggered. Approval comes with your unique Texas Provider Identifier, which rides on every claim you submit.

Insure and Equip Your Vehicles

Texas sets specific insurance minimums for NEMT providers. The HHSC NEMT Services Handbook requires business auto insurance with a combined single limit of $750,000 covering bodily injury and property damage for owned, hired, and non-owned vehicles. On top of that you need commercial general liability coverage at $1,000,000 per occurrence and $2,000,000 aggregate, plus $1,000,000 in umbrella or excess liability coverage.⁹ Budget accordingly. Annual premiums at this level typically run $4,500 to $10,000 per vehicle depending on fleet size, driver records, and territory.

Every vehicle must meet ADA accessibility standards. The Department of Transportation’s rules require boarding devices such as lifts or ramps so passengers who use wheelchairs can reach securement locations, and those devices must be kept in working condition.¹⁰ Wheelchair securement systems must hold both the chair and the occupant firmly during movement. HHSC expects documentation of annual mechanical inspections by certified technicians along with detailed maintenance logs for every vehicle. Compliance is verified during enrollment and again through periodic field audits.

Screen and Qualify Your Drivers

Your drivers have their own screening requirements separate from the business-level checks. HHSC contract terms require every driver to be at least 18 years old, hold a valid driver’s license, and pass a nationwide criminal history background check plus national and state sex offender registry checks.¹¹ Those records have to be maintained and available for HHSC review at any time.

The disqualifying convictions are broad. Any felony or misdemeanor within seven years of hire involving driving under the influence, abuse or neglect of children or the elderly, offenses against persons or families, drug violations under the Texas Controlled Substances Act, or crimes against public safety will bar a driver from providing services.¹¹ Drivers also cannot accumulate more than two moving violations in the previous 12 months. Drug testing is required, and you must keep documentation of each driver’s violation history through the Texas Department of Public Safety.

Many managed care organizations expect drivers to hold a Passenger Assistance Safety and Sensitivity (PASS) certification. PASS covers 19 modules including disability awareness and emergency procedures, and the certification is valid for two years before recertification. Even where PASS isn’t contractually required, it strengthens your position when negotiating MCO contracts.

Handle HIPAA From Day One

This is the compliance area that catches many new operators off guard. When you transport a Medicaid beneficiary you handle protected health information: the patient’s name, pickup address, appointment details, and sometimes diagnosis-related data passed along during scheduling. That makes you a business associate under HIPAA, and you are legally responsible for securing that data.

In practice, you need a signed Business Associate Agreement with every covered entity you work with, meaning the managed care organizations, healthcare facilities, and transportation brokers who send you trip assignments. Federal rules require each BAA to spell out what you can and cannot do with patient information, obligate you to report any unauthorized disclosure, and require you to return or destroy all patient data when the contract ends.¹²

On the technical side, any scheduling software, dispatch system, or electronic records that touch patient information must have access controls so only authorized users can see records, audit logging to track who viewed what, and encryption for data in transit.¹³ Every user needs a unique login. No shared accounts. These are federal requirements, and a breach can trigger HHS investigations and significant fines. Build HIPAA into your technology choices from the start rather than retrofitting later.

Classify Your Drivers Correctly

How you classify drivers, as employees or independent contractors, drives your tax obligations, insurance costs, and legal exposure. Get it wrong and you face back taxes, penalties, and potential disqualification from Medicaid. A Department of Labor rule proposed in February 2026 uses an “economic reality” test that focuses on two core factors: how much control the worker has over the work, and whether the worker has a genuine opportunity for profit or loss based on their own initiative and investment.¹⁴

For most NEMT operations, the answer lands on employee. You assign routes, set pickup times, require specific vehicles, mandate background checks and drug tests, and dictate how the driver interacts with patients. That level of control is hard to square with independent contractor status under any version of the test. Texas also runs its own analysis through the Texas Workforce Commission, and misclassification can trigger unemployment insurance liability going back years. If you’re building a fleet-based operation, plan on W-2 drivers from the start.

Contract With Managed Care Organizations

Here is where many first-time operators get tripped up: enrolling in Texas Medicaid through PEMS does not mean you can start billing. Texas delivers the majority of its Medicaid benefits through managed care programs like STAR and STAR+PLUS. To actually receive trip assignments and get paid, you have to separately contract and credential with the managed care organizations (MCOs) operating in your service area.¹⁵

Each MCO runs its own credentialing process, which means more applications, more proof of insurance, and sometimes rate negotiation. Some MCOs subcontract their NEMT benefit to transportation brokers, so your actual contracting relationship may be with the broker rather than the health plan. Identify the MCOs in your target counties early and start credentialing in parallel with your PEMS application. Waiting until after Medicaid approval to begin MCO outreach adds months to your timeline.

Keep Everything Current

Approval is not the finish line. Texas requires periodic revalidation of your Medicaid enrollment, and HHSC recommends submitting revalidation applications at least 120 days before your enrollment period ends to avoid a lapse in billing authority.¹⁵ The franchise tax report is due every May 15. Vehicle inspections, driver background checks, and insurance certificates all run on their own renewal cycles. Letting any one credential expire can put a hold on your claims.

Keep detailed records of every transport: patient name, pickup and drop-off times, mileage, driver assignment, and trip purpose. Those records are your defense during audits, which can arrive at any time and often focus on whether the trips you billed actually happened as documented. Medicaid fraud enforcement in Texas is aggressive, and sloppy recordkeeping is the fastest way to draw scrutiny even when your operations are clean.

1
Texas Medicaid & Healthcare Partnership. 2026 Provider Enrollment Application Fee Set at $750
2
Texas Comptroller of Public Accounts. Franchise Tax
3
Internal Revenue Service. About Form SS-4, Application for Employer Identification Number (EIN)
4
NPPES. National Plan and Provider Enumeration System
5
Texas Medicaid & Healthcare Partnership. How to Apply for Enrollment
6
U.S. Government Publishing Office. 42 CFR 455.104 Disclosure by Medicaid Providers and Fiscal Agents
7
Texas Health and Human Services. Form 5871-SF, Disclosure of Ownership and Control Statement
8
Cornell Law Institute. 1 Texas Administrative Code 352.5 – Provider Enrollment Requirements
9
Texas Health and Human Services Commission. HHSC Uniform Managed Care Manual Chapter 16.4 NEMT Services Handbook
10
U.S. Access Board. ADAAG for Transportation Vehicles
11
Texas Health and Human Services Commission. Medical Transportation Program Demand Response Transportation Services Contract
12
U.S. Department of Health and Human Services. Sample Business Associate Agreement Provisions
13
U.S. Department of Health and Human Services. Security Standards – Technical Safeguards
14
U.S. Department of Labor. Notice of Proposed Rule: Employee or Independent Contractor Status Under the Fair Labor Standards Act
15
Texas Health and Human Services. Medicaid and CHIP Enrollment and Revalidation