This Paragon Pic demonstrates how states and public providers use intergovernmental transfers (IGTs) to inflate Medicaid spending and inappropriately pass higher costs to federal taxpayers. In 2022, California’s Medicaid program (Medi-Cal) paid both public and private ambulance providers the same rate: $339 per emergency transport.

In 2023, California established the Public Provider Ground Emergency Medical Transport Intergovernmental Transfer (PP-GEMT IGT) program, which resulted in Medicaid payments to public ambulance providers more than tripling. Private providers, who are excluded from the program, continue to receive $339 per transport, while public provider payments increased to $1,065 in 2023 and $1,168 in 2024.

California has proposed further increasing these payments under State Plan Amendment 25-0002, which is currently pending federal approval. If approved by the Centers for Medicare and Medicaid Services, public provider payments would rise to approximately $1,597 per transport in 2025. This means public providers would be paid nearly five times the private provider rate.

California’s public EMT providers are paid more because of the state’s use of IGTs. Through IGTs, public providers send funds to the state, and the state uses those funds to make Medicaid payments back to the provider, essentially using “laundered” funds to claim federal matching dollars—negating any actual state contribution. With those federal matching dollars, the state pays the public provider and often has money left over for unrelated purposes.

In 2023, providers were expected to contribute approximately $321.95 per transport through the IGT. They eagerly provide this amount because the use of recycled dollars to obtain federal funds guarantees them a higher payment.

The IGT contribution is designed to cover the nonfederal, or state, share of a massive add-on payment, plus a 10 percent administrative charge levied by the state on the transferred amount. In return, the state pays public providers a significantly higher total reimbursement, funded in part by the provider’s own contribution and in part by federal matching funds. Comparable data for 2024 and 2025 have not been publicly released, so we don’t know precisely how much provider contributions have changed alongside rising payment rates.

This is just one example of the Medicaid money laundering schemes states use to shift the cost of Medicaid to the federal government. California’s policy creates a stark disparity: public providers benefit from a high-dollar reimbursement mechanism that burdens the federal government, while private providers who deliver the exact same service receive far less. Over time, such payment gaps may weaken the financial viability of private ambulance services and reduce patient access, especially in areas where public providers do not operate. The policy solution is for the federal government to require payment parity and prevent states from paying government providers more than private providers for the same service.