Medicaid RAC Improvement Act of 2026
- Bill Number
- S. 4898
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 2
- Status
- Introduced
- Latest Action
- 2026-06-24: Read twice and referred to the Committee on Finance.
- Last Updated
- 2026-07-07T04:53:29Z
AI-Generated Summary
Purpose This legislation, known as the Medicaid RAC Improvement Act of 2026, aims to strengthen the Medicaid Recovery Audit Contractor (RAC) program. It implements recommendations from the Comptroller General of the United States to improve oversight, expand reviews to managed care, reduce overpayments, and increase recovery of improper payments under Medicaid.
Key Provisions
- Oversight and Reporting Enhancements: Requires the Secretary of Health and Human Services (HHS) to establish policies for monitoring state exceptions to RAC requirements, including clear expiration notices and annual state reports on program methodologies and results. Mandates annual HHS reports to Congress on program effectiveness, including state-specific data on overpayments, underpayments, appeals, and savings.
- Inclusion of Managed Care: Requires states to incorporate reviews of claims paid by Medicaid managed care organizations, prepaid inpatient health plans, and prepaid ambulatory health plans into their RAC programs. States must ensure contracts with these entities allow for payment integrity reviews, either internally or by RAC contractors, with cooperation requirements.
- Payment Integrity Measures: Directs states to submit annual reports identifying reviewing entities for each payment stream, including managed care payments. Requires a study on barriers to state participation in RAC programs (such as contingency fees and startup costs) and a 5-year demonstration project to increase participation. Standardizes audit and recovery periods to cover the current fiscal year plus the prior 4 fiscal years.
- Exception Limits: Prohibits extensions of full or partial exceptions to RAC requirements after 2029 and phases out certain exceptions by December 31, 2028.
Significant Changes to Existing Law
- Amends Section 1902(a)(42) and Section 1903 of the Social Security Act to expand RAC program scope, add reporting mandates, and limit exceptions.
- Introduces new requirements for managed care inclusion, standardized 4-year lookback periods for audits, and federal studies/demonstrations not previously required.
- Shifts from optional state flexibility in RAC implementation toward more uniform federal standards and accountability.
Potential Impacts
- Government Agencies: Increases administrative responsibilities for the Centers for Medicare & Medicaid Services (CMS) in oversight, reporting, and conducting studies; requires states to enhance contracting, reporting, and coordination processes.
- Citizens and Providers: May lead to more frequent reviews of Medicaid payments, potentially reducing improper payments and improving program integrity, though it could increase administrative burdens on providers and managed care plans during audits.
- International Relations: No direct effects.
Main Stakeholders Affected
- State Medicaid agencies.
- The Secretary of HHS and CMS.
- Medicaid managed care organizations, prepaid health plans, and recovery audit contractors.
- Healthcare providers receiving Medicaid payments.
- Congress (through required reports).
Notable Legal, Constitutional, or Political Implications
- Operates entirely within existing federal-state Medicaid framework under the Social Security Act, with no apparent constitutional conflicts.
- Strengthens federal oversight of state-administered programs, potentially raising federalism considerations around state flexibility.
- Focuses on fiscal responsibility and payment integrity, with bipartisan potential given emphasis on recovering overpayments without new spending mandates.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Recent Actions
- 2026-06-24: Read twice and referred to the Committee on Finance.
- 2026-06-24: Introduced in Senate
Bill Versions
- Medicaid RAC Improvement Act of 2026 — issued 2026-06-24 — PDF (14 pages)