Medicaid RAC Improvement Act of 2026

This bill establishes additional requirements for and expands the scope of Medicaid Recovery Audit Contractors (RACs). RACs identify improper Medicaid payments to providers, collect overpayments, and reimburse underpayments.

Current law requires state Medicaid programs to establish a RAC program; however, states may apply to the Centers for Medicare & Medicaid Services (CMS) for an exception. The bill prohibits the CMS from granting exceptions after December 31, 2028. The CMS must inform states that have an approved RAC exception that the exception will not be renewed after this date, and it must also inform these states of the current expiration date of their excepted status.

The bill also expands the scope of RACs to include a review of payments to Medicaid managed care organizations, prepaid inpatient health plans, and prepaid ambulatory health plans. In addition, the bill expands the period of review for RACs to include the four-year period prior to the fiscal year at issue.

Finally, the bill establishes reporting requirements relating to the effectiveness of RACs, including annual reports with state-specific data on collected overpayments. The CMS must also conduct a study and establish a related demonstration program to increase the number of states with a RAC program.