Medicaid RAC Improvement Act of 2026

Increased Oversight of State Exceptions: The Secretary will implement policies to communicate expiration dates of State program exceptions and monitor upcoming expirations (Section 2(a)(2)).

Improved Transparency Through Reporting: The Secretary must submit annual reports to Congress that include State-specific information such as overpayments recovered, underpayments identified, and audit categories conducted (Section 2(a)(3)).

Enhanced Accountability for Managed Care: Managed care organizations, prepaid inpatient health plans, and prepaid ambulatory health plans must now be included in the review of claims to identify overpayments (Section 3).

Identification of Program Barriers: The Secretary is directed to conduct a study to identify barriers to State participation, such as startup costs and the effectiveness of fee structures (Section 4(b)).

Increased State Participation: A 5-year demonstration project will be conducted to increase the number of States that establish and implement a Medicaid RAC program (Section 4(b)(6)).

Strict Expiration of Exceptions: State plan amendments that grant exceptions to certain requirements are set to expire, and the bill specifies that these expiration dates shall not be extended after 2029 (Section 2(a)(2)(A)).

Requirements for Managed Care Organizations: Managed care organizations and health plans must adhere to specific review periods or permit State-engaged recovery audit contractors to conduct reviews (Section 3).

Retrospective Audit Limits: Contracts with recovery audit contractors must provide that audit and recovery activities cover a period of 4 fiscal years prior to the current fiscal year (Section 4(c)).