S. 4898 — Medicaid RAC Improvement Act of 2026

This section requires the Secretary of Health and Human Services to establish policies and procedures within 180 days for communicating Medicaid Recovery Audit Contractor (RAC) program exception expiration dates (with no extensions after 2029), monitoring those dates, and requiring annual state reports on RAC program methodologies and audit limits. It also mandates annual reports to Congress beginning December 31, 2027, that include state-specific overpayment recoveries, underpayments, pre-payment review savings, and recommendations for the program. It limits exceptions to RAC program requirements through December 31, 2028.

This section requires states to include reviews of claims paid by Medicaid managed care organizations, prepaid inpatient health plans, and prepaid ambulatory health plans in their Medicaid Recovery Audit Contractor programs. It also requires states, not later than January 1, 2028, to ensure that contracts with such organizations and plans provide for either an 18-month payment integrity review period by the plan or review by the state’s recovery audit contractor, followed by cooperation with recovery efforts.

This section requires states to submit annual reports identifying the reviewing entity for each Medicaid payment stream and directs the Secretary to report the results to Congress with recommendations. It also requires the Secretary to study barriers to state participation in Medicaid recovery audit contractor programs, submit a report within one year, and conduct a five-year demonstration project to increase participation, with interim and final reports to Congress. Beginning 120 days after enactment, it requires recovery audit contractor contracts to cover the current fiscal year and the prior four fiscal years.