[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 4898 Introduced in Senate (IS)]

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119th CONGRESS
  2d Session
                                S. 4898

 To implement recommendations of the Comptroller General of the United 
States for improving the Medicaid Recovery Audit Contractor program and 
identifying additional opportunities to recover Medicaid overpayments, 
                        and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 24, 2026

  Mr. Scott of Florida introduced the following bill; which was read 
             twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To implement recommendations of the Comptroller General of the United 
States for improving the Medicaid Recovery Audit Contractor program and 
identifying additional opportunities to recover Medicaid overpayments, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicaid RAC Improvement Act of 
2026''.

SEC. 2. IMPROVING CMS OVERSIGHT AND COMMUNICATION.

    (a) Improved Oversight.--Section 1903 of the Social Security Act 
(42 U.S.C. 1396b) is amended by adding at the end the following new 
subsection:
    ``(cc) Improving State Payment Integrity.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Medicaid rac program.--The term `Medicaid RAC 
                program' means a program described in section 
                1902(a)(42)(B)(i).
                    ``(B) RAC exception spa.--The term `RAC exception 
                SPA' means a State plan amendment submitted to the 
                Secretary by a State for approval of a full exception 
                from, or an exception to 1 or more of, the requirements 
                described in section 1902(a)(42)(B).
            ``(2) Improved oversight of medicaid rac program 
        exceptions.--Not later than 180 days after the date of 
        enactment of this subsection, the Secretary shall establish and 
        implement policies and procedures for the following:
                    ``(A) Communicate expiration of medicaid rac 
                program exception.--Clearly communicating to a State 
                with an approved RAC exception SPA--
                            ``(i) the expiration date of the approval; 
                        and
                            ``(ii) a statement that the RAC exception 
                        SPA approval expiration date shall not be 
                        extended after 2029.
                    ``(B) Monitoring of rac exception spa 
                expirations.--Monitoring of RAC exception SPA 
                expiration dates and notifying States with respect to 
                any upcoming expiration date.
                    ``(C) State reports.--Requiring annual, detailed 
                reporting from a State with an approved RAC exception 
                SPA that includes an overview of the State's Medicaid 
                RAC program, including methodologies and justifications 
                for audit limits or exclusions applied under the 
                program.
            ``(3) Improved reporting to congress on the effectiveness 
        of the medicaid rac program.--
                    ``(A) In general.--Not later than December 31, 
                2027, and annually thereafter, the Secretary, in 
                collaboration with State Medicaid agencies, shall 
                submit to Congress a report describing the 
                effectiveness of the Medicaid RAC program for the most 
                recently ended fiscal year.
                    ``(B) Contents.--Each report submitted by the 
                Secretary to Congress under subparagraph (A) shall 
                include the following information with respect to the 
                reporting period:
                            ``(i) State-specific information.--For each 
                        State:
                                    ``(I) A summary of the State's 
                                Medicaid RAC program, including 
                                methodologies and justifications for 
                                audit limits or exclusions applied 
                                under the program, and a description of 
                                any approved exceptions.
                                    ``(II) The aggregate amount of 
                                Medicaid overpayments recovered and the 
                                amount of each overpayment recovered.
                                    ``(III) The aggregate amount of 
                                Medicaid underpayments and the amount 
                                (actual or estimated) of each 
                                underpayment.
                                    ``(IV) If the State that has 
                                implemented pre-payment review of 
                                Medicaid payments to beneficiaries, the 
                                aggregate amount of savings (actual or 
                                estimated) attributable to such pre-
                                payment review.
                                    ``(V) The percentage of appeals of 
                                demands for overpayment that ended in 
                                settlement and, with respect to any 
                                such settlement amount, the percentage 
                                of such amount in comparison to the 
                                original overpayment demanded.
                                    ``(VI) The 5 initiatives most often 
                                implemented by the State to reduce 
                                overpayments and underpayments.
                                    ``(VII) The number of audit 
                                categories--
                                            ``(aa) conducted by a 
                                        State; or
                                            ``(bb) on hold or denied by 
                                        a State.
                            ``(ii) Secretary recommendations.--
                        Recommendations for expanding or improving the 
                        Medicaid RAC program, as the Secretary 
                        determines appropriate.''.
    (b) Conforming Amendment.--Section 1902(a)(42)(B)(i) of the Social 
Security Act (42 U.S.C. 1396a(a)(42)(B)(i)) is amended by inserting 
``(but only through December 31, 2028)'' after ``exceptions''.

SEC. 3. REQUIRING MEDICAID MANAGED CARE PLANS TO BE INCLUDED IN 
              MEDICAID RAC PROGRAMS.

    Section 1902(a)(42) of the Social Security Act (42 U.S.C. 
1396a(a)(42)) is amended--
            (1) in subparagraph (A), by striking ``and'' at the end;
            (2) in subparagraph (B)(ii)--
                    (A) in subclause (III), by striking ``and'' at the 
                end; and
                    (B) by adding at the end the following new 
                subclause:
                                    ``(V) such program is carried out 
                                in a robust manner likely to identify 
                                and recoup or prevent a substantial 
                                portion of overpayments and 
                                specifically includes a review of 
                                claims paid by medicaid managed care 
                                organizations (as defined in section 
                                1903(m)(1)(A)), prepaid inpatient 
                                health plans (as defined in section 
                                1903(m)(9)(D)(iii)(I)), and prepaid 
                                ambulatory health plans (as defined in 
                                section 1903(m)(9)(D)(iii)(II));''; and
            (3) by adding at the end the following new subparagraph:
                    ``(C) not later than January 1, 2028, the State 
                shall provide assurances satisfactory to the Secretary 
                that the State has an adequate process for ensuring 
                that any contract with a medicaid managed care 
                organization (as defined in section 1903(m)(1)(A)), 
                prepaid inpatient health plan (as defined in section 
                1903(m)(9)(D)(iii)(I)), or prepaid ambulatory health 
                plan (as defined in section 1903(m)(9)(D)(iii)(II)), 
                and a State shall include provisions under which such 
                an organization or health plan--
                            ``(i) shall either--
                                    ``(I) elect to engage in a period 
                                of payment integrity review by 
                                designating a period (not to exceed the 
                                lesser of 18 months after payment for a 
                                claim or the term of the contract with 
                                the managed care organization) during 
                                which the organization or health plan 
                                shall be permitted to engage in efforts 
                                to identify underpayments and 
                                overpayments and recoup overpayments 
                                under the State plan and under any 
                                waiver of the State plan with respect 
                                to all services for which payment is 
                                made to the organization or health plan 
                                under such plan or waiver; or
                                    ``(II) agree to permit a Medicaid 
                                recovery audit contractor (as described 
                                in subparagraph (B)) engaged by the 
                                State to engage in such payment 
                                integrity review; and
                            ``(ii) shall agree to--
                                    ``(I) cooperate with any Medicaid 
                                recovery audit contractor (as so 
                                described) engaged by the State to 
                                identify any such underpayments and 
                                overpayments and recoup any 
                                overpayments under the State plan and 
                                under any waiver of the State plan 
                                (after the expiration of the period 
                                designated under clause (i)(I), if the 
                                organization or health plan has elected 
                                such a period); and
                                    ``(II) coordinate such recovery 
                                audit efforts in the same manner 
                                described in subparagraph 
                                (B)(ii)(IV)(cc); and''.

SEC. 4. ADDITIONAL MEASURES FOR IMPROVING MEDICAID PAYMENT INTEGRITY.

    (a) Annual Reports Regarding State Payment Integrity Reviews.--
Section 1903(cc) of the Social Security Act (42 U.S.C. 1396b), as added 
by section 2(a) of this Act, is amended by adding at the end the 
following new paragraph:
            ``(4) Annual reports regarding state payment integrity 
        reviews.--
                    ``(A) State reports.--Not later than 1 year after 
                the date of enactment of this paragraph, and annually 
                thereafter, each State shall submit, separate from the 
                information reported under paragraph (2)(C), a report 
                to the Secretary, in such standard form and manner as 
                the Secretary shall specify, that identifies the 
                reviewing entity (including any recovery audit 
                contractor or other program integrity entity) for each 
                payment stream (including a non-State funded payment 
                and capitation or other payments made to a medicaid 
                managed care organization (as defined in section 
                1903(m)(1)(A)), prepaid inpatient health plan (as 
                defined in section 1903(m)(9)(D)(iii)(I)), or prepaid 
                ambulatory health plan (as defined in section 
                1903(m)(9)(D)(iii)(II))) under the State plan or under 
                a waiver of such State plan with respect to all items 
                and services for which payment is made for the 
                applicable reporting period.
                    ``(B) Reports to congress.--Not later than 180 days 
                after the date of each annual State reporting deadline 
                under subparagraph (A), the Secretary shall prepare and 
                submit to Congress a report detailing the information 
                contained in such State reports, together with 
                recommendations for such legislation and administrative 
                action as the Secretary determines appropriate.''.
    (b) Identifying and Testing Barriers to State Participation in 
Medicaid RAC Programs.--Section 1903(cc) of the Social Security Act, as 
amended by subsection (a), is amended by adding at the end the 
following new paragraphs:
            ``(5) Study on barriers to state participation in medicaid 
        rac programs.--
                    ``(A) In general.--The Secretary shall conduct a 
                study on barriers to State establishment and 
                implementation of Medicaid RAC programs as required 
                under section 1902(a)(42)(B)(i). Such study shall 
                examine--
                            ``(i) the contingency fee payment structure 
                        for recovery audit contractors, including--
                                    ``(I) whether such payment 
                                structure ensures a healthy and 
                                competitive marketplace for States to 
                                establish and implement Medicaid RAC 
                                programs; and
                                    ``(II) the effectiveness of such 
                                payment structure based on the 
                                population of a State that participates 
                                in the State Medicaid program;
                            ``(ii) alternative arrangements for 
                        engaging recovery audit contractors, including 
                        the viability of multi-State contracts; and
                            ``(iii) the start up costs associated with 
                        establishing a new Medicaid RAC program in a 
                        State, including--
                                    ``(I) the amount of time before a 
                                recovery audit contractor starts 
                                recouping overpayments to the extent 
                                that the recovery audit contractor 
                                recovers such start up costs; and
                                    ``(II) recommendations for a 
                                payment structure that could include 
                                initial funding to a recovery audit 
                                contractor.
                    ``(B) Report.--Not later than 1 year after the date 
                of enactment of this paragraph, the Secretary shall 
                submit to Congress a report containing the results of 
                the study conducted under subparagraph (A), together 
                with recommendations for such legislation and 
                administrative action as the Secretary determines 
                appropriate.
            ``(6) Demonstration project to improve state participation 
        in medicaid rac programs.--
                    ``(A) In general.--Not later than 2 years after the 
                date of enactment of this paragraph, based on the study 
                conducted under paragraph (5), the Secretary shall 
                conduct a 5-year demonstration project designed to 
                increase the number of States that establish and 
                implement a Medicaid RAC program in accordance with 
                section 1902(a)(42)(B)(i).
                    ``(B) Reports to congress.--The Secretary shall 
                submit an interim report to Congress on the 
                demonstration project conducted under this paragraph 
                not later than 90 days after the initiation of the 
                demonstration project, and a final report not later 
                than 180 days after the demonstration project ends. The 
                final report shall include an evaluation of the project 
                and recommendations for such legislation and 
                administrative action as the Secretary determines 
                appropriate.''.
    (c) Audit and Recovery Periods.--Section 1902(a)(42) of the Social 
Security Act (42 U.S.C. 1396a(a)(42)), as amended by section 3, is 
amended by adding at the end the following new subparagraph:
                    ``(D) notwithstanding clause (i) of subparagraph 
                (B), beginning 120 days after the date of enactment of 
                this subparagraph, each contract entered into by the 
                State with a recovery audit contractor under the 
                program described in subparagraph (B), including any 
                contract with a recovery audit contractor applying to a 
                medicaid managed care organization (as defined in 
                section 1903(m)(1)(A)), prepaid inpatient health plan 
                (as defined in section 1903(m)(9)(D)(iii)(I)), or 
                prepaid ambulatory health plan (as defined in section 
                1903(m)(9)(D)(iii)(II)), shall provide that audit and 
                recovery activities shall be conducted during a fiscal 
                year with respect to payments made under the State plan 
                and under any waiver of the State plan, or, if 
                applicable, payments made by such an organization or 
                health plan, during such fiscal year and 
                retrospectively for a period of 4 fiscal years prior to 
                such fiscal year;''.
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