Congress expands Medicaid audits, reaching back 4 years for overpayments
S. 4898 — Medicaid RAC Improvement Act of 2026 · Filed by Rick Scott (R-FL) · Introduced Jun 24, 2026 · Referred to committee
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What it does
This bill strengthens federal oversight of Medicaid Recovery Audit Contractor (RAC) programs, which are state-run initiatives that identify and recover overpayments to healthcare providers. It requires states to report annually on their RAC activities, mandates that managed care organizations participate in audits, extends the audit lookback period from current limits to 4 years, and directs the federal government to study barriers to state participation and test new payment models for RACs. The bill aims to improve payment integrity across Medicaid by making audits more comprehensive and transparent.
Why we flagged it
The bill's core function is to expand and standardize Medicaid RAC programs, increase federal oversight, and extend audit authority to managed care organizations. It is fundamentally a regulatory and administrative measure designed to improve payment integrity and reduce fraud.
What the text implies
- Extending the audit lookback period to 4 years retroactively may expose providers to large, unexpected clawback demands for payments made years earlier, creating financial instability for smaller healthcare systems and potentially reducing Medicaid participation.
- Mandatory inclusion of managed care organizations in RAC audits shifts audit costs and administrative burden to MCOs, which may pass costs to states or reduce MCO profitability, potentially affecting insurance market competition.
The full analysis lists 5 implications of this text.
Who stands to gain
Recovery audit contractors (RACs); Healthcare consulting firms; Managed care organizations (through audit fee structures)