Section 6411(a) of the Affordable Care Act enacted in 2012 requires states and territories to establish Medicaid RAC programs. Currently, only providers who bill services through the state’s Fee-For-Service Medicaid program and are paid under Title XIX of the Social Security Act are subject to the requirement for review by the RAC. However, by statute, a state may request to be excepted from some or all Medicaid RAC contracting requirements by submitting a written justification to the Centers for Medicare and Medicaid Services (CMS) for review and approval through the State Plan Amendment (SPA) process. 

On June 24, Rep. Gus Bilirakis (R-FL) introduced the Medicaid RAC Improvement Act (H.R. 9422) to tighten federal oversight of state RAC programs, requiring more detailed reporting on audits, overpayments, and recoveries. The bill also expands RAC requirements to Medicaid managed care payments. The lynchpin provision is to discontinue the Medicaid RAC exception policy in 2029. This bill was included package of 14 program integrity bills released by House Committee on Energy and Commerce Chairman Brett Guthrie (R-KY) on September 29.

However, 36 states, the District of Columbia, and all the territories have exceptions to the RAC requirement, arguing high levels of managed care participation makes the RAC limitations unworkable as a Medicaid program integrity strategy. Instead, they have developed alterative program integrity processes which should be reviewed and expanded where they have merit.

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CMS Frequently Asked Questions on Medicaid Recovery Audit Contractor program

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