Medicare Payment Integrity Enhancement Act of 2026
- Sponsor
- Rep. Smucker, Lloyd [R-PA-11]
- Committees
- Ways and Means Committee (primary)
- Last action
- May 13, 2026
Bottom line
The bill expands Medicare's fraud and abuse prevention efforts by allowing Recovery Audit Contractors to conduct prepayment reviews, aiming to stop improper payments before they are disbursed, with funding drawn from Medicare trust funds.
What it actually does
This bill amends the Social Security Act to authorize the Secretary of Health and Human Services to contract with Recovery Audit Contractors (RACs) to conduct prepayment reviews of claims under the Medicare program. Currently, RACs primarily focus on identifying and recouping improper payments after they have been made. This legislation expands their role to prevent improper payments before they occur, establishing a new payment methodology for RACs based on the amount of improper payments prevented and incentivizing timely and accurate prevention without disproportionate focus on specific claim types.
Proponents argue
Proponents argue that expanding RACs' authority to include prepayment reviews will significantly enhance Medicare's ability to prevent fraud, waste, and abuse, thereby protecting taxpayer dollars and the solvency of the Medicare trust funds. They contend that stopping improper payments before they are made is more efficient and less burdensome than attempting to recoup them after the fact, leading to substantial savings for the program and ensuring that funds are used appropriately for legitimate patient care.
Opponents contend
Opponents might express concerns that expanding RACs' authority to prepayment reviews could lead to increased administrative burdens and delays for healthcare providers, potentially impacting patient access to care. They may argue that RACs, driven by financial incentives tied to prevented payments, could become overly aggressive in denying claims, leading to legitimate claims being held up or denied, and increasing appeal processes for providers. Critics also worry about the potential for a 'disproportionate focus on particular types of claims' despite the bill's language, if the methodology is not carefully designed.
The bill is short and relatively straightforward, making it accessible for a quick read and understanding of its core purpose.
Section 2(a)(1)(A)
Authorization of Prepayment Reviews by RACs
This provision explicitly amends Section 1893(h)(1) of the Social Security Act to add 'conducting prepayment review of claims for payment under this title' to the authorized activities of Recovery Audit Contractors (RACs). This is a fundamental shift, moving RACs from a purely post-payment recovery role to an upfront prevention role, allowing them to scrutinize claims before Medicare disburses funds.
Supporters argue
Supporters argue this is a crucial step to modernize Medicare's payment integrity efforts, allowing the program to prevent improper payments proactively rather than reactively. This will save taxpayer money and reduce the administrative burden associated with recouping funds after they've been erroneously paid.
Critics contend
Critics may contend that this expansion could lead to an overly aggressive review process, potentially delaying legitimate payments to providers and increasing administrative costs for healthcare entities. They might also question the effectiveness of prepayment review compared to existing mechanisms.
Tradeoffs
The tension lies between the desire to prevent improper payments and the potential for increased administrative burden and payment delays for healthcare providers. The bill aims to balance these by incentivizing 'timely and accurate prevention' without 'disproportionate focus'.
Section 2(a)(1)(D)
New Payment Methodology for Prepayment Review RACs
This section establishes a new payment methodology for RACs specifically for their prepayment review activities. Unlike post-payment reviews where RACs are paid a contingency fee on recouped overpayments, for prepayment reviews, their payment will be based on the 'amount of improper payment that such contractor prevented from being paid.' The methodology must also incentivize 'timely and accurate prevention' and avoid a 'disproportionate focus on particular types of claims.'
Section 2(a)(11)
Funding for Prepayment Review Activities
This provision specifies that funding for payments to RACs for their prepayment review services will be transferred from the Federal Hospital Insurance Trust Fund (which funds Medicare Part A) and the Federal Supplementary Medical Insurance Trust Fund (which funds Medicare Part B). The Secretary of HHS will determine the appropriate proportion of funds from each trust fund based on the relative amount of improper payments prevented under Parts A and B, with these sums transferred to the Centers for Medicare & Medicaid Services (CMS) Program Management Account.
Section 2(b)
Mandatory Rulemaking for Implementation
This section mandates that the Secretary of Health and Human Services issue necessary rules to implement the amendments within one year of the bill's enactment. These rules must specifically include a detailed description of the methodology for paying RACs for prepayment reviews and a methodology for calculating the savings generated by these prepayment reviews for the Medicare program. This ensures that the operational details and financial metrics are clearly defined.
Extends existing appeal rights to cover situations where a payment is prevented based on a prepayment review of a claim. This ensures that providers have a mechanism to challenge a RAC's decision to deny a claim before payment, mirroring the rights they currently have for post-payment recoupments.
Section 2(a)(3)
Why it matters:This is standard legislative practice for amending existing statutes, ensuring consistency in legal language and cross-referencing. It's not necessarily evasive but requires familiarity with the underlying statute to fully appreciate its significance.
Case for: Ensuring due process and appeal rights for providers is critical when expanding RAC authority. This provision protects providers from arbitrary denials and allows for correction of errors, maintaining fairness in the system.
Case against: No specific case against extending appeal rights, as it's a fundamental aspect of due process. However, the existence of appeals adds to administrative burden for both providers and the government.
Estimated impact: This provision has a significant impact on procedural fairness, ensuring that the new prepayment review process does not circumvent existing rights. It will likely increase the volume of appeals handled by Medicare administrative contractors.