A new legislative push in Washington is targeting billions of dollars in improper government spending by tightening rules on how states track Medicaid funds. Senate Committee on Aging Chairman Rick Scott and U.S. Representative Gus Bilirakis introduced the Medicaid RAC Improvement Act of 2026, a bicameral bill designed to force all states to participate in federal anti-fraud auditing programs.
The legislation specifically updates the Medicaid Recovery Audit Contractor (RAC) program. Right now, loopholes allow most states to opt out of participating in these reviews. The new bill closes those gaps, mandates nationwide participation by states, and expands auditors’ legal authority to review and detect improper or fraudulent payments.
The sudden push follows data showing that Medicaid paid out $37 billion in improper payments in 2025 alone. Congress originally brought the RAC program to Medicaid in 2010 after a similar 2003 Medicare pilot successfully recovered $1.03 billion in bad payments over three years.
However, because state-level participation remained largely voluntary, the program failed to gain traction across most of the country.
“When waste, fraud, and abuse siphon off resources from programs that hardworking Americans rely on, it hurts everyone,” Chairman Scott said. “We’re seeing it happen in real time, from Ohio to California, and all while our country has $40 trillion in debt, we can’t afford to be handing out a single dime in bad payments. The American people deserve accountability and efficiency in how we use their hard-earned money. This bill will add oversight to Medicaid, ensuring resources are going to the people who need it the most—not fraudsters who scam the system. This will boost confidence in these programs and protect Americans who need an extra hand.”
This new bill comes four years after Chairman Scott and U.S. Senator Tim Scott first pressed the U.S. Government Accountability Office (GAO) in April 2022 to launch a formal review into why the Medicaid auditing system was leaving so much money unaccounted for.
Supporters of the bill state that plugging these holes is the only way to keep the program viable for the low-income families and individuals who rely on it for healthcare.
“Medicaid serves as a vital lifeline for millions of Americans, and we have a responsibility to ensure every dollar dedicated to the program is used appropriately and reaches those it is intended to help,” Rep. Bilirakis said. “Unfortunately, gaps in oversight and inconsistent enforcement have left taxpayers vulnerable and weakened our ability to identify improper payments. The Medicaid RAC Improvement Act strengthens transparency, accountability, and oversight so we can better safeguard taxpayer resources while preserving the integrity of this essential program.”
Bilirakis added that the move is designed to ensure the system survives for future generations. “Protecting Medicaid’s integrity is not only about safeguarding taxpayer dollars – it is about ensuring the program remains strong and sustainable for the individuals and families who depend on it. This commonsense legislation strengthens stewardship of public funds, enhances accountability, and helps ensure Medicaid can continue serving our nation’s most vulnerable populations for generations to come.”
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