Pa. hearing spotlights House Bill 1310 to set floor for nursing‑home Medicaid rates

HARRISBURG — Lawmakers, state officials and long‑term‑care providers spent a House Aging and Older Adults Services Committee public hearing debating House Bill 1310, which would set a 0.90 minimum for Pennsylvania's Budget Adjustment Factor, the adjustment the state applies to nursing‑facility Medicaid per‑diem rates when the legislature’s appropriation falls short of the department’s calculated rates.

Supporters said a statutory floor would bring predictability to a system they call unsustainable; opponents, including senior officials from the Department of Human Services, said a floor would remove the General Assembly’s budget flexibility and obligate the state to hundreds of millions in additional annual spending.

The bill and the dispute over the Budget Adjustment Factor, or BAF, matter to thousands of residents, government budgets and providers across the commonwealth. Medicaid (known in Pennsylvania as Medical Assistance) is the primary payer for many nursing‑facility residents; providers and unions told the committee that current funding plus workforce shortages have forced operators to reduce census, sell properties and take beds offline.

Juliet Marsala, Deputy Secretary for the Office of Long‑Term Living at the Pennsylvania Department of Human Services, and Dan Schar, the department’s Bureau of Finance director, told the committee that the BAF was created to align Medicaid nursing‑facility payments with the amount the General Assembly actually appropriates. Marsala and Schar said Pennsylvania uses a case‑mix methodology to calculate base per‑diem rates and that the BAF, in effect since 2005 and codified by Act 16 of 2007, prevents the department from paying more than the budget allows. Schar told the committee the BAF currently sits around 83.7 percent and said, as introduced, HB 1310’s 0.90 floor would require roughly $352,000,000 in additional state funds for the fiscal year cited by the department to hold the BAF at 90 percent.

“We do not see evidence that care has been adversely impacted within the Medicaid program,” Marsala said, citing department monitoring of access and quality measures and the share of recipients served in the community. She also emphasized that the BAF moderates aggregate per‑diem increases while allowing the department and managed care organizations to preserve program sustainability.

Providers, operators and labor representatives gave the committee the opposite assessment. Zach Schamberg, president and CEO of the Pennsylvania Health Care Association, said the BAF is “the most destructive budgeting tool the state of Pennsylvania has in its arsenal,” arguing it creates a recurring shortfall between calculated reimbursement and what facilities are actually paid. Schamberg and other witnesses said Pennsylvania’s nursing‑home rates trail neighboring states and that more than 30 nursing homes have closed since 2019.

Chuck Quinnen, senior vice president and chief government affairs officer for LeadingAge PA, presented audited examples. Quinnen said one five‑star Lancaster County provider’s calculated cost per resident per day was $584, the state‑calculated rate $316, and the actual reimbursement after BAF reductions roughly $265, creating what his testimony described as both daily losses per resident and annual shortfalls for the facility.

Jason Schott, chief operating officer at Phoebe Ministries, said his Phoebe Allentown campus is licensed for 395 nursing beds but currently uses about 250 because of staffing shortages and reduced census. Schott testified that Phoebe’s Medicaid reimbursement dropped from covering 77.6 percent of cost in 2018 (a $4.6 million shortfall) to about 59.5 percent in 2024 (a $12.2 million shortfall), and that every 0.01 change in the BAF translated to thousands of dollars in annual losses at his facility.

Union witnesses and frontline workers told personal stories about the care impact. Matt Yarnell, president of SEIU Healthcare Pennsylvania, said stable funding would make it easier for operators to raise wages and retain staff; Tina Siegel, an LPN at Clarion Healthcare and Rehab Center for four decades, described increased resident acuity, less time at the bedside and staff spending personal money to supply small comforts for residents.

Committee members pressed both sides on specifics. Members asked how incentive and supplemental payments work (the department described a nursing‑facility quality incentive program paid as a year‑end lump sum and cited roughly $12–15 million that year), how case mix is updated (quarterly), and whether a legislative floor would remove cost‑containment levers from the General Assembly. Dan Schar and Marsala warned a statutory floor would legally obligate larger appropriations and reduce the legislature’s ability to set competing budget priorities; providers countered that the current structure leaves facilities unable to plan or sustain operations and that statutory accountability measures already direct much of any increase to bedside care (witnesses cited a 2023 requirement that 70 percent of certain Medicaid dollars be spent on direct resident care).

No formal action was taken at the hearing. Committee members discussed an amendment floated by supporters that would pause rebasing of nursing‑facility rates for two years; witnesses said that amendment would lower the immediate state share of the floor from the $352 million figure cited by the department to roughly $139 million (supporters said the federal match would raise total dollars available beyond the state share).

The committee hearing combined technical budget testimony — how rates are calculated, the role of managed‑care Community HealthChoices capitation, the federal Medicaid entitlement structure, and the pending transition to the Patient Driven Payment Model — with on‑the‑ground accounts from providers and caregivers. Lawmakers repeatedly emphasized the budget season timeline and said they need clearer fiscal estimates and assurances that additional funding will reach bedside care. Several members urged the department and provider groups to work together on numbers and safeguards.

House Bill 1310 remains under consideration; the committee did not vote and asked for follow‑up information on fiscal impacts, distribution of incentive payments and the proposed amendment’s mechanics.