Pennsylvania’s new state budget approved a financial boost for nursing homes by setting a guaranteed minimum Medicaid reimbursement level, a change providers say will improve financial stability as facilities contend with rising demand, workforce shortages and mounting costs.
The policy, signed into law by Gov. Josh Shapiro as part of Pennsylvania’s 2026-27 budget, establishes a guaranteed minimum reimbursement level for nursing homes, reducing fluctuations tied to quarterly budget adjustments.
Beginning in 2027, the state will establish an 86% floor on the Budget Adjustment Factor (BAF), ending years of unpredictable quarterly reimbursement fluctuations that often left nursing homes operating below the cost of care.
While lawmakers chose not to eliminate the BAF, a long-time goal for providers, they opted to set a floor above the current 79%, according to a story in the Pennsylvania Capital Star.
The change will provide an additional $162 million in state funding over two years, matched by $215 million in federal funds, giving providers more certainty to budget for staffing, resident care and operations, the story states.
Leading nursing home providers in the state, such as Saber Healthcare Group, welcomed the funding change, with executives saying that the change will provide greater funding stability for skilled nursing facilities across the state.
“This is a historic victory for Pennsylvania’s long-term care residents and the hardworking staff who care for them every day,” Saber founder and CEO Bill Weisberg said in a press release shared with Skilled Nursing News. “A stable reimbursement floor means we can plan ahead, invest more confidently in our workforce, and continue delivering the quality of care our residents and families expect and deserve.”
Saber, which operates 43 skilled nursing facilities in Pennsylvania, had advocated the policy alongside SEIU Healthcare Pennsylvania during the state budget process under an existing alliance agreement, the press release noted.
In conjunction with the new funding policy, Saber announced it will invest in wages and benefits for its Pennsylvania workforce, including both union-represented and non-union employees. The company said the increases are voluntary and not required under its collective bargaining agreements. Specific details on the timing and scope of the investments are being shared directly with employees.
More than 70% of Pennsylvania nursing home residents rely on Medicaid, yet providers continue to face staffing shortages, delayed Medicaid approvals and shrinking capacity as facilities close or reduce beds.
Some changes that would have benefitted nursing homes weren’t approved. Lawmakers did not advance proposals to revise staffing requirements, though several workforce bills aimed at creating new training and certification pathways for nursing assistants remain under consideration.
The budget also included a modest increase for Pennsylvania’s Living Independence for the Elderly (LIFE) program, which helps eligible older adults remain at home rather than enter nursing facilities.
Pennsylvania is one of several states reexamining Medicaid funding for long-term care as an aging population increases demand for nursing home care.
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