The landscape of Medicaid reimbursement for nursing homes is undergoing a significant transformation. As new federal regulations threaten to squeeze an already stressed system, Pennsylvania lawmakers are taking proactive steps to protect long-term care facilities from financial collapse. The challenges facing nursing homes extend beyond simple administrative delays—they represent a critical threat to the sustainability of eldercare services across the state.
The Federal Policy Change
Understanding the One Big Beautiful Bill Act
Federal legislation known as the One Big Beautiful Bill Act has introduced sweeping changes to Medicaid retroactive payment policies. Starting January 1, 2027, the window for retroactive Medicaid payments will shrink dramatically from 90 days to just 60 days. This 33% reduction in the payment window comes at a particularly challenging time for healthcare providers nationwide.
Why This Matters for Healthcare Providers
The shortened timeline creates a perfect storm of complications. While the retroactive payment window narrows, state Medicaid offices face unprecedented workload increases. The new law requires additional eligibility verification and reverification processes, meaning the very offices responsible for processing applications will be handling significantly more paperwork with less time to process retroactive claims.
Pennsylvania’s Legislative Response
Senator Judy Ward’s Proposed Solution
Pennsylvania State Senator Judy Ward (R) has announced groundbreaking legislation designed to address these mounting concerns. The bill establishes “reasonable timelines” for both the Department of Human Services and County Assistance Offices to process Medicaid applications. More importantly, it introduces an innovative safety net for providers caught in processing delays.
The Pendency Payment System
Under Ward’s proposal, providers experiencing excessive delays or navigating appeals could receive partial reimbursement while awaiting final application decisions. This pendency payment system would allow facilities to maintain operations and continue providing care. If a patient’s Medicaid eligibility is ultimately denied, the state would reclaim those advance payments—creating accountability while providing crucial cash flow support.
Development and Inspiration
LeadingAge Pennsylvania worked closely with Senator Ward to develop this legislation, drawing inspiration from successful models in Rhode Island and Kansas. The final text may mirror House legislation from last year that proposed a 60-day reasonable time limit for application approvals, though that bill failed to advance.
Current Processing Challenges
The Reality of Application Timelines
Austin Cawley, legislative director for LeadingAge Pennsylvania, described Ward’s approach as a “common sense” solution to a growing crisis. Member facilities report average processing times ranging from three to six months per application—far exceeding any reasonable expectation for administrative review.
The Backlog Crisis
When surveyed about pending Medicaid days awaiting payment, member facilities reported an average of approximately 1,000 days. In what Cawley termed “egregious” cases, some applications take more than a year to resolve. This creates an unsustainable financial burden for facilities that must continue providing care while waiting for reimbursement.
Documentation Challenges
The extensive documentation requirements for Medicaid applications contribute significantly to these delays. Applicants must compile detailed financial records, medical histories, and proof of eligibility—a process that can take weeks or months even before submission. Once submitted, the County Assistance Offices face their own processing backlogs.
Impact on Long-Term Care Providers
Financial Strain and Facility Closures
Senator Ward’s memo to potential cosponsors painted a stark picture of the crisis. Providers across Pennsylvania report increasing pending days for Medicaid assistance and inconsistent application processes. Some facilities face hundreds of thousands of dollars in uncompensated care while waiting for application approvals.
This financial uncertainty has become a “contributing factor” in nursing home closures, particularly affecting small, independently owned facilities lacking the financial reserves to absorb extended payment delays. Between early 2024 and June 2025, 30 Pennsylvania skilled nursing facilities closed their doors, with additional facilities filing for bankruptcy.
The Uncompensated Care Problem
As Cawley explained, the shortened retroactive window will compound existing uncompensated care costs. Even when patients were eligible for Medicaid during their entire stay, providers can only receive payment for the limited window before application submission. This means facilities absorb costs for care already provided—care that patients needed and received in good faith.
How Other States Are Responding
New Hampshire’s Investment in Processing
Pennsylvania isn’t alone in grappling with these challenges. New Hampshire included $6 million in its 2025 state budget specifically to hire contract workers for expediting long-term care Medicaid processing.
This investment came after lawmakers heard compelling testimony from providers. Facilities reported average losses of $250,000 due to slow processing times, with one outlier losing $935,000 for care already provided—even with the full 90-day retroactive payment window.
Georgia’s Business Model Concerns
Medicaid-heavy providers in Georgia have expressed even more dire concerns. Some facilities indicate that limited retroactive pay could force fundamental business model changes, potentially requiring them to stop accepting patients before final Medicaid approval—a change that would create access barriers for vulnerable populations.
The Path Forward
State-Level Solutions
The initiatives in Pennsylvania, New Hampshire, and other states represent crucial state-level responses to federal policy changes. These solutions acknowledge that administrative systems need time and resources to adapt while protecting both providers and patients during transitions.
National Implications
The success or failure of Pennsylvania’s pendency payment approach could influence policy discussions nationwide. As states watch this experiment, successful implementation might inspire similar legislation elsewhere, creating a safety net for providers while maintaining program integrity.
Balancing Efficiency and Access
The ultimate challenge remains balancing administrative efficiency with healthcare access. While streamlined processing serves everyone’s interests, the reality of complex eligibility determinations means some delays are inevitable. Innovative payment solutions like Pennsylvania’s proposal offer a practical middle ground—maintaining care continuity while applications wind through necessary verification processes.
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