Quick answer
Pennsylvania’s 70% test uses defined allowable MA-11 costs, not a percentage of revenue. Reconcile Schedule C and Schedule G first, then calculate the ratio and any maximum penalty using the statutory rate and resident-day inputs.
Pennsylvania operators evaluating financial reporting systems need a reproducible MA-11 bridge. A general revenue dashboard cannot answer whether the facility meets the resident-care spending test or explain a proposed penalty.
The current Fiscal Code section 1603-T incorporates July 12, 2026 amendments. It expressly includes nursing facilities affiliated with continuing care retirement communities within its county and nonpublic Medical Assistance facility scope. Act 21 of 2026, section 35(1) applies the amended subsection (a) to MA-11 reporting periods ending on or after June 30, 2026. Confirm that period before selecting the formula; an older worksheet built from unallocated expenses or a list of capital costs can produce a different result.
Map the cost report before calculating
The numerator combines allowable nursing facility resident-care and other resident-related costs in Schedule C, column G. The denominator combines allowable nursing facility net operating costs and facility rent from that column, plus Schedule G excess administrative costs multiplied by the nursing facility allocation percentage in the administrative cost center’s Schedule C, column I.
This is a reconciliation of defined report amounts. It does not authorize changing cost classifications to reach 70%. Retain the submitted report version, review adjustments and supporting allocation schedules. A corrected source amount must flow through every affected calculation.
Compare two fictional facilities
Both facilities have $10 million of revenue. Revenue is shown only to expose why a revenue-based shortcut fails; it is not an input to this test. Assume the amounts below are correctly classified under the applicable instructions.
| Input | Facility A | Facility B |
|---|---|---|
| Allowable resident-care costs | $5,000,000 | $5,000,000 |
| Allowable other resident-related costs | $1,300,000 | $1,300,000 |
| Allowable net operating costs | $8,000,000 | $8,500,000 |
| Facility rent | $500,000 | $900,000 |
| Excess administration on Schedule G | $200,000 | $400,000 |
| Nursing facility allocation | 50% | 50% |
Each numerator is $6.3 million. A’s denominator is $8 million + $500,000 + ($200,000 × 50%) = $8.6 million. Its ratio is about 73.26%. B’s denominator is $8.5 million + $900,000 + ($400,000 × 50%) = $9.6 million. Its ratio is 65.625%.
Using revenue would incorrectly show both at 63%. Omitting B’s $200,000 allocated excess administration would also change the result. The reviewer should trace the allocation percentage to the report, not select the percentage that produces a favorable result.
The original review artifact has one row per input, with report schedule, column, version, amount, preparer and unresolved adjustment. A separate tab preserves the source totals before rounding so that a later change remains explainable.
Translate the shortfall into a bounded penalty screen
Section 1603-T(b) caps the percentage used in its maximum penalty calculation at five percentage points. The rate input is the fee-for-service per diem on the last day of the cost-report period; the day input is the MA resident days on the MA-11.
For fictional Facility B, the shortfall is 70% − 65.625% = 4.375 percentage points. With an assumed qualifying $250 per diem and 20,000 MA days, the illustrative maximum is 0.04375 × $250 × 20,000 = $218,750. It is not 4.375% of the facility’s $10 million revenue, nor the dollar amount needed to increase spending to 70%.
Record this as an exposure screen pending the actual state determination. The current text extends the specified enforcement provision to December 31, 2031 and retains conditions concerning full 12-month reports and increased-rate payments. Do not reuse an older December 2026 expiration assumption.
Resolve disagreements at the input level
If B disputes its rent allocation, show the originally reported amount, proposed correction, supporting agreement and effect on the denominator. If it disputes MA days, reconcile the census to the submitted MA-11 before changing the penalty estimate. A narrative saying that care spending is high does not resolve either difference.
The completed package should allow the controller, cost-report preparer and reviewer to reproduce the two ratios and the maximum penalty screen independently. During a platform demonstration, change B’s supported allocation percentage and require the numerator, denominator and exposure to update separately, with the prior version retained. The useful purchasing decision is whether the system preserves a state-specific financial calculation across report revisions.
Questions & answers
Is the Pennsylvania test based on revenue?
No. The amended formula uses specified allowable costs, facility rent and allocated excess administrative costs.
Are continuing care retirement communities automatically excluded?
No. The current section explicitly includes an affiliated nursing facility within the stated county and nonpublic Medicaid facility scope.
Does a shortfall equal an immediate payable penalty?
No. The statutory calculation identifies a maximum; the actual state determination, period and enforcement conditions must be reviewed.
Primary sources
- Pennsylvania Fiscal Code section 1603-T, as amended July 12, 2026
- Pennsylvania Act 21 of 2026, applicability and retroactivity
Use the cited source and its applicable version when making a facility-specific decision. These guides explain operational evaluation methods; they are not individualized clinical, coding, or legal advice.