DHS House Budget Hearing Summary and RCPA Divisional Highlights

This week, March 2-6, the Pennsylvania House Appropriations Committee held their budget hearing for the Department of Human Services (DHS), giving legislators an opportunity to ask the Department questions regarding the proposed Fiscal Year (FY) 2026/27 budget.



Many of the questions posed by legislators were in regard to federal changes from HR 1 and the impacts that these changes will have on Pennsylvanians. DHS Secretary Arkoosh explained how changes presented in HR 1 will affect the Commonwealth’s Medicaid and SNAP systems, as well as how these changes are directly reflected in the proposed budget. The changes made to Medicaid through HR 1 will result in an increased number of uninsured Pennsylvanians and a potential $20 billion cut to the program over the next decade. The Secretary noted this would be a worst-case scenario but a scenario that stakeholders need to be mindful of. She also explained that Governor Shapiro has proposed several initiatives to help reduce the future Medicaid spend, such as the Food is Medicine program and housing supports for unhoused individuals with significant medical conditions. These programs will be evaluated for their effectiveness for the possibility of future expansion.

Legislators are also concerned with how these changes will impact Pennsylvania’s hospitals, since an increase in uninsured individuals will lead to an increase in uncompensated care, putting more hospitals at risk of closure, as many are already operating with negative profit margins. Legislators asked if the $193 million that Pennsylvania secured through the Rural Health Transformation Program (RHTP) will be utilized. Secretary Arkoosh explained that the dollars will be allocated to each region using a formula allocation, then the region will be able to prioritize how those dollars are used based on what is allowed in the grant. The Secretary noted that, unfortunately, RHTP grant dollars are not allowed to be used to aid in covering hospital operating expenses.

RCPA Divisional Highlights:

Behavioral Health:

• Behavioral Health Capitation: Legislators voiced concern that increases in capitation will become unsustainable and were interested in possibilities to reduce the cost of growth while still acknowledging that this is necessary expenditure. Secretary Arkoosh assured the House that DHS has developed programs that will lead to lower Medicaid utilization. She also noted that through fraud, waste, and abuse efforts, the state has recouped more than $400 million in recoveries in the last year, and the state is continuing to ensure that payment error rates remain as low as possible.
• County Mental Health Funding: Secretary Arkoosh states that despite Governor Shapiro’s initial investments in County Mental Health Base Funding, they have fallen short of the $60 million investment that was promised. The Office of Mental Health and Substance Abuse Services (OMHSAS) is working with counties for a consolidated community reporting initiative to indicate how the money has been spent by the counties and joinders. As of December 2025, 97% of counties or joinders have submitted their data for the report.

Brain Injury:

• Residential Habilitation Rate Increases: Representative Flood focused on the findings from the HCBS Rate & Wage Study from 2025 that showed rate inadequacies that exist in HCBS. Specifically, a 44% rate increase was necessary for Residential Habilitation services, along with the lack of rate increases to this group of providers since 2010. Secretary Arkoosh was also asked whether there is a capacity issue. Secretary Arkoosh cited that they have no evidence of a wait-list issue. When asked if DHS is considering a future increase for this group of providers, Secretary Arkoosh stated they have no evidence that individuals are not getting the services they need, and that if an individual had an unmet need, CHC-MCO Service Coordinators would report this. Regarding rates, Arkoosh stated the providers are able to negotiate their rates with the CHC-MCOs.

Children’s Services:

• Representative Donahue referenced the 2024 Early Intervention Rate Methodology Study, which found that infant and toddler EI services are underfunded by about $71 million statewide, and asked if DHS has a plan to close the gap. The Secretary did not commit to additional funding but ensured that the Department is monitoring rates and access to services, believes that provider networks are adequate, and that children are receiving services. She mentioned that DHS would raise the issue again if they determine a rate increase becomes essential.

Intellectual Disabilities & Autism:

• Placement of Individuals with ID/A in Community HealthChoices vs. ODP Waivers: Appropriations Committee members raised concerns about individuals with intellectual disabilities or autism (ID/A) who are placed in the Community HealthChoices (CHC) program rather than the Office of Developmental Programs (ODP) waiver system. Secretary Arkoosh clarified that CHC is an entitlement program and some individuals with ID/A may qualify for it while they wait for an ODP waiver slot. For individuals whose primary needs are medical or nursing services, CHC may be sufficient. However, for those who require specialized developmental disability supports such as habilitation, skill development, and disability-specific staffing, CHC may not fully meet their needs because providers are not specifically trained for the ID/A population. As a result, some individuals remain on the adult emergency waiting list for ODP waivers while receiving partial services through CHC.
• Reducing the ID/A Emergency Waiting List: During the hearing, Secretary Arkoosh addressed questions regarding Pennsylvania’s emergency waiting list for individuals with intellectual disabilities and autism. DHS reported that the list has been reduced by approximately 31% since 2024 due to a combination of increased state funding for additional waiver slots and policy changes allowing counties greater flexibility to manage services within budget allocations rather than fixed slot counts. Once an individual is enrolled in an ODP waiver, they are removed from the waiting list because the program becomes responsible for meeting their assessed needs through services or unpaid supports. Oversight occurs through supports coordinators who meet regularly with participants to ensure service plans are implemented. The Department also monitors spending and service authorizations through dashboards shared with counties to ensure resources remain within appropriated budgets.
• Access to Services Challenges After Waiver Approval for Individuals with ID/A: Appropriate Committee members shared concerns from families that even after individuals with intellectual disabilities receive approval for waiver services, they may struggle to access those services because providers lack sufficient workforce capacity. Constituents described situations where individuals technically have service authorization but cannot find staff or providers to deliver supports. DHS acknowledged that these challenges can occur and explained that service coordination systems track individuals’ needs and monitor whether services are being delivered as planned. While the state may authorize services through waiver enrollment, the ability to fully implement those services can depend on provider staffing levels and workforce availability. This issue reflects broader workforce shortages in human services and affects how quickly individuals can begin receiving the full set of supports for which they are eligible.
• Note: RCPA has requested DHS provide data around the “hidden” waiting list where an individual is authorized but does not receive any/all of the services needed.

RCPA would like to thank the legislators who took the time to ask questions impacting our membership. Please contact your RCPA Policy Director with any questions.