Yes, if a merit scholarship is needed for affordability, then reach/match/safety should be based on the scholarship, not just admission. Admission without enough scholarship in this case is the same as rejection.
That would be an example of admission rate alone being misleading on how selective a school is. A school with a low admission rate from a weak applicant pool, with a resulting weak admit cohort, may appear more selective than it actually is if one just looks at admission rate.