"Fanboy" question

[rulesmaven]

Baseball's not my sport, so I'm strictly a fanboy on this one. Interesting play in high school game.

Routine ground ball, 1B drops ball and while the ball is in the dirt grasps it with non-glove hand just before batter/runner touches the bag. The ball is still touching the dirt when the BR touches the bag, but it's not moving withing the fielder's bare hand.

No immediate signal. Two umps talked about the play for some time before calling the runner out. It did not appear there was a dispute about what either of them saw, but instead what the rule was, which was surprising to me because I would assume this is a very common play/case. I thought I over heard some discussion whether the ball was touching the bag -- would it matter?

Just kind of curious.