Connecticut Advances Bill Requiring Nursing Homes to Spend 80% of Revenue on Direct Resident Care

A bill working its way through the Connecticut legislature would force nursing homes to direct at least 80 cents of every dollar they take in toward hands-on resident care — or face cuts to their Medicaid reimbursement.

The state’s Human Services Committee cleared Senate Bill 328 on a 16–7 vote last week, sending the measure to the full legislature. Under the proposal, facilities that fall short of the 80% threshold would be penalized starting July 1, 2028, when the state’s social services commissioner could reduce their Medicaid rates. Exceptions are carved out for capital improvement projects and fair-rent increases.

“Direct care” under the bill means the kind of work that defines a nursing home’s core purpose: nursing staff dressing, feeding, and bathing residents. Not administrative overhead, not management fees paid to related LLCs, not inflated rent charged by a property company with the same owner.

That last point is exactly why the bill exists.

Connecticut lawmakers have spent several legislative sessions trying to figure out where Medicaid nursing home dollars actually go. Some facilities spend only about half their revenue on direct resident care — well below the proposed 80% floor. Critics of the industry argue that layered ownership structures, where operators lease their buildings from related entities or pay fees to management companies they also own, allow money meant for residents to cycle back to owners without showing up in care spending.

The bill follows years of failed attempts at similar legislation. A 2024 version passed the state House but stalled before becoming law. The 2025 session saw two competing proposals advance in committee before being merged into a larger health care reform package. This time, a standalone bill cleared committee with bipartisan opposition but solid Democratic support.

Connecticut isn’t the only state pushing spending floors. Several states, including California and Minnesota, have enacted or debated minimum direct-care spending requirements for nursing homes in recent years. The idea has also surfaced at the federal level, though it has never made it into CMS regulations. Where these measures have passed, operators have sometimes argued they create compliance burdens without improving care — and that the definition of “direct care” can be contested, particularly when facilities employ therapists, social workers, and other specialists whose work directly affects resident outcomes but may not count under narrow bill language.

Industry advocates in Connecticut haven’t yet weighed in publicly on SB 328, though nursing home associations have generally opposed similar mandates in other states, arguing that reimbursement rates need to come up before spending floors can be enforced without destabilizing providers.

The Connecticut bill still has a long road ahead. The full legislature must vote, and the governor’s position on the measure hasn’t been stated. With the state budget due by April 1, nursing home funding questions are already consuming much of the oxygen at the Capitol.

But the 16–7 committee vote signals that the push to tie Medicaid dollars to demonstrable bedside care isn’t going away — and that Connecticut’s nursing home industry may be heading into another contentious legislative stretch.