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SB328 / File No. 461 1
General Assembly File No. 461
February Session, 2026 Senate Bill No. 328
Senate, April 7, 2026
The Committee on Human Services reported through SEN.
LESSER of the 9th Dist., Chairperson of the Committee on the
part of the Senate, that the bill ought to pass.
AN ACT REQUIRING NURSING HOMES TO SPEND EIGHTY PER
CENT OF REVENUE ON DIRECT PATIENT CARE.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. Subsection (a) of section 17b -340d of the 2026 supplement 1
to the general statutes is repealed and the following is substituted in lieu 2
thereof (Effective July 1, 2026): 3
(a) The Commissioner of Social Services shall implement an acuity -4
based methodology for Medicaid reimbursement of nursing home 5
services effective July 1, 2022. Notwithstanding section 17b -340, for the 6
fiscal year ending June 30, 2023, and annually thereafter, the 7
Commissioner of Social Services shall establish Medicaid rates paid to 8
nursing home facilities based on cost years ending on September 9
thirtieth in accordance with the following: 10
(1) Case-mix adjustments to the direct care component, which will be 11
based on Minimum Data Set resident assessment data as well as cost 12
data reported for the cost year ending September 30, 2019, shall be made 13
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effective beginning July 1, 2022, and updated every quarter thereafter. 14
After modeling such case-mix adjustments, the Commissioner of Social 15
Services shall evaluate impact on a facility by facility basis and, not later 16
than October 1, 2021, (A) make recommendations to the Secretary of the 17
Office of Policy and Management, and (B) submit a report on the 18
recommendations, in accordance with the provisions of section 11-4a, to 19
the joint standing committees of the General Assembly having 20
cognizance of matters relating to appropriations and the budgets of state 21
agencies and human services on any adjustments needed to facilitate the 22
transition to the new methodology on July 1, 2022. This evaluation may 23
include a review of inflationary allowances, case mix and budget 24
adjustment factors and stop loss and stop gain corridors and the ability 25
to make such adjustments within available appropriations. 26
(2) Beginning July 1, 2022, facilities will be required to comply with 27
collection and reporting of quality metrics as specified by the 28
Department of Social Services, after consultation with the nursing home 29
industry, consumers, employees and the Department of Public Health. 30
Rate adjustments based on performance on quality metrics will be 31
phased in, beginning July 1, 2022, with a period of reporting only. 32
Effective July 1, 2023, the Department of Social Services shall issue 33
individualized reports annually to each nursing home facility showing 34
the impact to the Medicaid rate for such home based on the quality 35
metrics program. A nursing home facility receiving an individualized 36
quality metrics report may use such report to evaluate the impact of the 37
quality metrics program on said facility's Medicaid reimbursement. On 38
or after October 1, 2026, the Department of Social Services may establish 39
a quality metrics program, within available appropriations designated 40
for such purpose, to provide payments to nursing home facilities (A) for 41
high-quality outcomes based on performance in the quality metrics 42
program, and (B) designed to incentivize the provision of high -quality 43
services to nursing home residents who are Medicaid beneficiaries, as 44
indicated in the individualized report issued to each nursing home 45
facility pursuant to the provisions of this subdivision. Such quality 46
metrics program shall evaluate nursing home facilities based on 47
national quality measures for nursing home facilities issued by the 48
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Centers for Medicare and Medicaid Services and state -administered 49
consumer satisfaction measures. Such quality measures may be 50
weighted higher for desired outcomes, as determined by the 51
department. Not later than February 1, 2027, the department shall 52
submit a report, in accordance with the provisions of section 11 -4a, to 53
the joint standing committees of the General Assembly having 54
cognizance of matters relating to appropriations and the budgets of state 55
agencies and human services on the implementation of the quality 56
metrics program. 57
(3) Geographic peer groupings of facilities shall be established by the 58
Department of Social Services pursuant to regulations adopted in 59
accordance with subsection (b) of this section. 60
(4) Allowable costs shall be divided into the following five cost 61
components: (A) Direct costs, which shall include salaries for nursing 62
personnel, related fringe benefits and costs for nursing personnel 63
supplied by a temporary nursing services agency; (B) indirect costs, 64
which shall include professional fees, dietary expenses, housekeeping 65
expenses, laundry expenses, supplies related to patient care, salaries for 66
indirect care personnel and related fringe benefits; (C) fair rent, which 67
shall be defined in regulations adopted in accordance with subsection 68
(b) of this section; (D) capital-related costs, which shall include property 69
taxes, insurance expenses, equipment leases and equipment 70
depreciation; and (E) administrative and general costs, which shall 71
include maintenance and operation of plant expenses, salaries for 72
administrative and maintenance personnel and related fringe benefits. 73
For (i) direct costs, the maximum cost shall be equal to one hundred 74
thirty-five per cent of the median allowable cost of that peer grouping; 75
(ii) indirect costs, the maximum cost shall be equal to one hundred 76
fifteen per cent of the state -wide median allowable cost; (iii) fair rent, 77
the amount shall be calculated utilizing the amount approved pursuant 78
to section 17b-353; (iv) capital-related costs, there shall be no maximum; 79
and (v) administrative and general costs, the maximum shall be equal to 80
the state-wide median allowable cost. For purposes of this subdivision, 81
"temporary nursing services agency" and "nursing personnel" have the 82
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same meaning as provided in section 19a-118. 83
(5) Costs in excess of the maximum amounts established under this 84
subsection shall not be recognized as allowable costs, except that the 85
commissioner may establish rates whereby allowable costs may exceed 86
such maximum amounts for beds which are restricted to use by patients 87
with acquired immune deficiency syndrome, traumatic brain injury or 88
other specialized services. 89
(6) On or after June 30, 2022, the commissioner may, in the 90
commissioner's discretion and within available appropriations, provide 91
pro rata fair rent increases to facilities which have documented fair rent 92
additions placed in service in the most recently filed cost report that are 93
not otherwise included in the rates issued. The commissioner may 94
provide, within available appropriations, pro rata fair rent increases, 95
which may, at the discretion of the commissioner, include increases for 96
facilities which have undergone a material change in circumstances 97
related to fair rent additions in the most recently filed cost report. The 98
commissioner may allow minimum fair rent as the basis upon which 99
reimbursement associated with improvements to real property is 100
added. 101
(7) For the purpose of determining allowable fair rent, a facility with 102
allowable fair rent less than the twenty-fifth percentile of the state-wide 103
allowable fair rent shall be reimbursed as having allowable fair rent 104
equal to the twenty-fifth percentile of the state-wide allowable fair rent. 105
Any facility with a rate of return on real property other than land in 106
excess of eleven per cent shall have such allowance revised to eleven per 107
cent. Any facility or its related realty affiliate which finances or 108
refinances debt through bonds issued by the Connecticut Health and 109
Education Facilities Authority shall report the terms and conditions of 110
such financing or refinancing to the Commissioner of Social Services not 111
later than thirty days after completing such financing or refinancing. 112
The commissioner may revise the facility's fair rent component of its rate 113
to reflect any financial benefit the facility or its related realty affiliate 114
received as a result of such financing or refinancing. The commissioner 115
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shall determine allowable fair rent for real property other than land 116
based on the rate of return for the cost year in which such bonds were 117
issued. The financial benefit resulting from a facility financing or 118
refinancing debt through such bonds shall be shared between the state 119
and the facility to an extent determined by the commissioner on a case-120
by-case basis and shall be reflected in an adjustment to the facility's 121
allowable fair rent. 122
(8) A facility shall receive cost efficiency adjustments for indirect costs 123
and for administrative and general costs if such costs are below the 124
state-wide median costs. The cost efficiency adjustments shall equal 125
twenty-five per cent of the difference between allowable reported costs 126
and the applicable median allowable cost established pursuant to 127
subdivision (4) of this subsection. 128
(9) On and after July 1, 2025, costs shall be rebased no more frequently 129
than every two years and no less frequently than every four years, as 130
determined by the commissioner. There shall be no inflation adjustment 131
during a year in which a facility's rates are rebased. The commissioner 132
shall determine whether and to what extent a change in ownership of a 133
facility shall occasion the rebasing of the facility's costs. There shall be 134
no rebasing for the fiscal year ending June 30, 2026. 135
(10) The method of establishing rates for new facilities shall be 136
determined by the commissioner in accordance with the provisions of 137
this subsection. 138
(11) There shall be no increase to rates based on inflation or any 139
inflationary factor for the fiscal years ending June 30, 2022, and June 30, 140
2023, unless otherwise authorized under subdivision (1) of this 141
subsection. Notwithstanding section 17 -311-52 of the regulations of 142
Connecticut state agencies, for the fiscal years ending June 30, 2024, June 143
30, 2025, June 30, 2026, and June 30, 2027, there shall be no inflationary 144
increases to rates beyond those already factored into the model for the 145
transition to an acuity-based reimbursement system. The commissioner 146
shall amend the Medicaid state plan to extend the case mix neutrality 147
limit as deemed necessary by the commissioner to remain within 148
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available appropriations. The neutrality limit shall not decrease below 149
the limit in effect for the fiscal year ending June 30, 2025, but may be 150
otherwise adjusted as the commissioner deems necessary to remain 151
within available appropriations. Notwithstanding any other provisions 152
of this chapter, any subsequent increase to allowable operating costs, 153
excluding fair rent, shall be inflated by the gross domestic product 154
deflator when funding is specifically appropriated for such purposes in 155
the enacted budget. The rate of inflation shall be computed by 156
comparing the most recent rate year to the average of the gross domestic 157
product deflator for the previous four fiscal quarters ending March 158
thirty-first. Any increase to rates based on inflation shall be applied 159
prior to the application of any other budget adjustment factors that may 160
impact such rates. 161
(12) For the fiscal year beginning July 1, 2026, and each fiscal year 162
thereafter, the commissioner shall require a nursing home facility to 163
spend not less than eighty per cent of funding received from Medicaid, 164
Medicare and all other payment sources on direct care of residents, 165
provided the commissioner may adjust the percentage spent on direct 166
care for a nursing home facility with a capital improvement project or a 167
fair rent increase approved by the commissioner. For the fiscal year 168
beginning July 1, 2028, and each fiscal year thereafter, the commissioner 169
may decrease rates of Medicaid reimbursement for any nursing home 170
that does not comply with the provisions of this subdivision. For 171
purposes of this subdivision, (A) "direct care" means hands -on care 172
provided to a facility resident by nursing personnel, including, but not 173
limited to, assistance with feeding, bathing, toileting, dressing, lifting or 174
moving residents, medication administration and salary, fringe benefits 175
and supplies related to direct care; and (B) "nursing personnel" means 176
an advanced practice registered nurse, licensed pursuant to chapter 378, 177
a registered nurse or practical nurse, licensed pursuant to chapter 378, 178
or a nurse's aide, registered pursuant to chapter 378a. 179
[(12)] (13) For purposes of computing minimum allowable patient 180
days, utilization of a facility's certified beds shall be determined at a 181
minimum of ninety per cent of capacity, except for facilities that have 182
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undergone a change in ownership, new facilities, and facilities which 183
are certified for additional beds which may be permitted a lower 184
occupancy rate for the first three months of operation after the effective 185
date of licensure. 186
[(13)] (14) Rates determined under this section shall comply with 187
federal laws and regulations. 188
[(14)] (15) The Commissioner of Social Services may authorize an 189
interim rate for a facility demonstrating circumstances particular to that 190
individual facility impacting facility finances or costs not reflected in the 191
underlying rates. 192
This act shall take effect as follows and shall amend the following
sections:
Section 1 July 1, 2026 17b-340d(a)
HS Joint Favorable
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The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of
the General Assembly, solely for purposes of information, summarization and explanation and do not
represent the intent of the General Assembly or either chamber thereof for any purpose. In general,
fiscal impacts are based upon a variety of informational sources, including the analyst’s professional
knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final
products do not necessarily reflect an assessment from any specific department.
OFA Fiscal Note
State Impact:
Agency Affected Fund-Effect FY 27 $ FY 28 $ FY 29 $
Social Services,
Dept.
GF - Cost At least
90,300
At least
90,300
At least
90,300
State
Comptroller -
Fringe Benefits1
GF - Cost At least
37,700
At least
37,700
At least
37,700
Social Services,
Dept.
GF - Potential
Savings
None None See Below
Note: GF=General Fund
Municipal Impact: None
Explanation
The bill results in a cost to the Department of Social Services (DSS)
associated with requiring nursing homes to spend at least 80% of
payment sources, including Medicaid and Medicare, on direct care. DSS
will incur costs to reflect an additional Associate Accounts Examiner
(annual salary of $90,300 with associated fringe of approximately
$37,700) to meet the requirements of the bill. To the extent DSS requires
system modifications, the agency could experience additional costs.
Beginning in FY 29, DSS may incur savings related to lower Medicaid
rates paid to any nursing homes not complying with the provisions of
the bill. For context, the state share of Medicaid payments to nursing
homes is approximately $700 million annually.
1The fringe benefit costs for most state employees are budgeted centrally in accounts
administered by the Comptroller. The estimated active employee fringe benefit cost
associated with most personnel changes is 41.82% of payroll in FY 27.
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The Out Years
The annualized ongoing fiscal impact identified above would
continue into the future subject to inflation.
Sources: Department of Administrative Services website
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OLR Bill Analysis
SB 328
AN ACT REQUIRING NURSING HOMES TO SPEND EIGHTY PER
CENT OF REVENUE ON DIRECT PATIENT CARE.
SUMMARY
This bill requires the Department of Social Services (DSS), beginning
with FY 27 , to require nursing homes to spend at least 80% of their
funding from Medicaid, Medicare, and all other payment sources on
residents’ direct care. However, it allows the commissioner to adjust this
percentage for nursing homes with a capital improvement project or fair
rent increase DSS approved. Beginning with FY 29, the commissioner
may decrease Medicaid reimbursement for any nursing home that does
not comply.
Under the bill, “direct care” is the hands-on care nursing personnel
provide to facility residents ( for example, help with feeding, bathing,
toileting, dressing, lifting or moving residents, or administering
medication). It also includes nursing personnel’s salary and fringe
benefits and the cost of supplies to provide hands -on care. “Nursing
personnel” are advanced practice registered nurses, registered or
practical nurses, and nurse’s aides.
EFFECTIVE DATE: July 1, 2026
COMMITTEE ACTION
Human Services Committee
Joint Favorable
Yea 16 Nay 7 (03/19/2026)