Sec. 611. Payments to hospitals and other facility-based services for operating expenses on the basis of approved global budgets
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Payment for operating expenses for institutional and facility-based care, including hospital services and nursing facility services, under State health security programs shall be made directly to each institution or facility by each State health security program under an annual prospective global budget approved under the program. Such a budget shall include payment for outpatient care and non-facility-based care that is furnished by or through the facility. In the case of a hospital that is wholly owned (or controlled) by a comprehensive health service organization that is paid under section 614 on the basis of a global budget, the global budget of the organization shall include the budget for the hospital.
The prospective global budget for an institution or facility shall— be developed through annual negotiations between— a panel of individuals who are appointed by the Governor of the State and who represent consumers, labor, business, and the State government; and the institution or facility; and be based on a nationally uniform system of cost accounting established under standards of the Board. In developing a budget through negotiations, there shall be taken into account at least the following:
With respect to inpatient hospital services, the number, and classification by diagnosis-related group, of discharges. An institution’s or facility’s past expenditures. The extent to which debt service for capital expenditures has been included in the proposed operating budget. The extent to which capital expenditures are financed directly or indirectly through reductions in direct care to patients, including reductions in registered nursing staffing patterns or changes in emergency room or primary care services or availability.
Change in the consumer price index and other price indices. The cost of reasonable compensation to health care practitioners. The compensation level of the institution’s or facility’s work force. The extent to which the institution or facility is providing health care services to meet the needs of residents in the area served by the institution or facility, including the institution’s or facility’s occupancy level. The institution’s or facility’s previous financial and clinical performance, based on utilization and outcomes data provided under this Act.
The type of institution or facility, including whether the institution or facility is part of a clinical education program or serves a health professional education, research or other training purpose. Technological advances or changes. Costs of the institution or facility associated with meeting Federal and State regulations. The costs associated with necessary public outreach activities. In the case of a for-profit facility, a reasonable rate of return on equity capital, independent of those operating expenses necessary to fulfill the objectives of this Act.
Incentives to facilities that maintain costs below previous reasonable budgeted levels without reducing the care provided. With respect to facilities that provide mental health services and substance abuse treatment services, any additional costs involved in the treatment of dually diagnosed individuals. The portion of such a budget that relates to expenditures for health professional education shall be consistent with the State health security budget for such expenditures. No budget for an institution or facility for a year may be approved unless the institution or facility has submitted on a timely basis to the State health security program such information as the program or the Board shall specify, including in the case of hospitals information on discharges classified by diagnosis-related group.
Each State health security program shall develop an administrative mechanism for reducing operating funds to institutions or facilities in proportion to payments made to such institutions or facilities for services contracted for by a comprehensive health service organization. In accordance with standards established by the Board, an operating and capital budget approved under this section for a year may be amended before, during, or after the year if there is a substantial change in any of the factors relevant to budget approval.
The States health security programs may permit institutions and facilities to raise funds from private sources to pay for newly constructed facilities, major renovations, and equipment. The expenditure of such funds, whether for operating or capital expenditures, does not obligate the State health security program to provide for continued support for such expenditures unless included in an approved global budget.