110 
(i) a panel of individuals who are ap-
pointed by the Governor of the State and 
who represent consumers, labor, business, 
and the State government; and 
(ii) the institution or facility; and 
(B) be based on a nationally uniform sys-
tem of cost accounting established under stand-
ards of the Board. 
(2) CONSIDERATIONS.—In developing a budget 
through negotiations, there shall be taken into ac-
count at least the following: 
(A) With respect to inpatient hospital serv-
ices, the number, and classification by diag-
nosis-related group, of discharges. 
(B) An institution’s or facility’s past ex-
penditures. 
(C) The extent to which debt service for 
capital expenditures has been included in the 
proposed operating budget. 
(D) The extent to which capital expendi-
tures are financed directly or indirectly through 
reductions in direct care to patients, including 
(but not limited to) reductions in registered 
nursing staffing patterns or changes in emer-
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111 
gency room or primary care services or avail-
ability. 
(E) Change in the consumer price index 
and other price indices. 
(F) The cost of reasonable compensation 
to health care practitioners. 
(G) The compensation level of the institu-
tion’s or facility’s work force. 
(H) 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. 
(I) The institution’s or facility’s previous 
financial and clinical performance, based on uti-
lization and outcomes data provided under this 
Act. 
(J) The type of institution or facility, in-
cluding whether the institution or facility is 
part of a clinical education program or serves 
a health professional education, research or 
other training purpose. 
(K) Technological advances or changes. 
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(L) Costs of the institution or facility asso-
ciated with meeting Federal and State regula-
tions. 
(M) The costs associated with necessary 
public outreach activities. 
(N) In the case of a for-profit facility, a 
reasonable rate of return on equity capital, 
independent of those operating expenses nec-
essary to fulfill the objectives of this Act. 
(O) Incentives to facilities that maintain 
costs below previous reasonable budgeted levels 
without reducing the care provided. 
(P) With respect to facilities that provide 
mental health services and substance abuse 
treatment services, any additional costs involved 
in the treatment of dually diagnosed individ-
uals. 
The portion of such a budget that relates to expendi-
tures for health professional education shall be con-
sistent with the State health security budget for 
such expenditures. 
(3) PROVISION OF REQUIRED INFORMATION; DI-
AGNOSIS-RELATED GROUP.—No budget for an insti-
tution or facility for a year may be approved unless 
the institution or facility has submitted on a timely 
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basis to the State health security program such in-
formation as the program or the Board shall specify, 
including in the case of hospitals information on dis-
charges classified by diagnosis-related group. 
(c) ADJUSTMENTS IN APPROVED BUDGETS.— 
(1) ADJUSTMENTS TO GLOBAL BUDGETS THAT 
CONTRACT WITH COMPREHENSIVE HEALTH SERVICE 
ORGANIZATIONS.—Each State health security pro-
gram 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 com-
prehensive health service organization. 
(2) AMENDMENTS.—In accordance with stand-
ards 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. 
(d) DONATIONS PERMISSIBLE.—The States health 
security programs may permit institutions and facilities 
to raise funds from private sources to pay for newly con-
structed facilities, major renovations, and equipment. The 
expenditure of such funds, whether for operating or cap-
ital expenditures, does not obligate the State health secu-
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