(ii) outbreaks of epidemics or infec-
tious diseases; 
(iii) unexpected facility or equipment 
repairs or purchases; 
(iv) significant and unexpected in-
creases in pharmaceutical or medical device 
prices; and 
(v) unanticipated increases in complex 
or high-cost patients or care needs. 
(B) Changes in Federal or State law that 
result in a change in costs. 
(C) Reasonable increases in labor costs, in-
cluding salaries and benefits, and changes in 
collective bargaining agreements, prevailing 
wage, or local law. 
(b) PAYMENT AMOUNT.— 
(1) IN GENERAL.—The amount of each pay-
ment to a provider described in subsection (a) shall 
be determined before the start of each fiscal year 
through negotiations between the provider and the 
regional director with jurisdiction over such pro-
vider. Such amount shall be based on factors speci-
fied in paragraph (2). 
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(2) PAYMENT FACTORS.—Payments negotiated 
pursuant to paragraph (1) shall take into account, 
with respect to a provider— 
(A) the historical volume of services pro-
vided for each item and services in the previous 
3-year period; 
(B) the actual expenditures of such pro-
vider in such provider’s most recent cost report 
under title XVIII of the Social Security Act for 
each item and service compared to— 
(i) such expenditures for other institu-
tional providers in the director’s jurisdic-
tion; and 
(ii) normative payment rates estab-
lished under comparative payment rate 
systems, including any adjustments, for 
such items and services; 
(C) projected changes in the volume and 
type of items and services to be furnished; 
(D) wages for employees, including any 
necessary increases for mandatory minimum 
safe registered nurse-to-patient ratios and opti-
mal staffing levels for physicians and other 
health care workers; 
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(E) the provider’s maximum capacity to 
provide items and services; 
(F) education and prevention programs; 
(G) permissible adjustment to the pro-
vider’s operating budget due to factors such 
as— 
(i) an increase in primary or specialty 
care access; 
(ii) efforts to decrease health care dis-
parities in rural or medically underserved 
areas; 
(iii) a response to emergent epidemic 
conditions; 
(iv) an increase in complex or high- 
cost patients or care needs; or 
(v) proposed new and innovative pa-
tient care programs at the institutional 
level; 
(H) whether the provider is located in a 
high social vulnerability index community, ZIP 
Code, or census track, or is a minority-serving 
provider; and 
(I) any other factor determined appro-
priate by the Secretary. 
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(3) LIMITATION.—Payment amounts negotiated 
pursuant to paragraph (1) may not— 
(A) take into account capital expenditures 
of the provider or any other expenditure not di-
rectly associated with the provision of items and 
services by the provider to an individual; 
(B) be used by a provider for capital ex-
penditures or such other expenditures; 
(C) exceed the provider’s capacity to pro-
vide care under this Act; or 
(D) be used to pay or otherwise com-
pensate any board member, executive, or ad-
ministrator of the institutional provider who 
has any interest or relationship prohibited 
under section 301(b)(2) of this Act or disclosed 
under section 301 of this Act. 
(4) LIMITATION
ON
COMPENSATION.—Com-
pensation costs for any employee or any contractor 
or any subcontractor employee of an institutional 
provider receiving global budgets under this section 
shall meet the compensation cap established in sec-
tion 702 of the Bipartisan Budget Act of 2013 (41 
U.S.C. 4304(a)(16)) and implementing regulations. 
(5) REGIONAL
NEGOTIATIONS
PERMITTED.— 
Subject to section 614, a regional director may nego-
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tiate changes to an institutional provider’s global 
budget, including any adjustments to address un-
foreseen market-shifts related to patient volume. 
(c) BASELINE RATES AND ADJUSTMENTS.— 
(1) IN GENERAL.—The Secretary shall use ex-
isting prospective payment systems under title 
XVIII of the Social Security Act to serve as the 
comparative payment rate system in global budget 
negotiations described in subsection (b). The Sec-
retary shall update such comparative payment rate 
systems annually. 
(2) SPECIFICATIONS.—In developing the com-
parative payment rate system, the Secretary shall 
use only the operating base payment rates under 
each such prospective payment systems with applica-
ble adjustments. 
(3) LIMITATION.—The comparative rate system 
established under this subsection shall not include 
the value-based payment adjustments and the cap-
ital expenses base payment rates that may be in-
cluded in such a prospective payment system. 
(4) INITIAL YEAR.—In the first year that global 
budget payments under this Act are available to in-
stitutional providers and for purposes of selecting a 
comparative payment rate system used during initial 
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global budget negotiations for each institutional pro-
vider, the Secretary shall take into account the ap-
propriate prospective payment system from the most 
recent year under title XVIII of the Social Security 
Act to determine what operating base payment the 
institutional provider would have been paid for cov-
ered items and services furnished the preceding year 
with applicable adjustments, excluding value-based 
payment adjustments, based on such prospective 
payment system. 
(d) OPERATING EXPENSES.—For purposes of this 
title, ‘‘operating expenses’’ of a provider include the fol-
lowing: 
(1) The cost of all items and services associated 
with the provision of inpatient care and outpatient 
care, including the following: 
(A) Wages and salary costs for physicians, 
nurses, and other health care practitioners em-
ployed by an institutional provider, including 
mandatory minimum safe registered nurse-to- 
patient staffing ratios and optimal staffing lev-
els for physicians and other healthcare workers. 
(B) Wages and salary costs for all ancil-
lary staff and services. 
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