The BABIES Act (Better Availability of Birth Centers Improves Outcomes and Expands Savings Act) would largely focus on expanding access to freestanding birth centers and testing new payment approaches under Medicaid for such centers. It does this in two main ways: (1) it authorizes Strong Start Birth Center Grants through HRSA to help eligible birth centers start up or expand in underserved areas ( Renovation/expansion, equipment, accreditation, with grants for up to 15 centers annually from 2026–2030, minimum $300,000 and maximum $500,000 per grant, total authorization of $5 million), and (2) it creates a Medicaid demonstration program to pilot prospective payment systems for freestanding birth center services for low-risk pregnancies. The demonstration would involve state planning grants, a competitive RFP process for states, and four-year demonstration periods with detailed reporting on costs and outcomes to Congress. The overall aim is to improve access, safety, and cost-effectiveness of birth center care for low-risk pregnancies, especially in maternity care deserts.
Key Points
- 1Grants to improve access to freestanding birth center services
- 2- HRSA (Administered by the Secretary) may award grants to accredited or pending-accreditation birth centers to expand access in underserved areas.
- 3- Eligible uses include facility renovation/expansion, new or updated equipment, and accreditation/licensure activities.
- 4- Up to 15 centers can receive grants each year (2026–2030), with grant amounts from $300,000 to $500,000.
- 5- Special consideration given to centers in maternity care shortage areas or with poor maternity outcomes and to centers that have not previously received a grant.
- 6- $5,000,000 authorized for this purpose across fiscal years 2026–2030.
- 7Medicaid demonstration program to improve freestanding birth center services
- 8- Adds a new subsection to the Social Security Act allowing a state demonstration program to test more effective payment models for freestanding birth centers serving low-risk pregnant women on Medicaid.
- 9- States must publish participation criteria within 1 year, including accreditation, licensure, care coordination, and center capabilities (e.g., staffing, transfer plans, data systems, quality improvement).
- 10- Guidance will be issued on developing a prospective payment system (PPS) for birth centers, including billing considerations for labor, postpartum, prenatal, and newborn care.
- 11- States will receive guidance for a PPS that may include partial facility payments, separate newborn/mother payments, and coverage for a range of professional and ancillary services.
- 12Planning grants and state applications
- 13- Planning grants: up to 6 states receive planning funds within 18 months to develop proposals, engage stakeholders, and set up PPS designs.
- 14- States must apply with details on target Medicaid populations, participating birth centers, criteria compliance, scope of services, and data sharing.
- 15- A formal RFP process will identify states and require a minimum number of birth centers, designated maternity care deserts, and diverse geographic representation.
- 16State demonstration program structure and funding
- 17- Demonstration programs must launch within 2 years of enactment and run for 4 years.
- 18- Federal matching payments to states for eligible birth center services will be provided under the PPS for the first 16 fiscal quarters, with FMAP determined by the existing Medicaid framework and other applicable limitations.
- 19- The Secretary may waive standard statewideness, comparability, and other provisions as necessary to run the demonstrations.
- 20- Annual congressional reporting on clinical outcomes and cost impacts; a coordinated evaluation of outcomes vs. traditional maternity services and outside birth centers, plus recommendations on continuation, expansion, or termination after year three.
- 21Definitions and scope
- 22- “Freestanding birth center services” align with existing Medicaid definitions and may include related services determined by the Secretary.
- 23- A “low-risk pregnancy” is defined as an uncomplicated singleton term pregnancy with vertex presentation and expected uncomplicated birth.