BABIES Act Funds New Birth Centers, Tests New Medicaid Payment System for Low-Risk Pregnancies

The Better Availability of Birth Centers Improves Outcomes and Expands Savings Act, or the BABIES Act, is aiming to tackle the persistent problem of maternity care deserts by focusing on freestanding birth centers. Essentially, this legislation uses a two-pronged approach: funding the centers directly and changing how Medicaid pays for their services.

The Birth Center Startup Fund

Section 2 sets up a new grant program designed to help accredited birth centers—or those working toward accreditation—get off the ground or expand. Think of it as seed money for better birth options. Between 2026 and 2030, the government plans to award up to 15 grants annually, with each center receiving between $300,000 and $500,000. This money can be used for building renovations, buying equipment, or covering those often-costly accreditation fees. The key here is priority: the grants are specifically aimed at centers located in areas with a shortage of maternity care professionals. If you live in a rural area where the nearest hospital is an hour away, this fund is designed to help bring a fully accredited, safe birth center closer to you.

Medicaid: Paying for Birth Centers Like They Mean It

Section 3 is where the real policy muscle is flexing. It establishes a four-year Medicaid demonstration program to figure out a better way to pay birth centers for their services. Currently, payment for these services can be complicated and often doesn't cover the full cost. This new program requires states to develop a “prospective payment system”—meaning a set, bundled payment for the whole package of care, from confirming pregnancy through the mother’s two postpartum visits and the newborn’s first 28 days of life.

This payment system is designed to be fair, even when things don't go exactly as planned. For instance, if a low-risk patient on Medicaid has to be transferred from the birth center to a hospital mid-labor, the birth center still gets a partial facility payment. This is a big deal because it stabilizes the center’s finances and removes a major financial risk that currently discourages centers from serving Medicaid patients. The goal is to make sure high-quality, low-risk maternity care is a viable option for women on Medicaid, who often face the steepest barriers to accessing care.

High Standards and Real-World Logistics

To participate in this Medicaid demonstration, birth centers must meet stringent requirements. They must be accredited, licensed by the state, and have formal transfer agreements with a nearby hospital that has obstetrics. They also need a board-certified obstetrician consultant with admitting privileges at that hospital. Staffing is strict, requiring a physician and a licensed midwife who meets international training standards to be employed or contracted. These requirements are in place to ensure patient safety, but they also highlight a potential logistical hurdle: for birth centers in very remote areas, securing a consulting physician with admitting privileges at a distant hospital might be tough, potentially limiting the program's reach despite its focus on underserved areas.

States have to apply to the Secretary of Health and Human Services to run these four-year demonstration programs, and they are encouraged to focus on areas with poor maternity outcomes or designated “maternity care deserts.” Ultimately, the BABIES Act is a focused effort to inject capital and payment stability into a specific, high-quality alternative to traditional hospital birth, hoping to improve access and outcomes for low-risk pregnant women, especially those relying on Medicaid.