BABIES Act Launches $5M Grant Program and Medicaid Pilot to Expand Birth Center Access by 2030

The Better Availability of Birth Centers Improves Outcomes and Expands Savings Act, or the BABIES Act, is tackling the growing problem of maternity care deserts by focusing federal resources on freestanding birth centers. This bill establishes two major programs aimed at making it easier and more affordable for people to access non-hospital birth settings, particularly those in underserved areas and those enrolled in Medicaid.

The Birth Center Startup Fund: $5 Million for Expansion

Section 2 of the BABIES Act sets up a new grant program called “Strong Start Birth Center Grants,” run through the Health Resources and Services Administration (HRSA). Starting in fiscal year 2026 and running through 2030, the government is authorized to appropriate $5 million total to award grants ranging from $300,000 to $500,000 to up to 15 birth centers each year. This money is earmarked for crucial infrastructure needs: think renovations, facility expansion, new equipment, or covering the costs of getting necessary state licenses and national accreditation. The goal here is simple: if a birth center needs capital to open or grow, the federal government is offering a boost.

Critically, the bill prioritizes centers that are located in, or serve, areas already designated as having a shortage of maternity care professionals (Health Professional Shortage Areas). This means the funding is targeted directly at closing gaps in care. For the birth center that's been operating out of a cramped space and wants to expand to serve more families in a rural area, this grant money could be the difference between staying small and becoming a vital community resource.

Medicaid Pilot Program: Changing How Birth Is Paid For

Section 3 sets up a significant Medicaid demonstration program designed to test a brand-new payment system for birth centers. Currently, many birth centers struggle with reimbursement rates, making it difficult to serve the large population of low-risk pregnant people covered by Medicaid. This program aims to fix that by setting up a Prospective Payment System (PPS) that pays for a full “episode of care.”

For a busy parent on Medicaid, this PPS means the birth center would get a single, bundled payment covering everything from confirming the pregnancy through the first 28 days of the newborn's life, including multiple prenatal visits, the delivery, and necessary postpartum follow-ups. The bill even mandates that the payment system must cover specific pain relief options like nitrous oxide and hydrotherapy supplies. This shift provides financial stability for centers and ensures comprehensive care for the patient.

To participate, states must apply and agree to use the new PPS rates. They are incentivized with enhanced federal matching rates (FMAP) for the first four years of the program. The Secretary is required to select up to six states for planning grants within 18 months, with the full demonstration programs launching no later than two years after enactment, running for four years. This move is a big deal because it takes a financial risk away from the birth centers and puts the focus on delivering quality care for low-risk pregnancies.

What’s the Catch? Coordination and Cost

While this is a major win for access, the bill imposes strict requirements on participating birth centers to ensure safety. For instance, centers must be accredited, licensed, and have formal, quick-transfer agreements with a local hospital. They must also have a consulting obstetrician with admitting privileges at a local hospital. This high bar is intended to protect patients, but it could be a significant barrier for smaller, rural centers that might struggle to secure a formal agreement with a distant hospital.

This demonstration program also requires the Secretary to track outcomes closely, comparing patients in the program to those receiving traditional hospital care on metrics like C-section rates, preterm births, and NICU admissions. If successful, this program could prove that birth centers are not just a safe, high-quality option for low-risk births, but also a more cost-effective one for federal and state governments. The bill authorizes $24 million over four years for the state demonstration programs themselves, a targeted investment aimed at improving maternal health outcomes in areas where they are currently lagging.