This bill directs the Department of Health and Human Services and states to quantify the cost of providing maternity, labor, and delivery care, then uses that information to require higher Medicaid/CHIP payment rates and additional federal matching for qualifying hospitals (with a focus on rural, critical-access, Indian Health Service, and high-Medicaid hospitals). It also creates an annual “anchor” payment to protect low-volume obstetric units, mandates 12‑month continuous full-benefit postpartum coverage, establishes optional Medicaid ‘maternity health homes’, directs workforce supports, and requires public notices and expanded hospital reporting around obstetric unit closures.
If enacted, the statute would rewire how states pay for maternity care (raising minimum rates and changing FMAP rules), expand coverage and care coordination during and after pregnancy, create targeted payments to keep small obstetric units open, and surface new public data on closures and costs—changes that matter to state Medicaid programs, hospital finance officers, health systems in rural and high‑Medicaid communities, and providers who deliver perinatal services.
At a Glance
What It Does
Amends Medicaid and CHIP authorities to (1) require minimum payment rates for ‘maternity, labor, and delivery’ services at qualifying hospitals and authorize higher federal matching for the increased portion; (2) create ‘anchor’ payments for low‑volume obstetric hospitals; and (3) expand postpartum coverage, care coordination options, screening incentives, workforce deployment tools, and public reporting requirements.
Who It Affects
State Medicaid and CHIP agencies, rural and safety‑net hospitals (including critical access and IHS facilities), managed care plans, perinatal clinicians (physicians, midwives, doulas), the Commissioned Corps, and patients—particularly pregnant and postpartum individuals whose births are Medicaid/CHIP‑funded.
Why It Matters
The bill shifts federal/state finance incentives toward sustaining local labor and delivery capacity, makes postpartum full‑benefit coverage mandatory, and creates near‑term funding and operational tools that could reduce obstetric unit closures and improve perinatal care coordination in underserved communities.
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What This Bill Actually Does
Title I starts by forcing states to run periodic, standardized studies on the costs of providing maternity, labor, and delivery services at hospitals that either (a) are rural or critical access or (b) have a majority of births paid by Medicaid/CHIP or average fewer than 300 births per year. HHS must compile state submissions into a public national report and use those findings to inform future payment-rate decisions.
The studies are intended to produce comparable cost and payment data (Medicare, Medicaid fee‑for‑service and managed care where available, CHIP, and private insurers) and to analyze how geography and local economics drive costs.
The bill then attaches new payment rules to Titles XIX and XXI. For eligible hospitals, state Medicaid programs must pay a minimum rate for maternity, labor, and delivery services—initially set relative to Medicare and thereafter recalibrated using the state study results—and states receive enhanced federal matching: the incremental amount above the old base rate is matched at 100 percent FFP, while the remainder gets the state’s enhanced FMAP.
The definition of eligible hospital is broad (rural, critical access, IHS/tribal, or hospitals with high shares of Medicaid/CHIP births) and the services covered are to be defined by HHS through rulemaking. CHIP is explicitly brought into parity with these Medicaid payment reforms.Separately, the bill creates ‘anchor’ payments for low‑volume obstetric hospitals meant to ensure a reliable revenue floor that accounts for both marginal per‑delivery cost and minimum standby capacity.
The statute sets an initial per‑delivery marginal amount ($10,000 in fiscal year 2028) and an initial standby capacity amount ($1.2 million in fiscal year 2028), indexes those amounts, and requires states to pay any shortfall between a hospital’s Medicaid‑specific revenue floor and actual Medicaid/CHIP payments. A receiving hospital must accept conditions—use the funds for labor and delivery services, maintain training and staffing requirements, and enter a multi‑year service commitment—or face recovery provisions; the state has preferred‑creditor status if recovery is required in bankruptcy.Title II mandates 12‑month continuous, full‑benefit postpartum coverage for pregnant individuals under Medicaid and CHIP (shifting the prior optional state model to a requirement), creates an optional Medicaid ‘maternity health home’ model for coordinated pregnancy/postpartum care with enhanced FMAP in the first eight quarters, requires HHS guidance on covering doulas and certain midwives and maternal health professionals, raises federal support slightly for standardized perinatal depression and anxiety screening, and makes presumptive eligibility for pregnant individuals mandatory.Title III focuses on workforce resilience: it expands the Public Health Service Commissioned Corps’ authority to respond to urgent maternal health care needs (including closures or staff losses), authorizes detail of Corps personnel to distressed facilities, provides new funding to strengthen Corps operations and readiness, and directs streamlined out‑of‑state provider enrollment rules to let neighboring‑state clinicians more easily serve patients across borders for maternity services.
Finally, Title IV compels hospitals to notify HHS, state/local agencies, and the community at least 180 days before an obstetric unit closure and requires more granular labor and delivery data in Medicare cost reports so policymakers and the public can track volumes, transfers, staffing, costs and payer mix.
The Five Things You Need to Know
States must conduct a statewide maternity cost study within 24 months of enactment and every five years thereafter; HHS will publish a national report within 12 months of receiving state data.
For fiscal year 2027 the bill sets a minimum Medicaid payment for eligible hospitals at 150% of the Medicare rate for maternity, labor, and delivery services and directs the Secretary to set updated, cost‑informed minimums in five‑year blocks thereafter.
The increased portion of Medicaid payments attributable to the new minimum is matched by the federal government at 100% FFP; the remaining base payment portion receives the state’s enhanced FMAP.
Anchor payments for low‑volume obstetric hospitals use a two‑part floor: a per‑delivery marginal amount (set at $10,000 in FY2028 and indexed) and a standby capacity amount (set at $1.2 million in FY2028 and indexed); states must pay any Medicaid revenue shortfall to reach that floor.
Hospitals must notify HHS, state/local agencies, and the public at least 180 days before an obstetric unit closure and include a community impact analysis, mitigation steps, cause of closure, and historic transportation cost data.
Section-by-Section Breakdown
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State cost studies and HHS national report
This section requires each state to perform recurring, standardized cost studies on maternity, labor and delivery services at ‘applicable hospitals’ and submit them to HHS. The studies must estimate actual expenditures (including hospitals that recently stopped providing services), compare payment rates across Medicare, Medicaid fee‑for‑service and managed care, CHIP, and private insurers, and analyze geographic and demographic cost drivers. HHS must compile state submissions into a public report and recommend data‑collection improvements—both a baseline transparency push and the evidence HHS must use later when setting minimum payment rates.
Mandatory minimum Medicaid payment rates for maternity care
This amendment to section 1902 imposes a statutory floor for payment of maternity, labor, and delivery services at ‘eligible hospitals’ and directs HHS to define covered services by rule. The initial floor ties to Medicare (150% in FY2027) and future floors are to be set in five‑year periods informed by the state studies. States identify eligible hospitals (rural, critical access, IHS/tribal, high Medicaid birth share, or by projection) for application of the minimum.
Enhanced federal matching for the increased payment portion
Section 1905 is amended to separate payments into a base payment portion and an enhanced payment portion (the increase required by the new Medicaid minimum). The federal government pays 100% FFP on the enhanced portion for qualifying quarters; the base portion receives the state’s enhanced FMAP. The provision also protects territories from counting those additional federal dollars toward territorial caps and requires states to report payments under the new anchor payment program to CMS.
‘Anchor’ payments for low‑volume obstetric hospitals
States must add a new Medicaid anchor program that guarantees a labor‑and‑delivery revenue floor for identified low‑volume obstetric hospitals. The floor combines a per‑delivery marginal cost and a standby capacity payment; the bill sets FY2028 baselines ($10,000 per delivery and $1.2M standby) and requires periodic recalibration. States pay any Medicaid shortfall and tie receipt to training/skills maintenance, continued service commitments, and use‑of‑funds contracts with clawback and preferred‑creditor recovery if obligations are breached or the hospital closes.
Apply payment and FMAP rules to CHIP
CHIP is explicitly brought into parity with the Medicaid payment and FMAP changes: the adequate‑payment requirement and the increased federal match for maternity services apply to state child health plans, aligning pediatric and maternal safety‑net financing across both programs.
Expand coverage and maternal care models
Title II makes continuous, full‑benefit postpartum coverage mandatory for pregnant individuals under Medicaid and CHIP for the 12 months after pregnancy, replaces the old optional state election approach, and allows a state option to establish ‘maternity health homes’ for coordinated care across pregnancy and the 365‑day postpartum period (with enhanced FMAP for the first eight quarters). The title also requires HHS guidance on covering doulas and certain midwives, increases federal support for standardized perinatal depression/anxiety screening, and makes presumptive eligibility for pregnant women mandatory.
Workforce surge and cross‑state enrollment tools
This title expands the Public Health Service Commissioned Corps’ remit to respond to urgent maternal health needs (closures or loss of staff) and authorizes detail of Corps personnel to assist impacted facilities, with possible reimbursement agreements and preferred‑creditor protections. It also provides funding to strengthen Corps operations and readiness. Separately, the bill requires states to adopt a streamlined process to enroll out‑of‑state maternity providers located in neighboring states—reducing regulatory barriers when clinicians cross borders to provide care.
Closure notifications and enhanced obstetric data
Hospitals are required to notify HHS, relevant state/local agencies, and the public at least 180 days before an obstetric unit closure and supply a community impact report (expected adverse outcomes, mitigation steps, closure cause, and transportation cost data). The bill also requires additional labor and delivery line‑item reporting in Medicare cost reports (volumes, cesarean vs. vaginal births, transfers, staffing, expenses, on‑call costs, and payer revenue mix) to allow better monitoring of supply, demand and financial viability.
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Explore Healthcare in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Rural and low‑volume obstetric hospitals: receive statutory minimum payments, 100% FFP on the incremental payment amount, and anchor payments that close Medicaid revenue shortfalls—reducing financial pressure that often leads to unit closures.
- Pregnant and postpartum individuals on Medicaid/CHIP: gain mandated 12‑month, full‑benefit postpartum coverage, access to optional maternity health homes for coordinated care, and stronger presumptive eligibility that speeds access to prenatal services.
- Tribal and Indian Health Service facilities: are explicitly eligible as ‘eligible hospitals’ and may access increased payments and federal matching designed to support continuity of local maternity care.
- State and local maternal health planners and public health officials: get richer, periodic cost studies and mandatory hospital reporting that improve planning, allow targeted interventions, and produce public data on closures and service gaps.
- Perinatal behavioral health services: receive targeted increased federal support for standardized perinatal depression and anxiety screening, which can expand detection and follow‑up in Medicaid/CHIP populations.
Who Bears the Cost
- State Medicaid programs: must implement new minimum payment rates, operate anchor payment programs, fund planning and administrative changes, and absorb operational complexity even though the federal government covers portions of the increase.
- Hospitals receiving anchor payments: must meet training, staffing, service‑level and funds‑use contractual obligations and accept clawback and preferred‑creditor recovery risk if they fail to sustain services.
- Federal budget / HHS operations: HHS must run large data collection and reporting efforts, administer planning grants and guidance, and bear initial increased FFP and startup appropriation costs (including Commissioned Corps funding increases).
- Managed care plans and Medicaid contractors: must adjust provider networks and contracts to reflect new minimums, streamlined out‑of‑state enrollments, and the maternity health home payment methodologies, creating operational and actuarial workload.
- Hospitals and providers outside the eligible categories: may see relative shifts in Medicaid payment prioritization and state resources toward qualifying facilities and programs.
Key Issues
The Core Tension
The central dilemma is balancing an immediate, higher federal/state funding floor to preserve local obstetric capacity against the complexity and fiscal strain that the reforms impose on state Medicaid systems and hospital operations; the bill buys local access with targeted subsidies and regulatory conditions, but success depends on consistent data collection, careful rate‑setting, and states’ willingness to redesign payment systems and enforce contractual obligations.
The bill attempts to marry evidence generation and targeted finance changes—state cost studies feed HHS rulemaking and five‑year rate resets, while immediate floors and FMAP incentives aim to stop unit closures now. That design raises implementation questions: states must stand up large, recurring cost studies with consistent methodologies; smaller hospitals need help compiling data (the bill provides modest grants), and HHS must translate heterogeneous state data into defensible national policy.
The anchor payment model includes hard numbers in FY2028 but relies on periodic recalibration by the Secretary to stay accurate—those future rulemakings will be politically and technically consequential.
Operational friction is unavoidable. States must redesign provider payment systems, adjust managed care and fee‑for‑service arrangements, and identify eligible hospitals subject to the new floors.
The 100% match on the incremental payment covers the new dollars but also creates accounting and monitoring obligations and requires vigilance to prevent duplication with other supplemental payments; the statute tries to avoid double‑counting by excluding these increases from other federal supplemental payment calculations, but administrative coordination will be hard. The anchor payments’ contractual clawbacks and preferred‑creditor language protect state recovery but could complicate hospital bankruptcies and local negotiations.
Finally, mandatory 12‑month postpartum coverage and higher screening incentives expand access but impose sustained costs on state budgets and administrative systems.
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