SB1598, the BABIES Act, aims to address maternity care shortages by expanding access to freestanding birth centers and by creating a Medicaid demonstration to explore more effective payment models for birth center services. The bill would fund startup and expansion through a grant program administered by the Health Resources and Services Administration, and it would pilot new reimbursement approaches within the Medicaid program to support low-risk pregnancies.
At a Glance
What It Does
Section 2 creates a Strong Start Birth Center Grants program to fund up to 15 birth centers from 2026 through 2030, with grants of $300,000 to $500,000 per center per year for startup or expansion.
Who It Affects
Freestanding birth centers accredited or seeking accreditation, patients seeking low-risk maternity care, and States/organizations involved in grant administration.
Why It Matters
Establishes a federal funding stream to expand access in underserved areas and lays the groundwork for future payment reform in birth center care.
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What This Bill Actually Does
The BABIES Act is a federal bill designed to grow access to freestanding birth centers and improve how birth center care is paid for under Medicaid. It does two big things.
First, it authorizes a grants program under HRSA to help birth centers open or expand in underserved areas. Eligible centers must be accredited or actively seeking accreditation, and the grants can be used for facility renovations, equipment, and the accreditation process itself.
The program caps awards at $300,000 to $500,000 per center each year, and it prioritizes centers in maternity care shortage areas or with poor maternal outcomes, including centers that have not previously received funding. The second major piece is a Medicaid demonstration program to test new payment models for freestanding birth center services for low-risk pregnancies.
States can apply to participate, receive planning grants, and then implement a four-year demonstration that includes a prospective payment system and data sharing to assess cost and quality. The act also defines what counts as a freestanding birth center operation, requires care coordination, and sets reporting expectations to Congress.
Overall, the BABIES Act is about expanding access while experimenting with payment structures to support safer, more integrated maternity care outside traditional hospital settings.
The Five Things You Need to Know
Grants to up to 15 birth centers: $300,000–$500,000 annually (2026–2030) for startup and expansion.
Eligibility hinges on accreditation (or intention to seek it) and licensure/coordination requirements.
Priority for underserved areas and centers without prior BABIES Act funding.
A Medicaid demonstration tests prospective payments for freestanding birth center services over a 4-year period.
States can receive planning grants and must publish a State application framework and participate in a broader data-and-outcome evaluation.
Section-by-Section Breakdown
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Short Title and Purpose
This section designates the act as the Better Availability of Birth Centers Improves Outcomes and Expands Savings Act (the BABIES Act). It signals that the bill’s core purpose is to reduce maternity care shortages by expanding access to freestanding birth centers and by creating a framework for testing payment reforms under Medicaid.
Grants to Improve Access to Freestanding Birth Center Services
Section 2 adds a new grant authority under Part III of the Public Health Service Act. The Secretary, through HRSA, may award up to 15 grants to eligible birth centers for startup or expansion. Eligible centers must be accredited or pursuing accreditation by a recognized body. Grants may be used for facility renovation, equipment, and the accreditation/licensure process. Special considerations push grant awards toward centers in maternity care shortage areas or with subpar outcomes, and to centers that have not previously received a grant. The section authorizes $5 million over 2026–2030 to fund these grants.
Medicaid Demonstration Program to Improve Freestanding Birth Center Services
Section 3 adds a new subsection to the Social Security Act to authorize a demonstration program for freestanding birth center services. The Secretary must establish participation criteria, a prospective payment system, and planning grants. States may apply to participate in a four-year demonstration, with federal support via an enhanced FMAP for eligible expenditures and waivers of certain state-wideness and related requirements as needed to implement the program. The section outlines accreditation and licensure requirements, care coordination expectations across settings, data collection and reporting, and guidance for developing the prospective payment system to cover both prenatal and postpartum care, as well as newborn care.
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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
- Low‑risk pregnant women in maternity care deserts will gain access to birth center services and coordinated perinatal care.
- Freestanding birth centers in underserved areas will receive funding to start up or expand capacity.
- Certified birth center accrediting bodies and midwifery associations will gain clearer pathways to accreditation and quality oversight.
- State Medicaid programs will have a framework to pilot alternative payment models for birth center services.
- Rural health clinics and Federally Qualified Health Centers that coordinate with birth centers will join integrated care networks.
Who Bears the Cost
- Birth centers incur costs for renovations, equipment, licensure, and accreditation; even with grants, there will be ongoing operating costs for staff and compliance.
- State Medicaid programs must administer the demonstration, implement the prospective payment system, and handle data reporting and oversight.
- The federal government would incur outlays for grants and the demonstration program administration over multiple years.
- Hospitals may experience shifts in transfer patterns or patient flow as birth centers expand, which could affect hospital revenue and coordination responsibilities.
- Accreditation bodies and credentialing organizations may face increased demand for verification and ongoing oversight.
Key Issues
The Core Tension
The central tension is whether federal funding and state-backed payment reform for freestanding birth centers can deliver reliable access and quality improvements without creating new administrative burdens or shifting costs in ways that offset potential savings.
The BABIES Act introduces a federal grant program and a state-based Medicaid demonstration to expand access to freestanding birth centers and to test new payment methods. This combination raises questions about cost, scalability, and administrative complexity.
While the grants help finance physical expansion and accreditation, success hinges on centers achieving sustained quality and integration with existing maternity services. The demonstration program, while designed to improve value and access, relies on waivers and new payment models that require robust data and careful oversight to avoid inconsistent care or unintended cost increases.
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