Senate bill would set Medicaid floor for maternity pay at rural hospitals

What does this do?

The Keeping Obstetrics Local Act would require Medicaid to pay hospitals at least 150 percent of Medicare rates for maternity services beginning in 2027. Small rural hospitals delivering fewer than 300 babies per year would receive additional annual payments to keep labor and delivery units staffed. The bill would also make 12 months of full postpartum Medicaid and CHIP coverage mandatory nationwide.

Who does it affect?

Pregnant women and new mothers on Medicaid or CHIP are the primary population affected, a group that accounts for about 4 in 10 births in the United States. Hospitals serving large Medicaid patient populations, rural communities, and the states that administer Medicaid programs would also face direct changes under the new payment rules.

Why does it matter?

Many hospitals in rural and low-income areas currently lose money on maternity care because Medicaid reimbursements fall below the actual cost of providing those services. Without a payment floor, these hospitals face financial pressure that can lead to the closure of local labor and delivery units.

What does it cost, and who pays?

• Federal share of maternity Medicaid costs rises
• Annual payments for small rural hospitals
• Applies to hospitals under 300 births a year

Where does it stand?