H.R. 3942 — Keeping Obstetrics Local Act

This section requires each state (as defined in section 1101(a)(1) of the Social Security Act for titles XIX [Medicaid] and XXI [CHIP]) to conduct a study, not later than 24 months after enactment and every five years thereafter, on the costs of providing maternity, labor, and delivery services in applicable hospitals and to submit the results to the Secretary of Health and Human Services (HHS). (1) Applicable hospitals are those that either provide labor and delivery services with more than 50% of births financed by Medicaid or CHIP or are rural (per the Federal Office of Rural Health Policy), provide such services, and average fewer than 300 births per year over the two most recent years of data. (2) State studies must include, to the extent practicable, cost estimates (current and for hospitals ceasing services within five years); analyses of geographic, demographic, and economic factors affecting costs; payments received under Medicare, Medicaid (fee-for-service and managed care), CHIP (fee-for-service and managed care), and private insurance; comparative payment analyses (including to Medicare rates per 42 C.F.R. §447.203(b)(3) and other payers); and evaluations of expected expenditure or reimbursement changes over three years. (3) HHS must issue a public report on each state's study within 12 months of submission. This section further directs HHS to submit to Congress, and make public, a report within three years of enactment analyzing the first round of state studies with data collection recommendations; appropriates $10 million for FY2026 (available until expended) for grants and technical assistance to small rural applicable hospitals; and appropriates an additional $3 million for FY2026 (available until expended) for implementation.

This section requires state Medicaid plans to provide for payment—at a rate not less than a specified minimum—for maternity, labor, and delivery services (i.e., specified inpatient, outpatient, and behavioral health hospital services related to maternity care or labor and delivery, per ICD/CPT codes to be set by interim final rule by July 1, 2026) furnished by eligible hospitals beginning in FY2027, in both fee-for-service and managed care. Eligible hospitals include (1) rural hospitals (as defined by the Federal Office of Rural Health Policy), (2) critical access hospitals, (3) Indian Health Service or tribally operated hospitals, (4) hospitals where at least 50% of births in the most recent available 12-month period were qualifying births (i.e., associated services paid by Medicaid, CHIP, Medicare, Indian Health Service/Native Hawaiian health care, or provided to uninsured patients), or (5) hospitals projecting at least 50% qualifying births for the fiscal year; states identify eligible hospitals subject to HHS approval. The minimum payment rate is 150% of the Medicare payment rate for FY2027 and, for each subsequent five-year period through FY2032, a rate set by the Secretary to reflect eligible hospitals' costs, informed by state studies submitted under section 101(a) of the Keeping Obstetrics Local Act. (Thus, these requirements extend Medicaid's existing adequate payment rules—previously limited to institutional services—to ensure access to obstetric services at targeted hospitals.)

This section establishes increased Federal Medical Assistance Percentage (FMAP) rates for State expenditures on medical assistance for maternity, labor, and delivery services (as defined in section 1902(uu)) furnished by eligible hospitals (as defined in section 1902(uu)) during fiscal quarters beginning on or after October 1, 2026. Specifically, it provides (1) 100% FMAP for the enhanced payment rate amount, equal to the excess of the minimum payment rate required under section 1902(a)(13)(D) (or, by application, section 1932(f)) over the base payment rate (i.e., the payment rate under the State plan or waiver as of January 1, 2025, increased by the percentage increase in the medical care component of the consumer price index for all urban consumers from January 2025 to the month before the quarter); and (2) the enhanced FMAP under section 2105(b) for the base payment rate amount (i.e., total such expenditures minus the enhanced amount), if that rate is not lower than the otherwise applicable FMAP. Such payments to territories are excluded from caps under section 1108(f) and (g).

This section amends Medicaid state plan requirements for reasonable and adequate hospital payment rates (42 U.S.C. 1396a(a)(13)(A)) to require that such rates take into account, consistent with new section 1923A, the situation of low-volume obstetric hospitals (generally, those averaging fewer than 300 births annually over the prior three fiscal years, recently closed low-volume hospitals, current-year low-volume providers, or state-certified essential providers for underserved populations such as those with limited English proficiency or specific racial/ethnic groups). The section adds a new section 1923A to the Medicaid statute (42 U.S.C. 1396r-4a) requiring states to submit a plan amendment by October 1, 2026, providing annual anchor payments to low-volume obstetric hospitals for labor and delivery services (inpatient/outpatient services related to births and antenatal transfers, as specified by the Secretary using ICD/CPT codes). Such payments must ensure a Medicaid labor and delivery revenue floor equal to the hospital's total labor and delivery revenue floor—calculated as its delivery volume (births plus antenatal transfers) times a per-delivery amount ($10,000 for FY2028, indexed annually thereafter by the medical care CPI and revised at least every five years based on cost data) plus a standby capacity amount (reflecting minimum expenditures needed for round-the-clock readiness of personnel, equipment, and facilities)—multiplied by the share of the hospital's deliveries paid under Medicaid or CHIP. (Thus, these payments aim to sustain maternity care access in low-volume settings at risk of service reductions or closures.)

This section requires state Children's Health Insurance Program (CHIP) plans to comply with Medicaid requirements under SSA sections 1902(a)(13)(D) and 1905(kk) establishing a minimum payment rate for maternity, labor, and delivery services furnished by an eligible hospital and providing federal financial participation for state expenditures on such services. (Thus, CHIP plans must incorporate these Medicaid payment protections previously applicable only to Medicaid.)

This section requires that a hospital's eligibility for, the amount of, and any applicable federal limits on federally-funded supplemental payments—including Medicare disproportionate share hospital (DSH) payments under section 1886(d)(5)(F) and Medicaid DSH payments under section 1923—and state upper payment limits be determined without regard to any increased or additional payments attributable to this title. (Thus, payment increases from this title do not reduce or disqualify hospitals from other supplemental payments or exceed state aggregate payment caps.)

This section requires Medicaid and CHIP state plans (or waivers) to provide pregnant individuals with continuous full-scope coverage during pregnancy and the 12-month postpartum period (previously, an optional Medicaid state election under section 1902(e)(16) to extend beyond the standard 60 days of pregnancy-related services only). (Thus, repealing the prior Medicaid limitation under section 1902(a)(10) to pregnancy-related services, vaccines, and conditions complicating pregnancy for individuals eligible solely under pregnancy categories.) The amendments take effect on the first day of the first calendar quarter one year after enactment, subject to an exception for states requiring legislation (first quarter after the first regular legislative session) and a state option for earlier implementation in any prior fiscal quarter.

This section establishes a Medicaid state plan option, effective January 1, 2028, to provide coordinated pregnancy and postpartum care through designated maternity health homes, notwithstanding statewideness and comparability requirements. Eligible individuals are Medicaid enrollees (or waiver enrollees) who are pregnant or within the 12-month period beginning on the last day of pregnancy, excluding those enrolled in health homes under sections 1945 or 1945A; such health homes must meet Secretary-established standards (considering best practices from section 330P grants) for coordinating care, developing individualized care plans, incorporating specified services (e.g., home care, behavioral health, social supports), coordinating with pediatric providers, and reporting data. States must pay qualifying maternity health homes for services during pregnancy and the 365-day postpartum period using a specified methodology (e.g., per-member-per-month, prospective payments to FQHCs/RHCs, or Secretary-approved alternative), adjustable for pregnancy/postpartum risk severity and care coordination needs and consistent with section 1902(a)(30)(A) economy and efficiency requirements; such payments qualify as medical assistance at 90% federal matching for the first eight fiscal quarters. Participating hospitals must establish procedures to notify maternity health homes when treating eligible individuals.

This section directs the Secretary of Health and Human Services, not later than one year after enactment, to issue and publish guidance for states on options to support and improve Medicaid and CHIP coverage and payment for services provided by doulas; certified nurse midwives, certified midwives, or certified professional midwives who meet or exceed International Confederation of Midwives education and training standards and are licensed in the state; and certain maternal health professionals specified by the Secretary. The guidance addresses such services (1) in rural areas, (2) across a continuum of care, and (3) among varied provider settings and payment and care models, including managed care.

This section provides increased federal medical assistance percentage (FMAP) payments under Medicaid for depression and anxiety screening services furnished to pregnant individuals that include, at a minimum, (1) at least one screening during the perinatal period using a standardized, validated tool and (2) a full assessment of mood and emotional well-being, including screening for postpartum depression and anxiety, during the postpartum period using a standardized, validated tool, by adding such services to those qualifying under clause (5) of the first sentence of section 1905(b); excludes the additional territorial payments for such services from payment limits under section 1108(f) and (g); and increases the enhanced FMAP under CHIP by 1 percentage point for such services provided to pregnant individuals (including targeted low-income pregnant women) during pregnancy and the subsequent 12-month postpartum period. The amendments take effect on the first day of the first fiscal quarter beginning one year after enactment.

This section requires states to provide presumptive eligibility for pregnant women for ambulatory prenatal care under Medicaid (changing "may provide" to "shall provide" in Section 1920(a) of the Social Security Act). (As background, presumptive eligibility allows qualified entities, such as providers, to temporarily deem individuals eligible for specified Medicaid services based on preliminary information while a full application is processed.) It further requires states to provide such presumptive eligibility to pregnant women independently of any presumptive eligibility options elected under §§1920A (children), 1920B (parents and caretaker relatives), or 1920C (low-income adults); permits participating hospitals to make presumptive eligibility determinations for any covered populations (previously limited by state elections); and makes conforming amendments to state plan requirements (§1902(a)(47)), notification procedures (§1920(e)), CHIP provisions (§§2107(e)(1)(R) and 2112(c)), and related headings.

This section amends section 203A of the Public Health Service Act (42 U.S.C. 204a) to expand Commissioned Corps deployment authorities beyond public health emergencies or needs to include "urgent maternal health care needs" (i.e., needs arising from hospital or facility closures, imminent closures, or loss of trained maternal health workers that impair access to prenatal, labor and delivery, postnatal, maternal/postpartum mental health, behavioral health, and reproductive services, as determined by the Secretary in consultation with the Attorney General); adds a deployment trigger for any urgent need that could escalate to an emergency; and defines "urgent maternal health care need." The section further amends section 214 (42 U.S.C. 215) to authorize the Secretary, upon request of an eligible entity (i.e., a State, political subdivision, or Tribal/nonprofit/health care entity), to detail Commissioned Corps personnel to address urgent maternal health care needs stemming from such closures or worker losses. (Details are paid from Service appropriations, with possible reimbursement by the entity; service counts toward Corps members' pay, promotion, retirement, and benefits; and the Secretary may require entity agreements to maintain services, submit hiring/retention or patient transition plans, and undergo workplace assessments.) This section also adds subsection (e) to section 203 (42 U.S.C. 204), directing the Secretary to enhance Commissioned Corps operations by improving headquarters processes and systems; maximizing force management, training, operational capacity, and mission readiness of the Regular Corps, Ready Reserve Corps, and Public Health Emergency Response Strike Teams; and recruiting/retaining professionals for underserved/vulnerable communities through improved onboarding.

This section requires state Medicaid plans to adopt and implement a streamlined enrollment process—without screening requirements beyond those for in-state providers—for eligible out-of-state providers of maternity, labor, and delivery services located in neighboring states (as defined by the Secretary of Health and Human Services), granting such providers five-year enrollment periods (unless terminated or excluded, with revalidation available for subsequent five-year periods). An eligible provider (i) furnishes such services (or provides related orders or referrals) for which Medicaid payment is available, (ii) is determined by the Secretary to pose limited risk of fraud, waste, or abuse under Medicare provider screening standards, (iii) has been screened under those standards for Medicare or its home-state Medicaid program, and (iv) has not been excluded from Medicare or Medicaid. It makes conforming amendments to related Medicaid provisions on provider screening and enrollment; applies the requirement to the Children's Health Insurance Program (CHIP); directs the Secretary to issue guidance to state Medicaid and CHIP directors on best practices for such screening and enrollment (including in managed care plans) by January 1, 2028; and specifies that the amendments take effect on January 1, 2028. (Thus, the changes facilitate beneficiary access to maternity services from qualified providers across state lines, particularly in border or underserved areas.)

This section amends Medicare provider agreements to require hospitals, beginning 180 days after enactment, to submit to the Secretary, relevant local and State agencies, and the community a notification at least 180 days before closing an obstetric unit (i.e., a hospital unit providing maternity care), including (1) a report analyzing community impacts such as adverse outcomes and increased obstetric service costs; (2) steps to identify other providers to address service gaps; (3) the closure's cause; (4) historic community transportation costs for obstetric services; and (5) additional information required by the Secretary. It further amends Medicaid state plan requirements to mandate that states publicly post on a relevant state agency website any such hospital impact reports received pursuant to this Medicare provision.

This section requires hospitals, as a condition of their Medicare provider agreement, to include specified data on labor and delivery services in cost reports submitted for cost reporting periods beginning on or after July 1, 2026, as follows: (1) the number of births, delineated by cesarean and vaginal; (2) the number of antenatal and postpartum transfers to other hospitals; (3) data on the number and characteristics of staff providing such services; (4) expenses incurred for such services, including nursing care, anesthesia, and operating room services; (5) amounts spent for on-call coverage by physicians and midwives; and (6) amounts and sources of revenue received for such services, including from Medicaid (title XIX), other health insurance or third-party coverage, and uninsured individuals.