Labor and delivery services anchor payments

(a) State requirement Section 1902(a)(13)(A) of the Social Security Act (42 U.S.C. 1396a(a)(13)(A)) is amended— (1) in clause (iii), by striking and at the end; (2) in clause (iv), by striking the semicolon at the end and inserting, and; and (3) by adding at the end the following new clause: (v) in the case of hospitals, such rates take into account (in a manner consistent with section 1923A) the situation of low volume obstetric hospitals (as such term is defined in such section);. (b) Requiring anchor payments for low volume obstetric hospitals Title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) is amended by inserting the following after section 1923: 1923A. Anchor payments for labor and delivery services provided by low volume obstetric hospitals (a) Implementation of requirement A State plan under this title shall not be considered to meet the requirement of section 1902(a)(13)(A)(v) (insofar as it requires payments to hospitals to take into account the situation of low volume obstetric hospitals), as of October 1, 2026, unless the State has submitted to the Secretary, by not later than such date, an amendment to such plan that provides for an annual anchor payment to such hospitals, consistent with subsection (c). (b) Definitions In this section: (1) Antenatal transfer The term antenatal transfer means, with respect to a hospital, a pregnant individual who was expected to receive labor and delivery services at the hospital but who is transferred to a different hospital because of a need for labor and delivery services that are not available at the transferring hospital. (2) Delivery volume The term delivery volume means, with respect to a hospital and a fiscal year, the total number of births occurring in, and antenatal transfers made by, such hospital during such year. (3) Labor and delivery revenue floor The term labor and delivery revenue floor means, with respect to a low volume obstetric hospital and a fiscal year, the amount equal to the sum of— (A) the product of— (i) the delivery volume for such hospital and fiscal year; and (ii) the per delivery amount for such fiscal year; and (B) the standby capacity amount for such fiscal year. (4) Labor and delivery services The term labor and delivery services means such inpatient and outpatient hospital services related to labor and delivery, including services related to antenatal transfers, identified by appropriate ICD and CPT codes, as the Secretary shall specify in consultation with professional or medical societies with expertise in this area. (5) Low volume obstetric hospital The term low volume obstetric hospital means, with respect to a hospital and a fiscal year, a hospital— (A) that is an eligible hospital (as defined in section 1902(uu)(2)); (B) in which the average number of births for which the hospital provided labor and delivery services during the preceding 3 fiscal years is less than 300 births per year; (C) that did not provide labor and delivery services in the preceding fiscal year, but in which the average number of births for which the hospital provided labor and delivery services during the most recent 3 fiscal years in which the hospital provided labor and delivery services is less than 300 births per year; (D) that is not described in subparagraphs (B) or (C) but, in the applicable fiscal year, provides labor and delivery services for fewer than 300 births; or (E) that is not described in subparagraphs (B) through (D) but is certified by the State in which the hospital is located as meeting such criteria as the Secretary shall establish for identifying hospitals that are essential to meeting the needs of an underserved population, such as serving a population with limited English proficiency, serving specific racial or ethnic populations, or other factors. (6) Medicaid labor and delivery revenue floor The term Medicaid labor and delivery revenue floor means, with respect to a low volume obstetric hospital and a fiscal year, the product of— (A) the labor and delivery revenue floor for such hospital and fiscal year; and (B) the percentage of the delivery volume of such hospital in such fiscal year that were paid for under a State plan under this title (or under a waiver of such a plan) or under a State child health plan under title XXI (or under a waiver of such a plan). (7) Per delivery amount (A) In general The term per delivery amount means, with respect to a fiscal year, an amount, as determined under subparagraph (B), that represents the marginal cost to a low volume obstetric hospital of a birth or an antenatal transfer. (B) Determination of per delivery amount (i) Fiscal year 2028 For fiscal year 2028, the per delivery amount shall be $10,000. (ii) Indexing Subject to clause (iii), for each fiscal year after fiscal year 2028, the per delivery amount shall be the amount that applied under this subparagraph for the preceding fiscal year increased by the percentage increase in the medical care component of the consumer price index for all urban consumers for the 12-month period ending with September of such preceding fiscal year. (iii) Periodic revision of per delivery amount Not less than once every 5 fiscal years, the Secretary shall collect and analyze data on the costs of labor and delivery services at low volume obstetric hospitals and, through rulemaking, shall establish a new per delivery amount for purposes of this section to ensure that such amount accurately reflects the marginal cost to a low volume obstetric hospital of a birth or an antenatal delivery. (8) Standby capacity amount (A) In general The term standby capacity amount means, with respect to a fiscal year, an amount, as determined under subparagraph (B), that represents the minimum level of expenditures by a low volume obstetric hospital that is necessary to ensure that adequate personnel, equipment, and facilities are available at all times to provide labor and delivery services. (B) Determination of standby capacity amount (i) Fiscal year 2028 For fiscal year 2028, the standby capacity amount shall be $1,200,000. (ii) Indexing Subject to clause (iii), for each fiscal year after fiscal year 2028, the standby capacity amount shall be the amount that applied under this subparagraph for the preceding fiscal year increased by the percentage increase in the medical care component of the consumer price index for all urban consumers for the 12-month period ending with September of such preceding fiscal year. (iii) Periodic revision of standby capacity amount Not less than once every 5 fiscal years, the Secretary shall collect and analyze data on the costs of labor and delivery services at low volume obstetric hospitals and, through rulemaking, shall establish a new standby capacity amount for purposes of this section to ensure that such amount accurately reflects the minimum level of expenditures by a low volume obstetric hospital that is necessary to ensure that adequate personnel, equipment, and facilities are available at all times to provide labor and delivery services. (c) Anchor payment for low volume obstetric hospitals Not later than 3 months after the end of each fiscal year beginning with fiscal year 2028, each State shall pay to each low volume obstetric hospital in the State an amount that is equal to the amount (if any) by which— (1) the Medicaid labor and delivery revenue floor for the hospital and fiscal year; exceeds (2) the total amount of all payments made to the low volume obstetric hospital under the State plan under this title (or under a waiver of such plan) and under the State child health plan under title XXI (or under a waiver of such plan) (other than payments under this section) for labor and delivery services provided by such hospital during such fiscal year. (d) Requirements for receipt of payments No anchor payment shall be made to a low volume obstetric hospital under this section for a fiscal year unless the hospital can satisfy the following requirements: (1) Skills maintenance and training activities The hospital demonstrates to the satisfaction of the State that the hospital conducts and completes skills maintenance and training activities, including continuing education and training to support maintenance of obstetric skills, that satisfy such requirements as the Secretary, taking into consideration nationally recognized obstetrics skills, maintenance, and training standards such as standards published by the American College of Obstetricians and Gynecologists and the Association of Women's Health, Obstetric, and Neonatal Nurses, shall specify for the purposes of this section. (2) Continued provision of labor and delivery services (A) In general The hospital and the State enter into a contract under which, in exchange for such payment under this section for a fiscal year, the hospital agrees to continue to provide labor and delivery services— (i) for the period that begins with such fiscal year and ends on the last day of the second fiscal year that follows such fiscal year; and (ii) at a level that is not less than the level at which the hospital provided such services in the fiscal year to which such payment relates, unless the hospital can demonstrate that the need for services in the community has decreased and that the new level of services will be adequate to meet that need. (B) Recovery of payment in the event of breach of contract by hospital The terms of the contract between a hospital and a State required under subparagraph (A) shall provide that if the hospital does not provide labor and delivery services as required under the contract throughout the period described in such subparagraph for any reason (including in the event of the hospital's bankruptcy or closure) the State may recover the full amount of the payment under this section to which the contract relates and in the event of the hospital's bankruptcy, the State shall be given preferred creditor status for purposes of the collection of such payment. (3) Utilization of funds for labor and delivery services (A) In general The hospital and the State enter into a contract under which, in exchange for such payment under this section, the hospital agrees to utilize funds received under such payment for the provision of labor and delivery services in the community served by the hospital. (B) Recovery of payment in the event of breach of contract by hospital The terms of the contract between a hospital and a State required under subparagraph (A) shall provide that if the hospital does not utilize payment funds for labor and delivery services as required under the contract for any reason (including in the event of the hospital's bankruptcy or closure) the State may recover the full amount of the payment under this section to which the contract relates and in the event of the hospital's bankruptcy, the State shall be given preferred creditor status for purposes of the collection of such payment. (e) Treatment of payments; recovery of payments (1) In general Payments made by a State under this section for a fiscal year— (A) shall be in addition to any other payments made to hospitals for labor and delivery services under the State plan (or a waiver of such plan) under this title, under the State child health assistance plan under title XXI (or under a waiver of such plan), or under title XVIII for the fiscal year, including disproportionate share hospital payments under section 1923 or section 1886(d)(5)(F) and other supplemental payments that are not made under this section; and (B) shall be treated as medical assistance for which payment is made under section 1903(a), except that the Federal medical assistance percentage applicable to amounts expended by a State for such payments shall be equal to the enhanced FMAP determined for the State and fiscal year under section 2105(b). (2) Payments recovered by a State If a State recovers any amount of a payment made by a State under this section (whether pursuant to paragraphs (2)(B) or (3)(B) of subsection (d) or otherwise), the amount so recovered shall be treated as an overpayment recovered by the State under section 1903(d).. (c) Conforming amendments Title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) is amended as follows: (1) In section 1903— (A) in subsection (d)(6)(B)— (i) by striking related to the total amount and inserting the following: “related to— (i) the total amount; (ii) by striking the period at the end and inserting; and; and (iii) by adding at the end the following new clause: (ii) the total amount of payments made to individual providers (by provider) under section 1923A during such fiscal year.; and (B) in subsection (bb)(2)(B)— (i) in the header, by inserting and low volume obstetric hospital after DSH; and (ii) by inserting or a payment made to a low volume obstetric hospital under section 1923A before the period. (2) In section 1905— (A) in subsection (cc), by striking section 1923 the second place it appears and inserting section 1923 or 1923A; and (B) in subsection (ii)(2)(A), by inserting or payments to low volume obstetric hospitals described in section 1923A before the semicolon.