The "Better Availability of Birth Centers Improves Outcomes and Expands Savings Act," or BABIES Act, seeks to alleviate maternity care shortages and enhance maternal and infant health outcomes. It proposes a grant program to support freestanding birth centers in underserved areas. These grants, ranging from $300,000 to $500,000 for up to 15 centers annually from fiscal years 2026 through 2030, can be used for renovation, expansion, equipment, and accreditation . Special consideration will be given to centers located in health professional shortage areas or those serving areas with poor maternity care outcomes. The bill also mandates the Secretary of Health and Human Services to establish a Medicaid demonstration program to explore more effective payment models for freestanding birth center services. This program targets women with low-risk pregnancies who are eligible for Medicaid. Within one year of enactment, the Secretary must publish participation criteria for birth centers, requiring them to be accredited, state-licensed , and capable of comprehensive care coordination, emergency procedures, and data collection. The Secretary will also issue guidance for states to develop a prospective payment system (PPS) for these services, ensuring payments cover various aspects of care, including partial facility payments, professional services, and care episodes for both mother and newborn. A Request for Proposal (RFP) will be published for states to apply, with preference given to those demonstrating potential to expand access and improve quality without increasing federal spending. States must have mechanisms to license birth centers and address maternity care deserts or poor outcomes. Up to six states will receive planning grants within 18 months to develop their demonstration proposals and establish their PPS. Selected states will then conduct four-year demonstration programs , receiving federal matching funds for services provided under their approved PPS. The Secretary is required to submit annual reports to Congress, assessing clinical outcomes, such as transfer rates and C-section rates, and evaluating the program's impact on federal and state costs compared to traditional maternity care. Recommendations for the program's future will be provided before its conclusion.