The "Better Availability of Birth Centers Improves Outcomes and Expands Savings Act," or BABIES Act, seeks to combat maternity care shortages and enhance maternal and infant health outcomes. It proposes to achieve this by increasing the availability of freestanding birth centers and investigating improved payment structures for their services. The bill establishes a new grant program, the Strong Start Birth Center Grants, administered by the Health Resources and Services Administration. These grants, ranging from $300,000 to $500,000 for up to 15 birth centers annually from fiscal years 2026 through 2030, are intended to support renovation, expansion, construction, equipment purchases, and accreditation activities . Special consideration will be given to birth centers located in or serving areas designated as maternity care health professional shortage areas or those with suboptimal maternity care outcomes. Furthermore, the legislation mandates the creation of 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, the Secretary must publish criteria for birth center participation, requiring accreditation, state licensure, robust care coordination, and the ability to provide peripartum care consistent with evidence-based guidelines. Participating birth centers must demonstrate capabilities for emergency procedures, established transfer plans with hospitals, medical consultation from board-certified physicians, and data collection for quality improvement. They must also employ or contract with a licensed physician and a midwife meeting international education and training standards. The Secretary will also issue guidance for states to develop a prospective payment system , ensuring comprehensive payment for facility services, professional services, and care episodes for both mothers and newborns. The bill outlines a request for proposals for states to participate, prioritizing those with existing or developing birth centers, licensure mechanisms, maternity care deserts, and poor maternity outcomes. Up to six states will receive planning grants within 18 months to develop detailed proposals, including stakeholder input and securing birth center participation. Selected states will launch their four-year demonstration programs within two years, receiving enhanced federal matching funds for approved services. Finally, the Secretary is required to submit annual reports to Congress assessing clinical outcomes, such as transfer rates, C-section rates, and preterm births, and evaluating the impact of the demonstration programs on federal and state costs compared to traditional maternity care. After three years, recommendations will be made regarding the program's continuation, expansion, modification, or termination. The bill defines "low-risk pregnancy" as an uncomplicated singleton term pregnancy with a vertex presentation and an expected uncomplicated birth.