The chair of the Senate Finance Committee on Monday released a bill that would increase federal financial support to hospitals in hopes of stemming the tide of labor and delivery unit closures in rural and underserved areas.

Nearly a quarter of rural hospitals stopped providing obstetric services between 2011 and 2021, according to Chartis, a health care consulting firm. Analysts blame the closures on low Medicaid reimbursement rates and declining birth rates in rural communities. The combination, they said, makes it financially challenging to keep labor and delivery units staffed. 

In a call with reporters, Senate Finance Committee Chair Ron Wyden, D-Ore., said he was inspired to introduce the bill after hearing of the impending closure of a maternity ward in Baker City, Ore. 

“Closures like these are driven by stark economic realities facing the hospitals and efforts by large hospital chains to streamline the business at the expense of young families,” Wyden said.

His bill would increase the base Medicaid payment rate for labor and delivery services to 150 percent of the Medicare rate for rural hospitals. The increased rate would also apply to hospitals for which at least 60 percent of its births are paid for by Medicaid, the Indian Health Service or through self-pay.

The federal government would also increase its share of the Medicaid match for labor and delivery services at eligible hospitals.

About 4 in 10 births in the United States are financed through Medicaid.

The bill would also create “standby” payments for labor and delivery services at hospitals that deliver fewer than 300 babies per year. Hospitals would be required to keep the supplemental funding in the community it was intended for and pay the money back if the hospital system decides to close the hospital or labor and delivery unit within two years of receiving it.

Wyden’s bill would also require states provide 12 months of Medicaid coverage to postpartum women. Almost every state voluntarily covers 12 months of postpartum coverage under a law that incentivized them to do so, according to KFF, formerly known as Kaiser Family Foundation.

The legislation would also require state Medicaid programs enroll obstetric care providers in neighboring states.

And it would require hospitals provide “timely notification” of an impending hospital obstetric unit closure and allow them to request emergency obstetrics providers from the United States Public Health Service Commissioned Corps.

Wyden said the bill has 15 Democratic co-sponsors so far. He is still working on recruiting Republicans.

“I believe we can make this bill a bipartisan one,” he said. “The Senate is essentially a very rural institution and we have a lot of colleagues that have been interested in this issue.”

He did not indicate when it will be marked up.

Wyden said he and the community were caught off guard by the closure announcement in Baker City.

“I was given no notice this was going on,” he said.