Guide

The two revenue lines in a birth center, and the licensure that unlocks the facility fee

Summary

A freestanding birth center gets paid a Medicaid facility fee only after the state licenses or approves it as a birth center, because federal Medicaid law makes that licensure a condition of the benefit existing at all. The facility fee is a separate claim from the clinician's delivery fee; each state sets its own rate, and the code and even the name of the license can differ too. South Dakota pays one all-inclusive flat rate per episode of care.

By Gale Editorial · Updated 2026-09-02. Every figure cited to a dated source. How we write.

What does the facility fee pay for that the delivery fee does not?

The room, the equipment, the staff time and the supplies. One birth at a licensed birth center produces two claims: the center bills for the place and everything in it, and the clinician bills separately for the delivery. South Dakota Medicaid puts the line in words worth borrowing, saying that delivery services performed by the physician, PA, NP or nurse-midwife are not considered to be facility services and belong on their own claim 1Ref 1South Dakota Department of Social Services, Division of Medical Services (2025).South Dakota Medicaid Billing and Policy Manual: Freestanding Birth Center.The two-line structure (delivery services by the physician, PA, NP or nurse-midwife are not facility services and go on a separate claim), the all-inclusive flat rate per episode of care, the lesser-of-billed-charge-or-fee-schedule cap on both lines, HCPCS S9083 on a CMS-1500 or 837P claim, HCPCS S4005 for labor not resulting in delivery, emergency treatment and transport as non-covered, and the manual quoting SDCL 34-12-1.12 -- all as South Dakota Medicaid's own rules, not a national rule..

That structure is what lets a birth center be a business rather than a job. The facility fee is revenue attached to the building. It has to carry the mortgage, the linens, the autoclave and the second room nobody is using tonight, and it keeps earning whichever clinician is on call.

A center that never bills a payer collects both lines in a single cash price and answers to nobody's fee schedule. That center faces the membership-not-insurance-test instead, a separate question from this one.

The licensure that unlocks the second line

Federal Medicaid law creates the facility line and then conditions it on a state license. A state may cover freestanding birth center services as a benefit, but only at a facility that is not a hospital, where childbirth is planned away from the woman's residence, and that is licensed or otherwise approved by the State for that care 2Ref 2Office of the Law Revision Counsel, U.S. House of Representatives (2010).42 U.S. Code § 1396d - Definitions.The federal licensure gate: a state may cover freestanding birth center services only at a facility that is not a hospital, where childbirth is planned away from the woman's residence, and that is licensed or otherwise approved by the State, and the statute sets no rate..

The statute stops there. It names no code, sets no rate and says nothing about what a schedule pays, because those are state decisions 2Ref 2Office of the Law Revision Counsel, U.S. House of Representatives (2010).42 U.S. Code § 1396d - Definitions.The federal licensure gate: a state may cover freestanding birth center services only at a facility that is not a hospital, where childbirth is planned away from the woman's residence, and that is licensed or otherwise approved by the State, and the statute sets no rate.. So the real sequence runs licensure first, provider enrollment second, and the rate discovered third, which is the reverse of the order most people research it in.

But the license is not one thing you can look up once and carry across a state line.

States do not share one licensing category for a birth center

Some states license a birth center as its own kind of facility, and some file it under clinics. Florida requires a license from the Agency for Health Care Administration in order to operate a birth center in the state at all 3Ref 3Florida Legislature (2026).The 2026 Florida Statutes, Section 383.301: Licensure and regulation of birth centers; legislative intent.That Florida requires a license from the Agency for Health Care Administration in order to operate a birth center in the state at all, and that section 383.301 is the licensing chapter to read.. California licenses what its code calls an alternative birth center as a category of specialty clinic, a clinic that is not part of a hospital, providing delivery care to women who stay under 24 hours 4Ref 4California State Legislature (2001).California Health and Safety Code Section 1204.That California licenses an alternative birth center as a category of specialty clinic rather than as its own facility class, defined as a clinic that is not part of a hospital providing delivery care to women who stay under 24 hours..

The clinician on the second line varies too. California licenses direct-entry midwives under a separate statutory title, the licensed midwife of the Licensed Midwifery Practice Act of 1993, distinct from certified nurse-midwife licensure 5Ref 5California State Legislature (2026).Business and Professions Code § 2505..That California licenses direct-entry midwives under a distinct statutory title, the licensed midwife of the Licensed Midwifery Practice Act of 1993, separate from certified nurse-midwife licensure.. Which credentials a state licenses sits upstream of who can appear as the rendering provider on the professional claim. The practice act answers the first question; the payer's manual answers the second, as South Dakota's does by naming the physician, PA, NP and nurse-midwife 1Ref 1South Dakota Department of Social Services, Division of Medical Services (2025).South Dakota Medicaid Billing and Policy Manual: Freestanding Birth Center.The two-line structure (delivery services by the physician, PA, NP or nurse-midwife are not facility services and go on a separate claim), the all-inclusive flat rate per episode of care, the lesser-of-billed-charge-or-fee-schedule cap on both lines, HCPCS S9083 on a CMS-1500 or 837P claim, HCPCS S4005 for labor not resulting in delivery, emergency treatment and transport as non-covered, and the manual quoting SDCL 34-12-1.12 -- all as South Dakota Medicaid's own rules, not a national rule..

Two public documents settle this for your own state. The first is the licensing chapter that names the facility category: Florida's is section 383.301, California's is Health and Safety Code section 1204. The second is the state Medicaid agency's provider manual for birth centers, which names the code and points to the fee schedule. Read them in that order. A manual may quote the state's statutory definition back at you, as South Dakota's does with SDCL 34-12-1.12 1Ref 1South Dakota Department of Social Services, Division of Medical Services (2025).South Dakota Medicaid Billing and Policy Manual: Freestanding Birth Center.The two-line structure (delivery services by the physician, PA, NP or nurse-midwife are not facility services and go on a separate claim), the all-inclusive flat rate per episode of care, the lesser-of-billed-charge-or-fee-schedule cap on both lines, HCPCS S9083 on a CMS-1500 or 837P claim, HCPCS S4005 for labor not resulting in delivery, emergency treatment and transport as non-covered, and the manual quoting SDCL 34-12-1.12 -- all as South Dakota Medicaid's own rules, not a national rule..

How the facility fee is billed, and what caps it

In South Dakota Medicaid, on one specific code, at one flat amount per birth. The facility fee is billed on HCPCS code S9083, on a CMS-1500 or 837P claim, and the center is reimbursed at an all-inclusive flat rate per episode of care rather than per service 1Ref 1South Dakota Department of Social Services, Division of Medical Services (2025).South Dakota Medicaid Billing and Policy Manual: Freestanding Birth Center.The two-line structure (delivery services by the physician, PA, NP or nurse-midwife are not facility services and go on a separate claim), the all-inclusive flat rate per episode of care, the lesser-of-billed-charge-or-fee-schedule cap on both lines, HCPCS S9083 on a CMS-1500 or 837P claim, HCPCS S4005 for labor not resulting in delivery, emergency treatment and transport as non-covered, and the manual quoting SDCL 34-12-1.12 -- all as South Dakota Medicaid's own rules, not a national rule.. Payment is then the lesser of the billed amount or the amount on the state's fee schedule, so billing above the schedule changes nothing 1Ref 1South Dakota Department of Social Services, Division of Medical Services (2025).South Dakota Medicaid Billing and Policy Manual: Freestanding Birth Center.The two-line structure (delivery services by the physician, PA, NP or nurse-midwife are not facility services and go on a separate claim), the all-inclusive flat rate per episode of care, the lesser-of-billed-charge-or-fee-schedule cap on both lines, HCPCS S9083 on a CMS-1500 or 837P claim, HCPCS S4005 for labor not resulting in delivery, emergency treatment and transport as non-covered, and the manual quoting SDCL 34-12-1.12 -- all as South Dakota Medicaid's own rules, not a national rule..

	Facility line	Professional line
Pays for	the room, staff, equipment, supplies	the clinician's delivery care
Billed by	the licensed center	the physician, PA, NP or nurse-midwife
Form and code	CMS-1500 or 837P, HCPCS S9083	a separate claim from that provider
Rate basis	all-inclusive flat rate per episode of care	the provider's usual and customary charge
What caps it	lesser of billed charge or fee schedule	lesser of that charge or fee schedule

Every cell in that table is South Dakota's rule 1Ref 1South Dakota Department of Social Services, Division of Medical Services (2025).South Dakota Medicaid Billing and Policy Manual: Freestanding Birth Center.The two-line structure (delivery services by the physician, PA, NP or nurse-midwife are not facility services and go on a separate claim), the all-inclusive flat rate per episode of care, the lesser-of-billed-charge-or-fee-schedule cap on both lines, HCPCS S9083 on a CMS-1500 or 837P claim, HCPCS S4005 for labor not resulting in delivery, emergency treatment and transport as non-covered, and the manual quoting SDCL 34-12-1.12 -- all as South Dakota Medicaid's own rules, not a national rule.. Another state may pay the facility line on a different code, on a different basis, or not at all, which is the check to run before borrowing any of it.

A flat rate per episode changes what you watch. A fourteen-hour labor and a four-hour labor pay the facility the same, so facility revenue moves with births completed at the center while cost moves with staff hours. The other limit is rooms. A center with two of them finds out on a night with three simultaneous labors whether it is full and turning people away.

What happens when labor does not end in a delivery

In South Dakota, the center can still bill for the labor, and the transfer itself is not the center's to bill. The manual lets a birth center bill labor occurring but not resulting in delivery under HCPCS code S4005 when a patient is admitted and then transferred, while emergency treatment and emergency transport are non-covered services the center cannot bill 1Ref 1South Dakota Department of Social Services, Division of Medical Services (2025).South Dakota Medicaid Billing and Policy Manual: Freestanding Birth Center.The two-line structure (delivery services by the physician, PA, NP or nurse-midwife are not facility services and go on a separate claim), the all-inclusive flat rate per episode of care, the lesser-of-billed-charge-or-fee-schedule cap on both lines, HCPCS S9083 on a CMS-1500 or 837P claim, HCPCS S4005 for labor not resulting in delivery, emergency treatment and transport as non-covered, and the manual quoting SDCL 34-12-1.12 -- all as South Dakota Medicaid's own rules, not a national rule.. Model that line before you open, because transfers are what make a birth center's revenue lumpier than its calendar looks.

The professional line splits as well when two clinicians share one episode, and Medicare's claims-processing manual shows the arithmetic used for it. Under its global allowances section, where one provider furnishes part of the global obstetric package and another furnishes the rest, the payer subtracts the dollar value of the portion already paid and pays the remainder at a stated percentage share, with reduced service modifiers flagging partial performance; the manual works it through on a single $1,000 example 6Ref 6Centers for Medicare & Medicaid Services (CMS) (2025).Medicare Claims Processing Manual, Chapter 12 - Physicians/Nonphysician Practitioners.The global-allowances arithmetic for splitting one global obstetric fee between two providers who each furnished part of the episode: subtract the value of the portion already paid, pay the remainder at a stated percentage share, use reduced service modifiers for partial performance, shown on a single $1,000 worked example.. That is Medicare, which is rarely the maternity payer, so take it as the shape of a split fee rather than as your rate.

The facility fee has to pay for the facility

The buildout is usually the heaviest item in the startup budget: rooms, tubs, plumbing, fire and life-safety work, and whatever the licensing chapter demands before an inspector signs. The facility line is the revenue that pays it back. Interior improvements to nonresidential property placed in service after 2017, what Publication 946 calls qualified improvement property, are generally 15-year property under MACRS, depreciated straight line under the general depreciation system 7Ref 7Internal Revenue Service (2025).Publication 946, How To Depreciate Property.That interior improvements to nonresidential property placed in service after 2017 are generally 15-year MACRS property depreciated straight line under GDS, and that the publication does not address unrecovered basis when a lease ends or improvements are abandoned early..

Fifteen years is a long horizon to hang on a lease, and Publication 946 does not address what happens to unrecovered basis when a lease ends or improvements are abandoned before that period runs 7Ref 7Internal Revenue Service (2025).Publication 946, How To Depreciate Property.That interior improvements to nonresidential property placed in service after 2017 are generally 15-year MACRS property depreciated straight line under GDS, and that the publication does not address unrecovered basis when a lease ends or improvements are abandoned early.. That is the question to put to your CPA with the lease term on the table, alongside whether the improvements belong to you or to the landlord.

A second clinician moves the two lines by different amounts. The professional line follows whoever did the work, so it scales with clinician hours and stops when they stop. The facility line does not care which of you was on call, and it only grows if clinician #2 fills a room that was sitting empty.

Before you model a rate

There is no national facility-fee number to model; anyone quoting one is quoting a single state or a single contract. The federal statute creates the benefit and leaves the rate to the states 2Ref 2Office of the Law Revision Counsel, U.S. House of Representatives (2010).42 U.S. Code § 1396d - Definitions.The federal licensure gate: a state may cover freestanding birth center services only at a facility that is not a hospital, where childbirth is planned away from the woman's residence, and that is licensed or otherwise approved by the State, and the statute sets no rate.. South Dakota's manual publishes the mechanism, an all-inclusive flat rate per episode paid at the lesser of charge or schedule, then points at a separate fee-schedule lookup for the dollar amount 1Ref 1South Dakota Department of Social Services, Division of Medical Services (2025).South Dakota Medicaid Billing and Policy Manual: Freestanding Birth Center.The two-line structure (delivery services by the physician, PA, NP or nurse-midwife are not facility services and go on a separate claim), the all-inclusive flat rate per episode of care, the lesser-of-billed-charge-or-fee-schedule cap on both lines, HCPCS S9083 on a CMS-1500 or 837P claim, HCPCS S4005 for labor not resulting in delivery, emergency treatment and transport as non-covered, and the manual quoting SDCL 34-12-1.12 -- all as South Dakota Medicaid's own rules, not a national rule.. Pull the schedule for your own state before any of the arithmetic is worth doing.

Start at the state Medicaid agency's fee-schedule page and search the code the birth-center manual names. Read that manual's covered and non-covered lists; South Dakota's is where its transfer and emergency rules sit 1Ref 1South Dakota Department of Social Services, Division of Medical Services (2025).South Dakota Medicaid Billing and Policy Manual: Freestanding Birth Center.The two-line structure (delivery services by the physician, PA, NP or nurse-midwife are not facility services and go on a separate claim), the all-inclusive flat rate per episode of care, the lesser-of-billed-charge-or-fee-schedule cap on both lines, HCPCS S9083 on a CMS-1500 or 837P claim, HCPCS S4005 for labor not resulting in delivery, emergency treatment and transport as non-covered, and the manual quoting SDCL 34-12-1.12 -- all as South Dakota Medicaid's own rules, not a national rule.. If the rate is not published, ask the agency's provider relations desk in writing and keep the answer.

If your patients sit in a Medicaid managed-care plan, whether that plan pays the state schedule or its own negotiated rate is a question for the contract in front of you, and the state's fee-for-service manual may not settle it. A neighboring question is whether your own professional payment is scored differently by place of service, the facility vs non-facility question; that one turns on your payer's physician fee schedule and sits outside the birth-center rules.

The file to bring your CPA and your attorney is short: the licensing chapter's build requirements, the facility rate on your state's schedule, an assumed transfer rate and whatever your state pays for labor that ends in a transfer, and the depreciation horizon on the buildout set against the lease term. The elections and the entity are theirs to advise on.

Common questions

No. Federal Medicaid law only lets a state cover freestanding birth center services at a facility that is not a hospital, where childbirth is planned away from the woman's residence, and that is licensed or otherwise approved by the State. Without that approval there is no benefit for the claim to attach to, whatever the center is charging cash patients.

Yes, and separately claimed. South Dakota Medicaid states that delivery services performed by the physician, PA, NP or nurse-midwife are not facility services, so the clinician bills a claim of their own at a usual and customary charge while the center bills the facility line. One birth produces two claims from two different billing providers.

It depends on the state, and South Dakota is the worked example rather than the rule. There, the facility fee must be billed on HCPCS code S9083 on a CMS-1500 or 837P claim, and it is paid as one all-inclusive flat rate per episode of care. Your own state's birth-center provider manual names the code it wants.

In South Dakota, a center that admits a patient who then transfers may bill labor occurring but not resulting in delivery under HCPCS code S4005. Emergency treatment and emergency transport are non-covered services the center cannot bill. Check the covered and non-covered lists in your own state's manual, because that pair of rules is where transfer economics is decided.

There is no national amount. The federal statute creates the benefit and leaves rates to the states, so the dollar figure lives on your state Medicaid agency's fee schedule under the code its manual names. Even where the mechanism is published, as South Dakota publishes its lesser-of rule, the amount itself sits in a separate fee-schedule lookup.

No. Florida requires a license from the Agency for Health Care Administration in order to operate a birth center at all, while California licenses an alternative birth center as a category of specialty clinic, defined around a stay under 24 hours. Read your state's licensing chapter and its Medicaid birth-center manual together before assuming either shape applies.

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References

1.South Dakota Department of Social Services, Division of Medical Services (2025). South Dakota Medicaid Billing and Policy Manual: Freestanding Birth Center. South Dakota Department of Social Services (dss.sd.gov). link ✓The two-line structure (delivery services by the physician, PA, NP or nurse-midwife are not facility services and go on a separate claim), the all-inclusive flat rate per episode of care, the lesser-of-billed-charge-or-fee-schedule cap on both lines, HCPCS S9083 on a CMS-1500 or 837P claim, HCPCS S4005 for labor not resulting in delivery, emergency treatment and transport as non-covered, and the manual quoting SDCL 34-12-1.12 -- all as South Dakota Medicaid's own rules, not a national rule.
2.Office of the Law Revision Counsel, U.S. House of Representatives (2010). 42 U.S. Code § 1396d - Definitions. Cornell Law School, Legal Information Institute (U.S. Code). link ✓The federal licensure gate: a state may cover freestanding birth center services only at a facility that is not a hospital, where childbirth is planned away from the woman's residence, and that is licensed or otherwise approved by the State, and the statute sets no rate.
3.Florida Legislature (2026). The 2026 Florida Statutes, Section 383.301: Licensure and regulation of birth centers; legislative intent. Online Sunshine, Florida Legislature statutes database. linkThat Florida requires a license from the Agency for Health Care Administration in order to operate a birth center in the state at all, and that section 383.301 is the licensing chapter to read.
4.California State Legislature (2001). California Health and Safety Code Section 1204. California Legislative Information (leginfo.legislature.ca.gov). link ✓That California licenses an alternative birth center as a category of specialty clinic rather than as its own facility class, defined as a clinic that is not part of a hospital providing delivery care to women who stay under 24 hours.
5.California State Legislature (2026). Business and Professions Code § 2505.. California Business and Professions Code, Licensed Midwifery Practice Act of 1993. link ✓That California licenses direct-entry midwives under a distinct statutory title, the licensed midwife of the Licensed Midwifery Practice Act of 1993, separate from certified nurse-midwife licensure.
6.Centers for Medicare & Medicaid Services (CMS) (2025). Medicare Claims Processing Manual, Chapter 12 - Physicians/Nonphysician Practitioners. CMS Internet-Only Manual, Pub. 100-04 (Table of Contents Rev. 13316, Issued 07-24-2025; §130.2 text dated Rev. 2024, Issued 08-06-2010, still current). link ✓The global-allowances arithmetic for splitting one global obstetric fee between two providers who each furnished part of the episode: subtract the value of the portion already paid, pay the remainder at a stated percentage share, use reduced service modifiers for partial performance, shown on a single $1,000 worked example.
7.Internal Revenue Service (2025). Publication 946, How To Depreciate Property. IRS Publication 946 (for use in preparing 2025 returns). link ✓That interior improvements to nonresidential property placed in service after 2017 are generally 15-year MACRS property depreciated straight line under GDS, and that the publication does not address unrecovered basis when a lease ends or improvements are abandoned early.

https://www.gale.care/for-providers/se-birth-center-facility-fee-economics · 7 sources. Competitor details are cited to dated public sources and maintained as they change; figures are estimates, not commitments. Synthetic demonstration.

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