Here's a bit more: Illegal immigrants do not have access to Medicaid, but are eligible to receive care for emergencies including labor and delivery. Earlier when a woman delivered her baby under Medicaid, the baby was automatically covered under Medicaid for the first year of its life.
However the new rules provide no such coverage; requiring the parents to file an application and provide documents to prove the baby's US citizenship. These rules were effective from July, but some states have been a bit slow in implementing them. Doctors are becoming aware of the rules only now.
Here's more info: Administration officials said the change was necessary under their reading of a new law, the Deficit Reduction Act, signed by President Bush in February. The law did not mention newborns, but generally tightened documentation requirements because some lawmakers were concerned that immigrants were fraudulently claiming U.S. citizenship to get Medicaid.