How do hospitals determine who to drug test at time of birth?

I want to know how hospitals/dr determine who to drug test at the time of their child's birth. The reason I ask is because I as told that medicaid patients have to be tested by law and that seems to me like they are discriminating on mother's on well fare. I have experience as a social worker and have had many clients ask this question to me. Even my supervisors could not answer the question.