OBJECTIVES: The risks of smoking during pregnancy are numerous to both mother and fetus.  While the negative effects of smoking during pregnancy can be long-term, medical costs that are most easily linked to smoking during pregnancy occur shortly following birth.  For example, smoking during pregnancy often results in prolonged hospitalization and admission of the infant to a neonatal intensive care unit (NICU), at a cost of thousands of dollars daily.  We set out to perform the first health economic analysis of incentive-based treatments in a smoking, pregnant population. METHODS: The design of the present study was based on analysis of recent prospective studies examining the use of contingency management (CM) for the treatment of smoking during pregnancy.  The resultant pooled analysis totaled 166 women (82 contingent, 78 non-contingent) for whom clinical outcomes and direct hospital costs were reported.  Pregnant women who reported smoking upon entering prenatal care were recruited from Fletcher Allen Health Care obstetric practices and Women, Infants, and Children (WIC) offices in and around Burlington, Vermont. Women were randomized between two conditions: contingent or noncontingent vouchers.  Those in the contingent condition received vouchers exchangeable for retail goods contingent upon cotinine-negative urine analysis.  Women in the non-contingent condition received vouchers independent of their smoking status. Vouchers were provided throughout pregnancy and for the first 3 months postpartum. RESULTS: As compared with non-contingent care, CM led to a nearly 3-fold reduction in admissions to the neonatal intensive care unit (NICU). Only 7.0% of CM women delivered infants admitted to the NICU (median charge = $9,210) versus 19.2% among non-contingent women (median charge = $11,363).  The findings from this study suggest that these cash-like incentives targeting at-risk patients are not only cost-effective but also cost-saving in pregnant smokers.  CONCLUSIONS: Incentive-based treatment towards smoking abstinence dominated usual care with both better outcomes and lower economic costs.