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Mandatory reporting laws in many states require healthcare providers to report suspected prenatal drug use, which may lead to drug testing during pregnancy and at delivery. Recent changes to these laws—both the relaxing and tightening of such requirements—provide a quasi-experimental setting to study how reporting requirements affect maternal and infant drug testing rates and the likelihood of a positive result. While identifying drug use during pregnancy can connect patients to treatment, testing can also lead to involvement with the criminal justice system or child protective services. These non-therapeutic uses of drug testing may encourage mistrust of the healthcare system, particularly given the racial disparities in testing levels. We find that Black infants were tested at higher rates (16%) compared to White infants (7%), but both groups had the same positive testing rate (20%). Using a large EMR with nationwide coverage, we use a staggered difference-in-differences research design to study the effect of state-level changes in reporting laws on testing practices. To examine the role of racial discrimination in testing decisions, we exploit the quasi-random assignment of patients to delivering physicians. Some physicians are systematically more likely to test patients, and we use this variation as an instrument to decompose the racial disparity in testing into what is driven by provider behavior vs. differences in provider exposure. We provide new evidence of how policy and provider discretion shape racial disparities in clinical decision-making during the perinatal period.