In 2012 South Carolina's Medicaid program was the first state Medicaid program to separate payment for the immediate postpartum placement of long-acting reversible contraception (intrauterine devices and contraceptive implants) from its global maternity payment. Examining data on all Medicaid-insured South Carolina women giving birth from 2010 to 2014, we found that the new policy achieved its explicit goal: increasing the availability of immediate postpartum long-acting reversible contraception. Among adolescents, for whom most pregnancies are unintended, this represented new use of long-acting reversible options, rather than substitution for sterilization or for short-acting reversible methods. Therefore, the new policy also significantly increased use of highly effective postpartum contraception in an age group that is particularly vulnerable to closely spaced, higher-risk repeat pregnancies. However, fewer than half of facilities began to offer immediate postpartum long-acting reversible contraceptives after the policy change. Additional policy approaches may be needed to achieve widespread availability of this option.