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In the U.S. all healthcare professionals are "mandated reporters." That means, if they find out about any form of child abuse while they're on the job, they're legally required to report it. Failing to do so can result in the loss of their professional license. Doing so is always considered an exception to confidentiality rights.
I suspect the hospital in question has a strict policy about reporting any pregnant mother who tests positive for drugs to CPS as a means of avoiding lawsuits. The problem is really with CPS systems in the U.S. They're supposed to investigate reported instances of abuse and if it turns out there's no cause for concern, close the case in short order; but CPS workers aren't all of equal quality, and in my experience (I work in mental health), there's a real problem with people who were abused as children becoming CPS workers and having a bias towards being overly suspicious of all parents. So, cases sometimes get dragged out, which ironically results in psychological harm to the children the CPS workers are supposed to be protecting.
Yes. Co-opting CPS a weapon in the "war on drugs" was a very intentional choice with extremely predictable outcomes.
While CPS is a good thing in concept it most often gets used as a weapon for class warfare. No angel investor is getting their kids taken away for getting busted snorting coke off a stripper.