The New Mexico Health Care Authority has requested $1 billion in federal funding to bolster rural health care, with the goals of expanding access to specialty care and chronic condition management, strengthening training programs for providers and building a statewide health care data system.
The state submitted a 128-page application dated Nov. 4 to secure five years of funding through the federal Rural Health Transformation Program. The $50 billion initiative was established as part of the latest federal reconciliation bill signed into law in July, which will also slash Medicaid funding over the next decade.
In a letter introducing the state’s application, Gov. Michelle Lujan Grisham called the program a “critical lifeline” for New Mexico’s rural communities, where residents face higher rates of chronic disease, long travel times to care and fewer hospitals, clinics and independent providers — many of which operate on thin margins.
“Our goal for implementing this plan is simple: improve access, drive better health outcomes, support stronger providers, and build a future where all New Mexicans thrive,” Lujan Grisham wrote.
The Centers for Medicare and Medicaid Services is slated to announce awardees by Dec. 31. Half of the rural health funds will be split equally between all approved states; the other half will be awarded based on each state’s application for funds.
All 50 states submitted applications for their share of the money, an effort Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz called “an extraordinary moment.”
“This is not just a funding opportunity — it’s a turning point for rural health,” Oz said in a news release. “Together, we’re delivering the largest rural health investment in American history — and building a foundation for healthier communities for generations to come.”
‘Make rural America healthy again’
Under federal rules, states must use the Rural Health Transformation Program funds along certain strategic priorities.
These include efforts to “make rural America healthy again” by promoting preventative care and encouraging innovation; supporting health care providers to ensure sustainable access to care in rural communities; developing and retaining a strong workforce of rural health care workers; and expanding medical technology for access and efficiency in rural settings.
The state Health Care Authority’s application outlines five initiatives to use the $1 billion. If awarded, the state would use the largest chunk of funding — nearly $400 million — to establish the “Healthy Horizons” program, a plan to expand specialty care and chronic disease management services in rural communities through enhanced in-person services as well as remote options.
According to the application, funding from Healthy Horizons programs would be directed based on prevalence of chronic conditions — with common conditions in New Mexico including arthritis, depression, diabetes, heart disease and asthma, among other respiratory issues — and the greatest projected shortages in specialty providers.
Another $53 million would go toward establishing a statewide health analytics platform to provide timely and actionable information for health care providers and policymakers.
The state’s application also includes plans to spend $243 million expanding rural career pathways to health professions, establish a $123 million Rural Health Sustainability and Innovation Center within the Health Care Authority, and develop a $188 — 187.5 million grant program for local initiatives in rural, frontier and tribal communities.
“This plan reflects the voices of rural New Mexicans who know their communities best,” state Medicaid director Dana Flannery said in a news release announcing the application’s submission.
Changes to state policy
New Mexico’s funding application signals some upcoming policy changes at the state level.
Notably, the application indicates the state’s plans to join interstate licensure compacts — agreements that would ease the process for medical professionals from other states to practice in New Mexico — for physicians, physician assistants, emergency medical services providers and psychologists during the 30-day legislative session in 2026.
Lawmakers considered the compacts during this year’s legislative session, though none of the ten made it over the finish line. However, legislative leaders have signaled plans to pass legislation within the first 15 days of the 2026 session that would allow New Mexico to join the compacts.
The state’s application also indicates plans to pursue legislative and regulatory changes to implement the Presidential Fitness Test in schools by the end of 2028. Discontinued in 2012, the test measured students’ performance on various physical tasks — a source of pride for some, embarrassment for others.
Trump in July issued an executive order to reinstate the test in public schools nationwide, arguing declining physical fitness has weakened “our economy, military readiness, academic performance, and national morale.”
One Trump administration health priority New Mexico isn’t currently considering, according to its application for the Rural Health Transformation Program: food restriction waivers for the Supplemental Nutrition Assistance Program, or SNAP.
The Trump administration has backed limiting the purchase of unhealthy foods like soda and candy through the food aid program — which has been subject to unprecedented upheaval in recent weeks after benefits were suspended during the ongoing federal government shutdown. Oklahoma, Colorado, Utah, Idaho and Texas have already passed legislation to impose some of those limits.
“New Mexico does not plan to pursue a SNAP food restriction waver at this time but will continue to leverage opportunities to incentivize healthy food choices in SNAP,” the application states.