Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
F I S C A L I M P A C T R E P O R T
SPONSOR
Reps. Terrazas, Jones, Dow and
Armstrong
/Sen. Ramos
LAST UPDATED
ORIGINAL DATE 3/10/2025
SHORT TITLE
Independent Health Provider
Reimbursement
BILL
NUMBER House Bill 562
ANALYST Rommel
APPROPRIATION*
(dollars in thousands)
FY25 FY26
Recurring or
Nonrecurring
Fund
Affected $3,000.0 Recurring General Fund
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
REVENUE*
(dollars in thousands)
Type FY25 FY26 FY27 FY28 FY29
Recurring or
Nonrecurring
Fund
Affected
Medicaid
Federal
Match
$10,643.0 $10,643.0 $10,6 43.0 $10,643.0 Recurring
Federal
Funds
Parentheses ( ) indicate revenue decreases.
*Amounts reflect most recent analysis of this legislation.
Sources of Information
LFC Files
Agency Analysis Received From
Health Care Authority (HCA)
SUMMARY
Synopsis of House Bill 562
House Bill 562 (HB562) appropriates $3 million from the general fund to the Health Care
Authority (HCA) for the purpose of increased Medicaid reimbursement for independent rural
healthcare providers. Any unexpended or unencumbered balance remaining at the end of fiscal
year 2026 shall revert to the general fund.
This bill does not contain an effective date and, as a result, would go into effect 90 days after the
Legislature adjourns.
House Bill 562 – Page 2
FISCAL IMPLICATIONS
The appropriation of $3 million contained in this bill is a recurring expense to the general fund.
Any unexpended or unencumbered balance remaining at the end of FY26 shall revert to the
general fund.
HB562 appropriates $3 million from the general fund to HCA in FY 2026 to increase
reimbursement rates for independent rural healthcare providers. For Medicaid allowable medical
payments, the general fund amount will be matched with $10.643 million of federal funds for a
total funding of $13.643 million. The blended federal financial participation is calculated to be
78.01 percent. Given that Medicaid provider rate increases are a recurring expense, HB562
would result in a recurring operating budget impact to the HCA of $3 million from the general
fund in future fiscal years.
SIGNIFICANT ISSUES
HCA reports:
Medicaid provider rate increases are recurring to ensure the maintenance of services to
Medicaid beneficiaries and because they involve significant policy and system changes.
Based on the current language in the bill, the increase in provider reimbursements
implemented in FY 2026 would result in a recurring general fund need to the HCA of $3
million per year.
HB562 does not provide an explicit definition of “independent rural health care
providers”, nor does it specify an explicit increase in their reimbursement rates. The
majority of services are reimbursed through managed care organizations (MCOs) based
on applicable Medicaid fee schedules. Rates above the Medicaid fee schedule may be
negotiated between MCOs and individual providers to ensure sufficient provider network
capacity in rural areas.
ADMINISTRATIVE IMPLICATIONS
HCA notes it would need to determine a methodology for implementing this rate increase and
would need to operationalize it. Differential rate reimbursement can be challenging to administer
and oversee.
HB562 would require system changes in the financial services Information Technology system.
The specific requirements would need to be gathered before a timeline for completion could be
estimated. Additionally, such changes will require revision to the federal Medicaid State Plan
and must be approved by the Centers for Medicare and Medicaid Services.
OTHER SUBSTANT IVE ISSUES
New Mexico continues to face critical, chronic shortages of healthcare professionals across
nearly all disciplines. Thirty-two of 33 counties are designated as or contain federally designated House Bill 562 – Page 3
health professional shortage areas in the areas of primary care, mental health, and dental health.
1
Increasing rates to providers located in rural communities may help recruit and retain providers
in rural, underserved areas of New Mexico.
HLR/sgs/SL/sgs
1
https://data.hrsa.gov/tools/shortage-area/hpsa-find