SANTA FE, N.M. (AP) – New Mexico is releasing an outline of proposed cuts to reimbursement rates for Medicaid health care providers that would trim up to $160 million in annual state and federal spending.

The state Human Service Department unveiled a proposal Tuesday that would rescind enhanced reimbursements to nearly 2,000 physicians and shave reimbursement rates to hospitals by between 3 percent and 8 percent.

Preventive care and obstetrics would be exempt from reimbursement cuts linked to various medical services.

New Mexico is seeking to close an $86 million state funding gap for Medicaid services between now and mid-2017. That means New Mexico is likely to forgo well over $300 million in federal matching funds.

Full Medicaid coverage now extends to more than one-third of New Mexico’s 2.1 million residents.