The Associated Press

LEXINGTON - A federal judge has ruled that Kentucky's Medicaid program should reinstate more than 3,500 people who were denied nursing home or home health care services in a cost-cutting move.

In his ruling, U.S. District Judge Joseph Hood wrote: "Kentucky has inappropriately chosen to use cost-savings as the sole touchstone in its determination, focusing on how much money it wants to save rather than upon the medical needs of Medicaid recipients or the Medicaid statutory requirements."

Hood's ruling was issued late last month in response to a suit filed in October by 10 people who were denied care due to changes in eligibility. Hood ruled that they should be reinstated to be Medicaid program within 15 days.

Hood said thousands of Kentuckians similarly denied access to or terminated from the Medicaid program since last April have the right to take part in a class action, which would allow for their reinstatement within the next few weeks.

As soon as the Office of Kentucky Legal Services Programs, which represented the 10 people terminated from the Medicaid program, is approved to represent the entire group, Hood is expected to order the reinstatement.

"They slashed the Medicaid program and in the process, violated federal law," said Anne Marie Regan, senior staff attorney for the Office of Kentucky Legal Services Programs.

But David Fleenor, general counsel for the Health and Family Services Cabinet, said Hood's ruling was preliminary and the lawsuit is still in its early stages. The cabinet has made changes since the lawsuit was filed that allows more people in the program, he said.

"A lot of the issues that are dealt with, we feel we've already addressed those," Fleenor said.

The tightening of the eligibility guidelines of long-term care services was expected to save an estimated $50 million in the Medicaid budget. As of January, however, the changes had only saved about $2 million, at least partly because people continued to receive services while they appealed.

In late January, Gov. Ernie Fletcher adjusted the Medicaid eligibility rules for long-term care to be less stringent than the guidelines set in April 2003. Under the new Fletcher rules, low-income people could get nursing home or in-home care if they met two health-related criteria, instead of the three they had to meet under the previous rules.

Gwenda Bond, spokeswoman for the Health and Family Services Cabinet, said that the state Medicaid program made the January changes to address the issues and contacted those who would be reinstated.

Judge's ruling

U.S. District Judge Joseph Hood wrote, "Kentucky has inappropriately chosen to use cost-savings as the sole touchstone in its determination, focusing on how much money it wants to save rather than upon the medical needs of Medicaid recipients or the Medicaid statutory requirements."