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Oakwood regains most funding

FRANKFORT — State officials announced Monday that federal funding has been restored to three of four units at Oakwood, a troubled Somerset facility for the mentally and physically handicapped.

The cash-strapped state has been paying the full bill for patients at Oakwood since May 2008, when the Centers for Medicare and Medicaid Services terminated funding to the facility because of repeated problems, including two deaths.

In 2005 and 2006, the facility received 24 Type A citations — the most serious — for failing to keep residents safe. Two of those citations were for incidents involving a man who drowned in a bathtub and another resident who choked on a hot dog.

Medicaid typically pays $60 million of the $75 million annual tab for the facility, which houses a little more than 200 patients.

The Centers for Medicare and Medicaid informed the cabinet last week that funding for units 2, 3 and 4 has been restored since the facility corrected deficiencies found during an earlier survey. The fourth unit did not pass its initial inspection to get re-certified last September.

The Cabinet for Health and Family Services and Bluegrass Regional Mental Health-Mental Retardation Board plan to resubmit an application to the Centers for Medicare and Medicaid Services so funding to that unit can also be restored, the cabinet said in a statement.

That application will be resubmitted within three weeks, cabinet officials said Monday.

Janie Miller, secretary of the cabinet, said the state hopes to know by July 1 whether funding for that unit — which houses about 60 patients and is costing the state more than $1 million a month — is restored. However, there are no guarantees that the Centers for Medicare and Medicaid Services will restore funding by July 1, the beginning of the next fiscal year, Miller said.

Don Putnam of Lexington, president of the Parent-Relative Organization for Oakwood Facilities Inc., or PROOF, said parents and relatives of Oakwood residents "are extremely pleased with this outcome. We hope the other unit will be restored soon." PROOF represents 100 to 150 parents or relatives.

Bluegrass Regional Mental Health-Mental Retardation Board was awarded the contract to oversee Oakwood in November 2006. It is the second provider to run Oakwood in the past five years. The state paid millions of dollars to a private company to run Oakwood, but problems at the facility continued to mount.

Shannon Ware, president and CEO of Bluegrass, said Monday that the non-profit mental health agency has worked diligently over the past two years to correct decades of problems at Oakwood.

"We were focused very early on changes that would immediately improve and assure the health and safety of individuals," Ware said.

Still, problems remain at Oakwood.

"I think there have been improvements," said Marsha Hockensmith, director of Kentucky Protection and Advocacy, a state agency charged with ensuring the protection of people with disabilities. "But it is still an institution."

Hockensmith said she hoped the cabinet would focus on moving more people out of Oakwood and into community settings now that federal funding has mostly been restored.

Critics of Oakwood have long held that the state is spending too much money on too few people and that money the state has spent at Oakwood could be better used ridding the state of long waiting lists for community-based services. Moreover, Oakwood has been in and out of trouble with federal and state regulators for more than two decades.

Gov. Steve Beshear said Monday that the state felt it could not shutter the facility because there are people at Oakwood who can't be served anyplace else.

"You still have a large number of folks who need the services that a facility like that can give and we owed it to those people to try to get recertification," Beshear said.

Miller said the network of community-based providers is continuing to expand and improve. And it's possible that some of the people who are served at Oakwood can be served in a less restrictive environment in the future, Miller said.

"You have to remember these are 200 lives we are talking about," she said. "These are real people."

The state will continue with its lawsuit against the federal government, alleging that Oakwood was wrongly terminated from the program, Miller said. The state sued the Centers for Medicare and Medicaid Services last month in federal court.

Miller said that if funding is restored to the fourth unit, that lawsuit could become moot.

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