The state has applied to receive Medicaid funding for Oakwood, the historically troubled state facility for mentally disabled people in Somerset.
Oakwood lost its Medicaid funding in May, and the state began paying the full cost to run the facility, about $6.5 million a month.
Janie Miller, secretary of the Cabinet for Health and Family Services, announced Thursday that the state had submitted an application for recertification by the federal government.
"The application begins the formal recertification process, which includes two unannounced surveys," Miller said in a statement.
The first inspection by the federal Centers for Medicaid and Medicare can happen any time after the application is filed. The second survey occurs 30 to 120 days later.
The state needs federal money to help pay its bills.
The state has budgeted $78 million for Oakwood; about $70 million of that money goes to directly to Bluegrass Regional Mental Health-Mental Retardation Board, which has a contract to manage the facility. But the state will be out of money for Oakwood sometime before the next fiscal year, which begins July 1, Miller said
Miller said that, once the money runs out, it is unclear what will happen to the state-run facility, where 214 people with mental and physical disabilities live. "I do think at some point ... we're going to be out of money to pay the bills; that issue will have to be addressed at that time. This is just one issue in a very challenging budget this year."
It is unclear how quickly the federal government will make its decision. Don Putnam, president of the parents and relative organization at Oakwood, said he hopes the federal government will approve Medicaid funding for the facility before the state's money runs out.
"I have confidence that the cabinet and the legislature and the Health and Welfare Committee will work something out," Putnam said. "Oakwood needs to be there."
Miller said Thursday she thinks the state and Bluegrass Mental Health have worked hard to make sure that it will be ready for the survey. Putnam agreed, adding that many parents have seen positive changes at Oakwood since Bluegrass took over in November 2006.
"We've had no Type As (the most serious violation) during 2008," Miller said. "I feel really good about where we are."
Oakwood lost its Medicaid certification in September 2005, after an unsupervised resident drowned in a bathtub. It was not a good era for the facility: In 2005 and 2006, Oakwood received 24 Type A citations, the most serious kind, for failing to keep residents safe.