DENVER — Colorado has agreed to do more to prevent needless isolation of thousands of people with physical disabilities who were confined to nursing homes, settling a federal lawsuit that claimed state health officials illegally segregate too many people.

U.S. Department of Justice officials announced the settlement this month. Colorado officials committed to taking the following actions before February 2026:

— Help thousands of nursing facility residents move

— Identify people at risk of unnecessary confinement

— Give information needed to make choices.

— Help people with disabilities find accessible, affordable housing

— Connect people with Medicaid long-term care services

— Boost opportunities for people with disabilities to control their care

— Support family caregivers

“People with disabilities should not have to give up their lives in the community and be isolated in nursing facilities to get the services they need,” Assistant U.S. Attorney General Kristen Clarke said.

A 32-page agreement “sends the message that people with disabilities deserve the same kinds of lives as others, and makes clear that our family members, friends, and neighbors with disabilities add value to our lives and strengthen our communities when they can receive the services they need right inside their own home,” Clarke said.

It resolves a federal lawsuit filed in September 2023. Federal investigators found Colorado violated the Americans with Disabilities Act by unnecessarily confining people with physical disabilities. They found Colorado had more people with low-care needs living in nursing homes than all but nine states.

Under the ADA, states are required to make services available to people with disabilities in the least restrictive, most integrated setting appropriate for their needs. The services include help with bathing, dressing, managing medications and preparing meals.

Colorado “is violating the ADA by administering its long-term care system in a way that unnecessarily segregates individuals with physical disabilities in nursing facilities and places others with physical disabilities at serious risk of unnecessary institutionalization,” federal prosecutors warned in a March 2022 letter to Gov. Jared Polis.

The lawsuit alleged Colorado had too few in-home service providers, particularly those who could help people find housing that meets their needs. Colorado officials regularly increased payments to nursing homes but not to providers working in the community, the lawsuit said — contributing to the problem by making it financially unattractive to offer home services.

The lawsuit said the state indirectly pushed people toward nursing homes by failing to require that home service providers plan for when assigned workers are sick, leading to unreliable in-home service. It said state health officials refused to pay for home modifications, such as the installation of wheelchair ramps, for people who wanted to move out of nursing homes. State agencies did not offer help for people who needed to find accessible housing, the lawsuit alleged, and failed to inform people with disabilities about services available in homes. Lengthy reviews of financial qualifications delayed transitions out of nursing homes, the lawsuit said.

Colorado’s Department of Health Care Policy and Financing had disputed the federal allegations. State health and attorney general officials declined to discuss the legal settlement. In a statement, HCPF officials said they negotiated to settle the lawsuit to save taxpayers the expense of a lengthy legal battle.

“More than 83% of Colorado’s Medicaid members with disabilities who receive long-term services and supports receive them in their own homes and communities, rather than in an institutional setting,” HCPF director Kim Bimestefer said. “This is a number we have worked very hard to achieve and a metric we have continued to improve each year.”

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