There's no place like home and the community for the mentally retarded to thrive. But Medicaid laws now force many of those people into institutions to receive help, according to a Utahn's testimony before Congress Friday.

Sherilin Rowley, who has a child with Downs Syndrome and who represented the Utah Association for Retarded Citizens, told the House Subcommittee on Health and Environment that rules should be changed to allow more mentally retarded citizens to receive money for help at home or group-home settings.She told how having her daughter, Cydnee, at home and in a program at a neighborhood school has helped her to thrive.

She said Cydnee spends 51/2 hours a day at school, with 31/2 in a regular classroom. The other two hours are spent in special instruction to help her gain skills she needs. Cydnee has also been given a part-time job in the school library sorting books and watering plants to help her develop.

"The ripple effect of this integration program is that Cydnee is being invited to attend neighborhood birthday parties, to go ice-skating with the entire school and to go swimming at the neighborhood pool. She also played on the community softball team this summer," Rowley's prepared testimony said.

She added, "The current Medicaid program looks upon my daughter as being an `eternal child' who would need care and protection for the rest of her life. Obviously, this is not so. How do we prepare the friends Cydnee is now making to never see her again after graduation?

"And why won't they see her? Because the only funds appropriated for residential services are for institutions," she said. "After having worked with professionals developing the skills she needs to live as independent a life as possible, I find the only placement options, if Medicaid rules are not changed, are at a state institution."

But a bill sponsored by James J. Florio, D-N.J., would change that and Utah's congressional delegation will act as co-sponsors.

Rep. Howard Nielson, R-Utah, who introduced Rowley at a hearing Friday, explained problems with current laws.

"The home and community based waiver in Utah currently allows only 933 clients to be served in the community settings with Medicaid money. Deinstitutionalized clients have consumed most of these placements so there have been few left for people residing with their families.

"This forces parents and advocates to place their children in federally mandated institutional settings, and then try to place pressure on the state to place them into smaller home-like setting through the outmovement process. This is called the revolving-door syndrome.

"The state recognizes that it is inappropriate, inefficient and definitely not in the best interest of the people with mental retardation, but the practice continues because of Medicaid laws and regulations," Nielson said.

"Utah presently has 279 people on waiting lists with more than 512 severely handicapped students graduating from high school in the next three years needing employment opportunities and small community-living options."

Nielson said Medicaid laws relegate "them to programs that segregate, foster dependence and ensure that they will continue to require continuous care throughout their lives."