CHICAGO (Reuters) - The U.S. Health and Human Services Department has scaled back a new law so that it exempts the elderly and the disabled from having to prove they are U.S. citizens to qualify for Medicaid health insurance, lawyers suing the government said on Friday.

The law, which went into effect July 1, requires people to supply original documents like passports or birth certificates to receive Medicaid benefits. Some 55 million low-income people are covered by Medicaid.

But in regulations amending the law filed late on Thursday, the government made exceptions for certain groups, including those on Medicare and those who get certain Social Security benefits, according to John Bouman, a lawyer at the Shriver Center on Poverty Law in Chicago, which filed the lawsuit seeking class action status challenging the law.

That suit, filed last week in the U.S. District Court in Chicago, argues that the law would hurt the most vulnerable people, and that it violated the Constitution's Fifth Amendment guarantee of due process.

Plaintiffs will now amend the complaint to argue that key groups like the homeless and victims of natural disasters still face significant challenges to comply with the law, Bouman said.

"A big chunk of the people we thought would be affected will not be harmed, as a result (of the changes to the regulations)," Bouman said. "But there is still a large group not out of the woods yet."

The law is intended to keep illegal immigrants from getting government-sponsored heath care, but critics say it could throw millions of U.S. citizens off the government health program because they can't prove that they are citizens.

A brief hearing at the U.S. District Court in Chicago on the plaintiffs' request for a temporary restraining order was held on Friday, but a new hearing was set for July 28 in light of the new regulations.

U.S. hospitals, which on average get 15 percent of their revenue from Medicaid, fear the law will suppress Medicaid eligibility and have also called for revisions.

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