Each state has its own guidelines for administering Medicaid to pay for Nursing Home or Assisted Living coverage. You need a Kentucky Elder Law attorney. See Avvo.com under Find-A-Lawyer. Sit down with him or her and map out what is exempt in your state and what is not. Good Luck.
From your fact summary it sounds like your brother has Medicare and a Medicare supplement policy. Medicare will only pay up to 100 days in the nursing home and if Medicare doesn't cover the stay, the Medicare supplement policy won't pay either. The IRA is usually treated as an available resource that must be spent down or otherwise dealt with before a person will qualify for Medicaid. The answer to your question is "no" the nursing home doesn't "take" the IRA, but they do want to get paid and if the resident has an IRA, unless some valid Medicaid planning has been done, it needs to be used for that purpose. You should contact an elder law attorney in your area that does Medicaid planning.
Briefly, the government wants people to use up their own resources before using government resources to pay for care. This can be bothersome for people who were intending to use their savings/investments in other ways, with one desire perhaps being giving the money to people they love upon their death. However, the government's position is understandable; if someone has money to pay for his or her own care, then he or she should use that money before using taxpayer money.
This advice being provided in no way represents the formation of a lawyer client relationship. This is advice only based on limited information. The advice seeker should seek an in-person meeting with a qualified attorney to discuss his or her issue.