Indiana can't block Medicaid funds for Planned Parenthood just because the organization provides abortions, a federal appeals court ruled Tuesday, upholding the crux of a lower court order that said the state couldn't deny patients the right to choose their own health care provider.

The ruling will likely have little impact on Planned Parenthood's operations in Indiana as funding to its clinics has been largely uninterrupted since Republican Gov. Mitch Daniels signed a law attempting to cut the organization off in May 2011.

That law made Indiana the first state to deny the Planned Parenthood Medicaid funds for general health services including cancer screenings. The organization immediately challenged the law with help from the American Civil Liberties Union of Indiana. District Judge Tanya Walton Pratt blocked the state from enforcing the law in June 2011.

The state appealed that order, arguing that federal law says Medicaid cannot be used to cover abortions in most circumstances and that the program indirectly funds the procedures by providing money for Planned Parenthood.

On Tuesday, the 7th U.S. Circuit Court of Appeals in Chicago upheld the core portion of Pratt's order, saying the Indiana law effectively stamps on a person's right to choose their doctors.

"The defunding law excludes Planned Parenthood from Medicaid for a reason unrelated to its fitness to provide medical services, violating its patients' statutory right to obtain medical care from the qualified provider of their choice," the ruling said.

Planned Parenthood performs more than 5,500 abortions annually in Indiana.

Bryan Corbin, a spokesman for the Indiana attorney general's office, said the state was reviewing the appeals court opinion. The state can either ask the full court to review the panel's ruling or appeal directly to the Supreme Court. The governor's office did not return phone calls Tuesday morning seeking comment.

The ACLU said the appeals court decision was a victory, above all, for women.

"This law was an attempt by politicians to punish organizations that are providing legal services," Talcott Camp, deputy director of the ACLU Reproductive Freedom Project, said in a news release. "Elected officials should not place politics above women's health."

The appeals court also said Pratt needed to modify other sections of her order that ACLU attorney Ken Falk said dealt with revenue sources other than Medicaid.