Maybe, depending on whether the nursing home participates in the Medicaid program. If the nursing home participates in the Medicaid program, threatening to discharge a patient for applying for Medicaid is illegal. A nursing home in the Medicaid program can discharge a patient only for medical reasons, or if the patient fails to pay.
Nursing homes cannot claim that a Medicaid amount, which is probably less than what you paid privately, counts as non-payment. Federal law specifically states that payment under Medicaid is not a non-payment. If you are Medicaid eligible, the nursing home cannot charge you an amount above what Medicaid will pay. If the nursing home does not participate in the Medicaid program, then they are not covered by the law discussed above and may discharge you if you apply for Medicaid.
If you believe that the nursing home violated some federal or state law, you may contact the state authority at:
Office of Health Facility Licensure & Certification Phone: (304) 558-0050
408 Leon Sullivan Way Fax: (304) 558-1442
Charleston, WV 25301
For more information, see: 42 U.S.C. §§ 1396r(c)(2)(A),(c)(5)(A)(i)(I)-(III), (c)(7)(A) (2014); West Virginia Department of Health and Human Resources, Office of Health Facility and Licensure, www.ohflac.wv.gov/factype.html#type=02 (last visited May 26, 2015).