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Who is your FIL's POA? Does he have one. That person can have him moved to a different facility and if he needs medical transport, the family can pay for it. If it's important then everyone can chip in.
The state can't be expected to pay for everything.
These problems are what occur when the state has to take over, when there is no family either willing or willing and able to do POA work or assume conservatorship over an elder.
The state will decide where the placement is best done. The caseworker will keep family informed and will remain the contact.
You describe someone now approaching end of life. This is not a time for this person to be moved to you, but for you to do the best you can in visiting where the patient is receiving care.
If the facility cannot accept the patient back they will be in communication with the state and in facility hospice or other placement will be arranged.
I hope you will be able to visit. As you are not POA calls to staff or case workers will only be able to supply you with so much information. I wish you the best going forward.
I was POA for my Mom and she received Medicaid. At no time did I feel that I was not still in charge of my Moms care. Meaning, if I didn't like the NH that was available at the time she needed it, I could have her transferred somewhere else when a bed came available. Just because Medicaid is footing the bill, doesn't mean family is not in charge. Now if the State has guardianship, thats a different story. In that instance, you contact the guardian that has been assigned, and ask them if they can move Dad closer.
Again, if you mean by State, Medicaid and there is a POA, then you can research on you own for an open bed closer and have Dad transferred. The SW at the new place can help you handle the transfer. Not sure how you can handle it if no POA. Who made decisions concerning Dads care?