They would have had to transfer the house at least two years before her mother first entered the nursing home.
Yet another part of life where the axiom "Proper Prior Planning Prevents Piss Poor Performance" holds true. Reading the article, it seems Mrs. Rhodes liquidated her and her husbands savings to save Mom's house, without checking to see if they could, in fact, save the house. It is a sad story.
That said, reading the link that Chester posted, I don't see anything unreasonable in there. Medicaid is a program to help folks without means. It's reasonable for the assets of the estate to help offset those costs.
ETA: Corrected the program, thanks Hawkmoon. Doing retirement planning so I have Medicare on the brain.