Misappropriation of funds.

Medicare has nothing to do with cost of care. Its a health insurance. They only pay for Rehab and in home which is temporary. Intermediate care which is not 24/7 care.

To have Medicaid to pay for your care, you as the recipent, have to contribute, too. That means your SS and pension are used for your care.

Now the VA disability, if that is Aid and Attendance, that can't be used with Medicaid, both government, so one of them drops off. Medicaid usually pays more so A&A drops off. Your friend may get $90 a month from A&A for Personal needs.

Medicate only pays for 24/7 care in a long-term care facility. The person applying cannot go over the asset cap of 2k in most states or the income cap. They are almost poor.

If you are not your friend's POA I think that you not have a full understanding exactly what is happening with all of her finances.
If your friend has a POA or Fiduciary operating on her behalf, then that is the person she should discuss this with.

If your friend is fully competent, and managing her own financial affairs, and she wishes you to accompany her on an appointment to the Administration to be informed fully in black and white what is happening her, why not just help her to arrange that?

Wishing you the best of luck and hope you it gets worked out to her full understanding.

Who is "they"? The NH? Or the government?

Her SS goes towards paying her Medicaid. Medicare covers her medical while Medicaid covers custodial care.

My MIL's SS goes directly to Medicaid, which then pays the NH directly. It might differ by state. She gets to keep $90 a month (in MN).

A long as all those funds do not add up to MORE than her monthly rent at the SNF, there is no "misappropriation of funds" going on at all. She should only be left with about $60 a month in funds to spend on personal items. They "only" took her Medicaid before the other government benefits kicked in because that's the only funds that were coming in to cover an enormous bill!