The sale of your mother's home should not affect her Medicare at all. However, the sale of her home can be an important part of her Medicaid lookback period (5 years). Medicaid uses information from the previous 5 years to determine eligibility -- generally, one has to prove that they have spent all of their assets prior to going on Medicaid. This is a quite complicated aspect of Medicaid, and you would be best off consulting an elder law attorney for details.
As for taxes, if the house is sold prior to 2013, then generally the only tax liability would be on the capital gain of the house, above and beyond the $250,000 exclusion. In other words, if your mother's house sells for less than a $250,000 profit, then she most likely owes no tax. Any profits above $250,000 would be subject to capital gains taxes. (Please note that your mother must have lived in the house for at least 24 of the preceeding 60 months to get this exclusion.)
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As for taxes, if the house is sold prior to 2013, then generally the only tax liability would be on the capital gain of the house, above and beyond the $250,000 exclusion. In other words, if your mother's house sells for less than a $250,000 profit, then she most likely owes no tax. Any profits above $250,000 would be subject to capital gains taxes. (Please note that your mother must have lived in the house for at least 24 of the preceeding 60 months to get this exclusion.)