By MICHAEL BIESECKER
The Associated Press
RALEIGH — Four adult care homes in North Carolina could lose Medicaid funding, resulting in the possible eviction of dozens of residents with mental illness.
The homes notified this week of the potential cutoff of federal insurance reimbursements on Sept. 17 are the first of what could be 135 adult care homes within the state affected by a federal rule that bars facilities from having more than half of its beds occupied by residents with a primary diagnosis of mental illness.
Those patients increasingly began living in facilities primarily intended for the elderly over the last decade, as state lawmakers mandated deep cuts to government-run mental hospitals and treatment services as part of a failed privatization plan.
The homes in violation are Heritage Care of Conover, Hunter Village in Huntersville and two locations of Pinebrook Residential Center in Yadkinville.
“We are working closely with providers and our partner agencies at the local level to help transition people out of homes when necessary and into appropriate community-based housing,” said Julie Henry, the spokeswoman for the N.C. Department of Health and Human Services.
However, advocates for people with mental illness worry that not enough alternative housing will be found in time and that some affected residents may end up in living situations ill-suited to their needs or even on the street.
The state of North Carolina and the federal government signed an agreement last month pledging to move thousands of residents out of adult care homes and into community housing, potentially spending $287 million over the next eight years. The first of those new homes aren’t expected to be available until next summer.
The U.S. Department of Justice threatened to sue the state last year because federal officials said thousands of people with mental illness were segregated from society in adult care homes, in violation of court rulings requiring they be treated within their home communities whenever possible.
The agreement signed last month requires the state to provide affordable housing for 3,000 people who otherwise would be living in adult care homes or mental hospitals by the mid-2020s. The agreement also provides for increased access to community-based mental health services and directs the state to help them find employment.

The N.C. Association of Long Term Care Facilities, which represents many adult care homes, had lobbied Gov. Bev Perdue against entering into the settlement, arguing residents could be forced out and that some homes dependent on government funds would go out of business.