How can get get care for my grandmother that we can afford?

My grandmother, who has dementia, is in a nursing home at the moment. We have been trying to get medicaid approved for her, but they keep denying us for supposed missing papers. We and the lady helping us at the nursing home have double checked and we send the papers in question. The nursing home has been great to help us but we owe them for back months: around $20,000. If medicaid does not go through within the next two weeks, we will have no choice but to bring her home. The problem is that we don't have the resources to 1-pay for her medication 2-give her 24/7 care that she needs 3-(this is selfish I know but..)My mothers only saving grace has been the chance to babysit my niece. She can't do that and watch Granny. Mom is retired but I am not. I can't help that much. Please tell me their is another option. I've been told by others that there are state nursing homes that take in this kind of patient, but I've also heard about the horrible conditions in some. We need some kind of help with medicaid or some other option we don't know about. PLEASE help!