(ASHEVILLE) -- North Carolina is working with the federal government to find housing solutions for hundreds of mentally ill adults who may be forced out of the adult care facilities where they currently live.

State Health and Human Services Secretary Lanier Canslwer says the real issue is how those facilities are classified. He says if more than half the residents of a facility have a primary diagnosis of mental illness, then they are no longer considered adult care facilities, they are institutions of mental disease.

Cansler says those facilities cannot accept personal care funds from Medicaid to pay for room and board, which is what many mentally ill adults use to help pay for their housing and meals at adult care facilities. He says the state is in the process of evaluating every facility to determine exactly how many need to be reclassified and how many residents would be affected. Cansler adds that the best outcome would be for those facing eviction to find permanent housing solutions.

The Centers for Medicare and Medicaid Services is forcing the state to crack down on the misuse of Medicaid personal care funds beginning in August.