Elder Law attorney passed away... Will I have to start all over?

You don’t have to go to the recommended attorney, but chances are plans have been made for all the deceased attorney’s clients to be referred to the other one and the process may be a little easier, unless you think the new attorney was just chosen out of a group of names by the deceased attorney’s staff. In any case, find someone ASAP to get things in motion. Call the facility and let them know what’s going on. They may have suggestions as well.

Yes, the files etc should all have been transferred to the firm who is taking on your previous lawyer’s clients. You shouldn’t have to start again. However you say that this is not the normal work for the new firm, so it might be useful to contact them and see if they want to take it on. If they don’t really want it and have this flood of new files, it may go to the bottom of the pile. In that case, they may agree to transfer the files to another suitable firm before they have done any work on it. Stress that you need it to be dealt with immediately because you are at the end of the Medicaid spend down and the situation is now different – it can’t just sit there for weeks. If the file has been relatively inactive for months, they won't know it's more urgent now unless you tell them. They should know where to transfer it to, if you both think that is best. I'd suggest a one page snail mail letter, and include the file reference.