@qbteachmt's caution is wise because those who jump in with answers off the top of their head are likely to end up bald.  Say the parents' adjusted basis is $100,000 but last year they borrowed $250,000 on a line of credit.  Anyone else see a tax implication there?  

Perhaps more important, the law in my state says I'm guilty of a misdemeanor if, as a tax preparer, I see elder abuse or neglect and don't report it.  So, what the H is going on here?  The question isn't whether the daughter will apply for Medicaid, it's whether the parents will.  Have they already been to a lawyer who has told them to check with their tax adviser before proceeding with getting assets out of their name?  If it's just your average run-of-the-mill "I didn't save for retirement but I still want to leave something for my kid so I'll plan on taxpayer financing instead" case, then wish them  luck when the daughter's divorce complicates ownership.