Does he have to use up all his money before mother qualifies for medicaid?

It sounds like they are expecting him to pay down his 150k assets before accessing Medicaid benefits, which is the normal procedure. Whenever accessing public benefits, the beneficiary must deplete their assets to the designated amount. Even to the penny! Was there spouse, maybe I missed that detail. If dad is a community spouse, the equation changes. Best to have an experienced Elder Care lawyer in your court. Best wishes!

An AL is a private pay facility.

Good answers from Pam and babalou. I live in Ohio. Here the answer is NO, if the facility accepts Medicaid payment. That's the big if. Many ALs do not, but some do. The dementia care facility that my Dad was in did. (Although we never got to that point. Dad's heart gave out before the Veteran's benefits or Medicaid kicked in.) That's my point. You really need to put in the applications ASAP, and get the ball rolling. It can take several months. The attorney we used said that they almost always turn down your first request for Medicaid, so he likes to apply before the point at which the patient truly qualifies. The benefits counselor at the facility can often help you through it, since this person is already in a facility. ( We used a lawyer because we'd dealt with him for several years, redoing wills, POAs, Living wills, etc.) starting back when Mom's dementia was just becoming problematic, and Dad's was just beginning. If all you need now is the financial aid, start with the folks at the facility today.

Most AL's are private pay. First you need to know if they will even accept Medicaid. If they do, they will have a benefits counselor to help you. If the house was jointly owned, they should only have to spend down her half.
It would be a very good idea to see a lawyer and update all of their estate documents, including Will, POA, Health Care Proxies.

This is best asked of a cerified eldercare attorney. Does the AL accept Medicaid?

Dad is what is called the "community spuse". He is alowed to retain certain assets, depending upon what state he resides in. Go up to the "money and legal" tab and enter their zip code. Have him talk to the lawyer asap.