What happens if a dementia person can't afford a nursing home?

My FIL is in a Washington State care home. He has dementia. He has spent down all his assets but his allowance for Medicaid is $5200 but since he gets $5500 from a pension he apparently can only afford a $5500 place. I thought the $5200 would add to his $5500 but I guess that isn't how Medicaid works. It seems to be either/or. His NH says he has increased care needs and wants to charge $10k or more/month. What happens if he can't afford it? which he can't. We can't afford it either and we can't care for him at home. We are a little panicked that he'll either be out on the street or we will be forced to pay. Any suggestions?