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My neighbor was scheduled for a "Well check". They told her she has 90 days to quit smoking or her Medicaid would be stopped! Anyone else hear of this?

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Medicaid in Ohio ( and elsewhere) is required to offer and pay for smoking cessation treatment.

Perhaps your neighbor was offered treatment and misunderstood?
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No idea, why not ask Medicaid, but here's another thought too - if this notion does make your neighbour quit you'll be doing her a favour by playing along. Let discretion be the better part of truthfulness, perhaps?

And think of the money she'll save :)
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Never.
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