"So there are no other additional hurdles to overcome? It is simply she lives in the same house as her mother that she cares for, it is for nonmedical care and paid by caresource which is a medicaid provider? I am good to exclude it?"

You need to review the nature of the payment your client received and the program under which it is paid to ensure it meets the conditions stipulated in the Notice Lisa cited.  You should also read the Q&A published by the IRS in conjunction with the Notice if you have not already done so (even though you "have read a lot of information").

Since she has "other clients", it does sound like she is in a trade or business for providing care services and the income would be reportable on Sch C as you mentioned.  If she is eligible for Medicaid waiver, a negative amount for the excluded income should be recorded in Part V as “Notice 2014-7”, according to the Q&A, and the excluded income would not be subject to SE tax.

As for whether your client could claim the mother as a dependent, Notice 2014-7 should not be relevant.  The question is whether her mother met all the usual conditions for being a dependent of hers.