The situation your mother is in sounds concerning indeed. It is understandable that you may be confused by the rapid changes in your mother's behavior. But there could be a number of explanations for this change. First, it is imperative that you speak with her physician. There may be some medical reasons why this is happening, and it's a good idea to run tests in order to rule out possible causes, such as depression, vitamin deficiency, thyroid imbalance, etc. If there is a medical problem that could be contributing to these changes, it needs to be addressed right away. You can also use this time to discuss with her doctor why the medications were cut down to begin with.  You asked about Medicare/Medicaid; there is no law related to Medicare and Medicaid that addresses the discontinuation of medications. The doctor would be your best source for finding out the reasons for this change.

You mentioned that your mother was given a prescription for medication in 2000 but only started taking it 7 years later. This would suggest that your mother probably had problems with her cognition 9 years ago, but they were addressed much further along in the process. As dementia is a degenerative disease, the symptoms progress and become worse with time. The fact that she is having memory loss and anxiety is not surprising, and is actually quite common for the illness. If there are no other medical explanations, it is possible that your mother is reacting this way as a result of the normal disease process.

Even if her medications were discontinued, there are things that you can do to help her manage her symptoms. Try to use behavioral interventions such as distraction and redirection. If she is panicking, try to stay calm and be as optimistic as possible. Let her know how much you care and that you wish to do everything you can to make her feel better. Once she feels validated, quickly redirect the matter to a more positive topic, such as what she would like to do in the afternoon, or what she would like to eat for her next meal. You may find yourself doing this several times a day, but it tends to be a helpful intervention which you can use frequently.