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Wondering about possible outcomes, and what powers he has that could limit possibilities for AL and/or enforce mental health settings as the more appropriate living place.

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I took my Mom to a neurologist. He tested Mom and asked her the questions. He would sometimes look over at me and I would shake my head yes or no. I also took a list of things I had noticed and gave it to the receptionist to give to the doctor. He did refer to them during Moms appt. I typed the questions in 14 font. Numbered 1, 2,3, etc. Spacing between each #. Kept each question short.

1. Sundowning about 4pm

2. Having night terrors, once a week.

3. Anxiety

Dr has no powers as such. He can only tell you what type of Dementia and if he feels she needs 24/7 care. He can recommend Memory Care over an Assisted Living. If those choices are unaffordable then a LTC facility. I guess if he felt it necessary, he could have her placed in a Psychiatric facility but that is only if she is showing signs of hurting herself or others. There would need to be some aggression on her part. Medicaid usually doesn't pay for Als and MCs. These are self pay and expensive. My State Medicaid may pay after self pay for at least 2 years. You need to check this out with ur State.
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Look up "neuro-psychiatric exams for elderly". This may give you some good ideas via search engine of what to expect.
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Unless your mother's a threat to herself or others this is generally to determine how far along her dementia is, rule out any other factor like depression that can sometime mimic dementia, and to asses if she's well supported with her current meds.
You can ask them, and they can make a recommendation, about what level of care will be most appropriate, but for a basic office visit assessment they can't mandate placement.
If you are looking for places for your mother then you will have to be upfront with the facilities you are interviewing about about any challenging behaviors and question them carefully about what level of support they do and don't provide. Ask them what their cutoff is for determining that a resident go to a skilled nursing facility.
Testing: There are a variety of tests during an evaluation that will test how well the person can function. Here's some:
https://readementia.com/cognitive-tests-for-dementia
I found it helpful to put down what I noticed my mom was needing help with. I handed this to the office staff when we checked in so the doctor could read it ahead of time. Then we did a quick run through of Mom's history together with her, and then I went to wait for about 1 1/2 hours while she ran a variety of tests on my mom. Do make sure your mom has whatever she needs to suceed that day--like reading glasses or hearing aid. After the testing she shared with both of us where Mom's strengths and weaknesses were compared to others of her age group and education level. She was lovely, and my mom, who could have easily become defensive, sailed right through it.
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Neurologists will not only ask questions but do tests. Questions can involve: remembering words and ask later in conversation to repeat words back,
computing simple math problems,
knowing current leadership or events,
asking about date/day/time,
asking about people in their lives - names and relationships,
checking balance,
checking ability to touch nose and ear with eyes closed,
touching evaluator's finger and their nose as fast as possible,
testing muscle strength on different sides of the body,
identifying smells...
just about anything that handles discernment, memory, computations. proprioception (knowing where body parts are in).

The goals to identify any weakness or inability.
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Each doctor does things differently, but, things like what is todays day, date, etc. They will give a few words for patient to remember after several other assessments are done. They could be asked to count backwards from 100 by 7's or 3's, they could ask about family members and their friends. Strength testing and listening for impaired thought patterns.
If the patient has a good day, competency will be determined, if it is an off day further evaluation will most likely be done.
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I took dad to a neurologist. His questions were more detailed than the PCP did in the office.

In addition to questions listed by one of the posters above; one of the questions was the MA asked dad to say as many words starting with the letter "S" (the letter wouldn't be the same at each visit) and gave him about a minute to list as many words starting with that letter.

The original visit the neuro ordered an MRI. I was surprised to learn that dad had what was considered a significant stroke in the balance center of his brain - the cause of all his falls. What was surprising was we never saw the signs of any stroke according to F A C E. Dad was diagnosed with Alzheimers and vascular dementia. He and mom moved from Independent to AL due to dad's falls.
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Not really sure what your goal is here. As others noted, generally this is to assess the person's capabilities, mostly cognitive, but that can impact physical abilities as well. Doctors can't really order someone into a facility, or prevent them from going to one either (exception might be if there are some serious psychiatric issues, but that doesn't appear to be the issue with your mother.)

I do see some potential advantage to having tests (cweissp relating the MRI/fall issues.) However we never had this kind of testing done with my mother. She did have an assessment done by a nurse when I tried hiring aides to keep her in her home longer (didn't work out, thanks to her), but it was mostly a more detailed test than a doc office does (saw that myself later, both for her, which failed, and me.) That was so they could make suggestions and know what services we needed. This was done in her own place, with 2 of us there, and is all paid for by Medicare.

We had NO other testing done. When she refused to let the aides in (only 1 hr/day!), we had to find a MC place for her. It was not safe for her to stay there and I couldn't physically care for her. The facility does their own assessment. THEY are the ones who will know what she needs and whether they can provide that service.

There's certainly no harm in trying this test, unless it agitates mom. I've heard some say these tests take hours - my mother would never have sat through that!

So, if the real question/goal is how to go about moving mom to a facility, you need to check various places, most likely she'll need MC. Now that most places have vaccinated, it will be easier to check them in person. Take notes. Compare services. Ask LOTS of questions. Visit at different times of day. Observe, see, smell, listen, taste. Ask what the fee covers and what extra charges might happen. Part of the deposit I made covered their "assessment" of mom. We had NO, read ZERO, paperwork from doctors regarding her condition or abilities. I provided what I knew and they did the rest. Her place was a non-profit. If you can find one or more of those, they might be better than the profit places. Mom's care was great, no complaints!

(Getting mom moved was the big issue. EC atty told me we couldn't force her, as she was refusing to consider moving anywhere. Obviously we were not going to drag her there! But his suggestion of guardianship wasn't going to work as they wouldn't accept a committal. So, FIBS-R-US had to come up with a way to get it done!)
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