5-Hunter
I. Introduction
Ms. M was 80 years old when she needed hip surgery. Since this surgery requires such intensive recovery, Ms. M needed to stay at a skilled nursing facility (SNF) for short-term rehabilitation care. Thankfully, she had a Medicare Advantage plan through UnitedHealthcare that offers full coverage for SNF care. Even with complications, Ms. M was making consistent progress with her physical and occupational therapy, as noted by the staff at the SNF. It was therefore shocking to them when UnitedHealthcare started barraging Ms. M with termination of coverage notices. While trying to focus on her recovery process during an incredibly tough period in her life, Ms. M was forced by UnitedHealthcare to appeal their denials of coverage 10 times. Even after winning 10 appeals on her own, denial of coverage continued, forcing her to reach out to the Center for Medicare Advocacy for help in persevering in this fight with her MA plan. To make matters worse, UnitedHealthcare offered little to no explanation for the denial. As it turned out, the reason for this lack of explanation arose from the fact that the decisions denying coverage were not based on the facts and medical judgments of the patient’s providers, but rather were based on algorithms generated by an AI program designed to save money and generate profits. Paula Haney, the director of rehabilitation at the SNF providing Ms. M’s care, said this about the nightmare facing her patients: “They’re dealing with trying to get better. And it’s this emotional roller coaster every five to seven days.”
In addition to the predicament suffered by Ms. M, this article will discuss a number of complex systemic issues related to Medicare that, when examined through the lens of Fourteenth Amendment due process, involve an actionable deprivation and violation of the constitutional rights of Medicare beneficiaries. The Centers for Medicare & Medicaid Services (CMS), along with their third-party contractors, are overpromising and underdelivering benefits to such a degree that Medicare beneficiaries are being harmed in various settings, creating due process implications that this article posits constitute a “constructive removal” of Medicare beneficiaries’ access to health care. Constructive removal is a new term created for this article, which will be used when referring to benefits or rights that, while legally and/or structurally available, are not practically available due to some unforeseen barrier or strategic shortcut. This article will discuss several constructive removal scenarios to highlight this unique due process violation.
Ensuring that clients actually receive the Medicare benefits to which they are entitled is important for practitioners in the field of elder law and, as this introduction suggests, this article will therefore explore the viability of this new claim of constructive removal as an avenue to address such systemic and strategic denials of Medicare benefits. Part II of this article will provide a brief overview of the Medicare program’s intended purpose, how it is inseparably tied to federal and state governments, and why Medicare beneficiaries have a constitutionally protected right to these health care benefits. Part III will discuss constitutional due process protections relative to Medicare benefits and how government action can require due process, while Part IV will present four non-exclusive constructive removal scenarios identified by Medicare advocates at a recent national conference. Part V will discuss the legal viability of redressing each scenario using a possible claim of constructive removal. Part VI concludes with the hope that further examination and development of this claim of constructive removal will prove beneficial to Medicare beneficiaries and their advocates.
II. A Brief Overview of Medicare
The Medicare program started in 1965 as a broad insurance program, and it now includes more than 69 million American beneficiaries. It was established under Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395–1395 iii (The Medicare Act) and “is the federal government’s health insurance program for the elderly.” It is administered by CMS, which is part of the U.S. Department of Health & Human Services (HHS). Medicare is available to several classes of people: older adults over age 65, those who receive long-term disability benefits from Social Security for an extended period of time, and those struggling with specific conditions like amyotrophic lateral sclerosis (ALS) or end-stage renal disease. Medicare is designed to help beneficiaries pay for hospital care, medical care, and other health care expenses. Medicare will preclude payment for items and services that “are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member” per 42 U.S.C. § 1395y(a)(1)(A), and coverage determinations are required by law to be conducted on an individualized basis and cannot be subject to rules of thumb.
While Medicare is vast and complicated, there are four main parts. Part A typically covers hospital expenses and inpatient services. Part B covers medical expenses and outpatient services. Part D covers prescription medications through third-party companies that are contracted with Medicare. Parts A, B, and D are known as “Original Medicare.” Part C refers to the Medicare Advantage program, which is an all-in-one alternative to Original Medicare provided by third-party providers contracted with Medicare.
Original Medicare and Medicare Advantage (MA) do not function the same way for beneficiaries. Original Medicare allows beneficiaries to work with any provider who accepts Medicare, predominantly by paying premiums each month for their Part B and Part D coverage along with an assortment of deductibles and copays. Most MA plans function with managed care point-of-service payment schedules where the plan creates networks of providers for beneficiaries to use (this can include health maintenance organizations, preferred provider organizations, etc.). If services outside of the network are used, the beneficiary can face heavy charges. As will be discussed more fully below, provider networks can create barriers to care and hinder beneficiaries from getting the medical treatment they might need or have been promised.
Original Medicare is clearly linked to the government as it is managed directly by the federal government. It is important to understand that Medicare Advantage Organizations (MAOs) and their offered plans are intricately connected to CMS and HHS. CMS provides regulation and guidance for MAOs through the Medicare Managed Care Manual. Chapter 11 of this manual specifically addresses the MA application procedures and contractual requirements to be associated with and operate under the Medicare program. With this degree of structuring and oversight, there is no way to claim that MA plans are merely third-party contractors.
Title 42 of the Code of Federal Regulations provides the legal foundation for the Medicare Managed Care Manual and covers HHS (Chapter I) along with CMS as a whole (Chapter IV). The MA program can be found under Title 42, Subchapter B, Part 422, and this section lists the MAO rules governing eligibility, benefits, beneficiary protections, and overall standards for the MA program. This section is extensive and it does show a high level of government involvement and regulation. Illustrating this point, beneficiaries receive special election periods if they can show that the MA plan violated a material provision of its contract or failed to provide a medical service in accordance with applicable quality standards.
While discussing rights and protections for Medicare beneficiaries, it is important to note that CMS expressly recognizes and endorses specific rights and protections under both Original Medicare and the MA program. CMS publishes a booklet to help beneficiaries understand their rights, and they even provide a Medicare Beneficiary Ombudsman to address questions or challenges on program administration. By addressing the rights of Medicare beneficiaries in this manner, CMS and its affiliates are openly recognizing beneficiaries’ expectations and reliance upon the program and its integrity.
When beneficiaries are wronged, Medicare has a defined appeals process that consists of several avenues depending on both the issue and type of insurance in effect at the time. For example, if a beneficiary is appealing an issue with a benefit period for an SNF rehabilitation service, that is a Medicare Part A benefit. A person with Original Medicare has a set path to appeal, but someone under an MA plan (referred to as a Medicare health plan on the webpage) has another path to appeal this issue. While appeals are already complicated, this can be confusing for Medicare beneficiaries who truly do not understand how their insurance functions. Many beneficiaries cannot tell you the difference between Original Medicare or its unique parts and Medicare Advantage. The confusion caused by this lack of understanding is exacerbated for a sick beneficiary in immediate need of continuing care who must determine the correct appeal path to take.
Medically necessary health care is essential to any person’s quality of life and is often a matter of life and death for an older person. Eligibility for Medicare benefits is often the only source of affordable health care for older adults and persons with disabilities. Medicare is a governmentally created and administrated program upon which its beneficiaries have a constitutionally protected property interest that they cannot be deprived of without due process.
III. Due Process and Medicare
A. Due Process and Government Benefits
The Fifth and Fourteenth Amendments protect citizens from government interference with fundamental rights, and they prohibit the government from depriving a person of “life, liberty, or property without due process of law.” More specifically, the Fifth Amendment applies to federal action and the Fourteenth Amendment applies to state action. With that understanding, it becomes important to delineate the difference in the two components of due process — procedural and substantive due process — to apply the concepts properly. Substantive due process involves determining what rights fall within the ambit of the basic “life, liberty, or property” rights that are constitutionally protected against deprivation by government action taken without procedural due process. Historically, the Supreme Court held that the Due Process Clause protected existing property interests but did not create them.
For some, the notion that benefits provided by a government program would be considered a protected property interest for purposes of substantive due process might seem preposterous given this historical perspective. Fortunately, in Goldberg v. Kelly, the Supreme Court reviewed the substantive due process rights of welfare recipients and determined that welfare benefits “are a matter of statutory entitlement for persons qualified to receive them.” The Court thereby disavowed the historical “rights v. privileges” analysis of property interests and verified that relevant constitutional restraints apply to the withdrawal of public assistance benefits. Furthermore, the Court specifically stated that the amount of due process afforded should be measured by the extent to which the recipient would be subjected to grievous loss, and that loss should be weighed against the government’s interest in summary adjudication. This is a useful consideration when weighing how much due process is appropriate. To draw a key quote from the Court’s opinion, “consideration of what procedures due process may require under any given set of circumstances must begin with a determination of the precise nature of the government function involved as well as of the private interest that has been affected by governmental action.” Goldberg provides another noteworthy quote: “In almost every setting where important decisions turn on questions of fact, due process requires an opportunity to confront and cross-examine adverse witnesses.” While due process does not protect individuals from all adverse action, these sentiments help illustrate the fundamental goal of due process as a whole — fairness during adverse action.
B. Key Precedent: “State Action” and Violations of Due Process in Medicare Cases
Thanks to the Goldberg case, the existence of a protected property interest in Medicare benefits is generally recognized. As already discussed in Part II of this article, a process that beneficiaries may use for appealing adverse actions is outlined in the federal statute for both Original Medicare and Medicare Advantage. However, to the extent that private entities are involved in the implementation of the Medicare program, issues may arise concerning whether there has been sufficient “state action” to constitute a violation of due process and what level of process is due if there is a violation.
For example, in Fox v. Bowen, the district court addressed a class action where Medicare beneficiaries were denied SNF coverage based on general presumptions of when coverage was necessary, despite their documented need for the services in question. The case determined that the Secretary of Health and Human Services, the party that represents Medicare, and its fiscal intermediary agents acted illegally when they failed to ensure that every plaintiff received an individualized assessment of their entitlement to coverage for SNF care. Consequently, the case recognizes that intermediaries administering the Medicare Act are agents of the HHS Secretary and their practices are state action imputable to the Secretary.
Although, as stated above, beneficiaries do have a property interest in receiving their Medicare which is protected by a statutorily created appeal process, there are situations that require redress which fall outside of established parameters. In Alexander v. Azar, the district court addressed a nationwide class of Medicare beneficiaries claiming due process deprivation after they were placed on observation status rather than inpatient status during hospital treatments. The class claimed that they lacked procedural safeguards since there was no way to challenge the classification, which was made by a private physician at the time of the patient’s arrival at the facility, then reviewed by the hospital’s “utilization review staff,” in light of Medicare standards, which may result in later reclassification. First, the court decided that the beneficiaries have a constitutionally protected property interest in Medicare Part A coverage and that this interest was being adversely affected in cases where the beneficiaries had been placed on “observation status” in the hospital. The court then determined that the utilization review staff’s decision on such classification constituted state action. Entitlement to due process of law is established when the statutes and regulations that govern a program require government administration and oversight of the program’s operation. Regarding government benefits:
the meaningful channeling standard involves two largely distinct inquiries, both of which must be satisfied to establish a due process protected property interest: whether the relevant criteria governing eligibility meaningfully channel official discretion, and whether conferral of the benefit becomes mandatory upon a finding that the relevant criteria are satisfied.
Continued further:
the relevant inquiry is thus better framed not in terms of whether the relevant criteria are “fixed” and “objective” — both of which are vague terms better understood in terms of a spectrum rather than a rigid dichotomy — but whether the criteria are sufficiently fixed and objective to “meaningfully channel official discretion.
The district court decided that Medicare, its regulations and oversights, and the discretion that was exercised meet those requirements. Furthermore, the beneficiaries were denied due process and deserved procedural safeguards. This case shows that the courts recognize Medicare benefits as protected property interests that warrant due process of law. The court further explained that even when a person does not qualify for the benefit in question, it does not preclude the existence of a protected property interest under the Due Process Clause.
On appeal, in Barrows v. Becerra (the continuation of the Alexander case following the death of the lead plaintiff), the Second Circuit Court of Appeals opinion provides further insights worth noting. The court again addressed the class action lawsuit against HHS where plaintiffs claimed a due process violation regarding denial of Medicare Part A coverage. As previously noted, beneficiaries were classified under “observation” status rather than “inpatient” status during a hospital stay. This separation of status is important because Medicare has what is known as the “two-midnight rule.” To get subsequent rehabilitation services in a nursing home covered by Medicare, a beneficiary is required to be hospitalized under inpatient status for at least three days, and the days are counted by passing at least two midnights. This fact pattern involved beneficiaries being listed as under observation rather than inpatient (sometimes a mix of both) so that they could not meet the two-midnight requirement and were denied coverage for subsequent inpatient rehabilitation services without the necessary procedural safeguards. There was no fair way to challenge the observation status.
The court of appeals also determined that reclassifying patients from inpatient to observation status constituted state action for due process purposes since Medicare statutes specifically require the use of government-regulated utilization review committees (URCs) to make such decisions. Even though the hospital and the URCs are private entities, the court quoted Cooper v. U.S. Postal Service by reaffirming: “Actions of a private entity are attributable to the State if there is a sufficiently close nexus between the State and the challenged action of the entity so that the action of the latter may be fairly treated as that of the State itself.” Furthermore, the court determined that the Medicare beneficiaries who were denied the proper procedural safeguards during the decision-making were in fact deprived of a protected property interest without due process of law as they lacked any meaningful opportunity to challenge the status determination.
Finally, the court discussed several situations where third parties could be state actors. For example, exercising powers that are typically exclusive (or nearly exclusive) to the government can be considered state action, and this applies even when the state has contracted out an activity to non-government private entities. As a result of this litigation, CMS has express language about the Medicare Outpatient Observation Notice (MOON) requirements and court-ordered ability to appeal the decision when a hospital changes someone from inpatient to an outpatient with observation services.
C. Seeing Due Process Gaps Through a Lens of Constructive Removal
As can be seen from the above precedent, the complexity of the Medicare program and the vast panoply of government and private provider participants make it increasingly difficult to address due process violations. Consider the case of Jimmo v. Sebelius, involving a class of Medicare beneficiaries and related organizations challenging a Medicare review process in which beneficiaries could be denied rehabilitation-related services if they were not improving pursuant to what was known as the “improvement standard.” The plaintiffs asserted that this “rule of thumb” was implemented without proper procedural safeguards and unduly burdened Medicare beneficiaries seeking treatment in violation of the Medicare Act, its regulations, and the Due Process Clause of the Fifth Amendment. It is important to point out that the “improvement standard” was not a part of federal Medicare statute or regulations, but was rather a “covert rule of thumb” or unauthorized and “clandestine policy” implemented by lower-level Medicare providers and administrative contractors. The HHS Secretary agreed to settle the plaintiff’s claims and the settlement was approved by the court on January 14, 2013. The agreement addressed a “maintenance coverage standard” that means “skilled nursing services would be covered where such skilled nursing services are necessary to maintain the patient’s current condition or prevent or slow further deterioration so long as the beneficiary requires skilled care for the services to be safely and effectively provided.”
Ultimately, this created the “maintenance coverage standard” that allowed coverage of SNF care, home health care, and occupational therapy so long as it assisted the beneficiary to improve or at least maintain their current state of function. This was a major win for Medicare beneficiaries, and it further assisted medical providers in directing their patients’ care. As seen in Jimmo v. Burwell, the court adopted “individualized assessment” as a requirement for decisions implementing the maintenance coverage standard:
Skilled therapy services are covered when an individualized assessment of the patient’s clinical condition demonstrates that the specialized judgment, knowledge, and skills of a qualified therapist (“skilled care”) are necessary for the performance of a safe and effective maintenance program. Such a maintenance program to maintain the patient’s current condition or to prevent or slow further deterioration is covered so long as the beneficiary requires skilled care for the safe and effective performance of the program.
Unfortunately, in the Burwell case, the court faced another claim stemming from the Jimmo class action, as the plaintiffs claimed that the HHS Secretary and CMS failed to uphold their portions of the settlement agreement to support and educate about the new maintenance coverage standard, and so brought an action to enforce the settlement agreement as written. To fix the issue, both parties tried to create a solution in good faith and finally suggested different corrective actions for the court to review. The court found that the Secretary’s corrective action plan would cure its breach of the agreement. This aspect of the case presents a clear example of how Medicare policy, or intended action to implement even a settlement agreement, can be inadvertently avoided or ignored and thus constitute a constructive removal of a beneficiary’s rights that again required redress.
Consequently, beyond strengthening the ties between Medicare and a due process analysis, the Jimmo cases themselves provide a powerful basis for the concept of constructive removal. The “improvement standard” never legitimately existed. It was entirely fabricated to deny beneficiaries access to medically necessary services, and there was no policy or legislation to justify it. In short, the Jimmo cases should never have been necessary. Red tape denied beneficiaries their rightful access to care, and the “improvement standard” is still incorrectly used and appealed to this day.
IV. Other Constructive Removal Issues in the Medicare Program
In addition to the example at the beginning of this article of Ms. M’s AI denial decisions based on algorithms using “rules of thumb” — which should be addressed by Jimmo’s insistence on “individualized” decisions — this section provides case samples from across the nation that illustrate the struggles of Medicare beneficiaries.
The Life Care Planning Law Firms Association’s (LCPLFA) member-only 2023 UnProgram included a specific breakout session devoted to Medicare and its related problems. The following examples of constructive removal emerged from the group’s collective discussion of their experiences.
A. Guaranteed Issue Rights for Medicare Supplement Insurance
“Guaranteed issue rights” were reinforced through the Affordable Care Act (ACA), and they provide new Medicare beneficiaries the ability to avoid medical underwriting when shopping for a Medicare supplemental insurance policy. Before the implementation of the ACA, an insurance company could deny coverage for preexisting health conditions, and this would essentially bar certain beneficiaries from ever receiving Original Medicare in its entirety. This forced many people to settle for Medicare Advantage plans against their wishes. Guaranteed issue rights have thus been an impactful change for the sickest of the Medicare population and provided flexibility for their insurance options. Conversely, it was not a perfect answer to the problem. While the idea of guaranteed issue rights seems to work for those aging into Medicare, it is not effective for those who get Medicare benefits due to disability. Federal law does not require guaranteed issue rights for those under age 65, but over half of the states expand this right to those under age 65. Per the discussion at LCPLFA, many practitioners have seen those under age 65, who do have guaranteed issue rights within their states, get price-blocked by quotes with exorbitantly expensive premiums when trying to get a supplemental policy.
While companies cannot specifically ask medical questions during intake, they are allowed to ask for the beneficiary’s age. By understanding Medicare enrollment rules, it can be inferred that someone under age 65 has a major medical diagnosis, and it seems that insurance companies are simply charging extreme rates to either cover themselves or scare the sick away. During the session, several members explained that a person who is 65 years old might get a quote for supplement Plan G at $115 per month through “company x,” while another person who is 60 years old might get a quote ranging from $400–$500 for the exact same policy at the same company. The breakout group felt this clearly opposed the intent of guaranteed issue rights — it defeats the purpose. This is an example of constructive removal. There is a policy in place with the intent to provide beneficiaries with a desired legislative outcome, but since there are possible workarounds for Medicare’s contracting parties, certain beneficiaries are denied the benefits of the legislation. Those under age 65 practically have no guaranteed issue rights like those naturally aging into Medicare.
B. Medicare Advantage and Misleading Marketing
As has already been noted in this article, most people do not understand the differences between Original Medicare and Medicare Advantage. Consequently, the constant barrage of MA commercials on television often constitutes the only source of information that a prospective beneficiary has concerning those differences. Offering ancillary benefits to attract beneficiaries to MA plans while providing little substance or practicality in using those benefits is knowingly misleading and a source of harm to those shopping for coverage. For example, older Medicare beneficiaries living in nursing home facilities changed to MA plans in hope of receiving dental coverage but were unaware of the barriers they would encounter to receiving care. Since the MA plans are HMOs and PPOs that use networks of providers, some of the beneficiaries were unable to use their primary care providers or much-needed medical specialists because they were out of network. Even worse, when their families tried to call about the dental coverage, they were informed that no provider in their area accepted the plan. The desired coverage was essentially useless while harming the rest of the client’s health care access. This in turn prompted discussion about MA plans that encourage beneficiaries to change plans for a lower premium without warning of the potential issues that may arise with restrictive provider networks.
Both marketing practices constitute yet another form of constructive removal — misleading and inducing the beneficiaries to change to a plan for a particular benefit that is practically unavailable. While it is technically available and recognized, it is practically inaccessible or useless. This only robs Medicare beneficiaries of their benefits and hurts the program’s integrity.
C. Misuse of Prior Authorization
Another common stumbling block can be found in prior authorizations. These authorizations are required for specific procedures, tests, or treatments before the Medicare beneficiary can use the service. While this makes some financial sense, there is argument in the advocacy community whether these authorizations are being overused by insurance providers. This overuse places an unreasonable burden on Medicare beneficiaries across various health care settings. A report by the HHS Office of Inspector General (OIG) found the capitated payment model used for MAOs could incentivize inappropriate denials of service.
HHS-OIG found that 13% of MAO denials are for services that would have been covered by Original Medicare, because MAOs use clinical criteria outside the Medicare coverage rules. Unfortunately, there is a lack of CMS guidance on whether MAOs should be using these internal clinical criteria or simply relying on Medicare’s coverage rules. While this is a matter of continuing change and new legislation, there is still unnecessary ambiguity and differing results between Original Medicare and MAO coverage. Additionally, the study found that MAOs were requiring high levels of supporting medical records to approve prior authorizations. This is another form of constructive removal. While the services are available and supported by Medicare’s coverage rules, the approval itself is practically not available for beneficiaries, and the lack of CMS guidance provides little to no due process for those facing denials.
V. Constructive Removal as a New Claim of Action
The preceding instances of constructive removal are far from exhaustive and meet the entry requirements for a due process violation analysis. Ms. M., the person fighting through 10 appeals without an adequate remedy received “rule of thumb” decisions generated by AI — the proverbial ghost in the machine issuing denials of care by algorithm in clear violation of due process, which requires coverage decisions to be made on an individual basis, governed by what under the facts is medically necessary for the patient. Similarly, a patient who was taken to a hospital and who received treatment under “observation status” as opposed to being admitted to the hospital as an inpatient (or worse, who was admitted and whose admission is later “reclassified” as “observation”) will then find that their rehabilitation in an SNF would not be covered by Medicare — again without recourse and in violation of due process.
To recap, the case law established in Alexander v. Azar and other Medicare-focused cases shows that Medicare beneficiaries do have a protected property interest in their Medicare benefits. Furthermore, cases like Fox v. Bowen show that state action can apply equally to the government officials who staff the Medicare program and to the private parties with whom they contract or whose conduct they regulate, since those third parties are considered agents of the Secretary of Health and Human Services. To illustrate the analysis for constructive removal, the problems raised in the previous section — guaranteed issue rights, Medicare Advantage marketing, and prior authorizations — will be readdressed through that lens.
A. Applying a Due Process Analysis to Guaranteed Issue Rights
The first issue is whether the concept of constructive removal can be applied to the private action of insurance companies that raise the cost of the same Medigap supplemental insurance policies from an affordable rate for those 65 and older to a cost-prohibitive level for those under 65 as a misuse of guaranteed issue rights in states where these rights are protected by additional state law.
As mentioned in previous sections, there are various cases that form the basis for a due process analysis. The United States Court of Appeals for the Second Circuit recognized the “close nexus” test in Cooper v. U.S. Postal Service, which allows the action of private entities to be attributable to the government, and fulfill the state action requirement, when the actions of the private entity are assisting the government and there is a sufficiently close nexus between the challenged action and the government. Applying that logic here, when a state chooses to expand guaranteed issue rights beyond the federal basis, while also providing the standards for insurance companies who provide supplemental insurance quotes, there is clearly state action.
Applying the law to the example of a Medicare beneficiary under age 65 who receives a cost-prohibitive quote for supplemental insurance, the inappropriate use of age as a marker for disability-based Medicare eligibility for those under 65 not only offends the state legislative intent but also qualifies as a due process violation. The individual is denied meaningful access to a promised benefit from the government in the form of an affordable Medigap policy, which in turn blocks access to affordable Medicare coverage. There is no opportunity to challenge the price quoted either during or after the application process, and the entire process is managed by third parties working under government oversight and regulation.
In conclusion, the constructive removal of guaranteed issue rights for those under age 65, in the states that add this additional protection to those whose age falls below the base set by federal law, is a violation of those Medicare beneficiaries’ constitutional right to due process. This provides an example of constructive removal because the states in question have chosen to expand guaranteed issue rights on paper through legislation, but the practice of over-quoting prices practically bars supplemental insurance for the majority who cannot afford it. While these companies are technically following the letter of guaranteed issue rights and not using medical underwriting to quote, simply raising prices to an inaccessible level because of a beneficiary’s age has the same effect. This issue impacts many people, often some of the most vulnerable and frail within the Medicare population, and it cannot be ignored.
B. Applying a Due Process Analysis to Medicare Advantage Marketing
The second issue is whether the actions by Medicare Advantage companies to advertise ancillary benefits to Medicare beneficiaries or to advertise lower plan costs overall to entice beneficiaries to switch plans, while concealing the limited nature and availability of those ancillary benefits and services or the restricted availability of physicians within the network, fits the analysis for constructive removal.
Cooper v. U.S. Postal Service again supports a finding that the actions of MA providers in overpromising the availability of ancillary benefits and general health care, and underdelivering on both due to restrictive provider networks, have been permitted through lax government regulation by HHS of the MA providers and their agents. This means that the predatory practices of MA providers constitute state action. Furthermore, the promise of specific services like dental benefits, or lower overall plan costs, while failing to explain that those benefits are only available through the limited number of providers who choose to work with the plan, could constitute a deprivation of a promised, protected property interest. Applying the law to this example — the deceptive actions of the companies to entice enrollment from Medicare beneficiaries while failing to explain the potential pitfalls or the limited availability of services — could be considered state action depriving Medicare beneficiaries of the property interest found in their plan’s promised coverage. This shows a constructive removal of beneficiaries’ rights and access to care through overpromising while underdelivering.
C. Applying a Due Process Analysis to the Misuse of Prior Authorization
The third issue is whether the abuse of prior authorizations to limit access to medically necessary care constitutes a constructive removal.
Applying the law to this example, the use of overly restrictive prior authorizations by MA providers is denying Medicare beneficiaries access to care, despite the reasonable expectation that insurance should cover their medically necessary hospital and physician-ordered procedures. As previously noted in the HHS-OIG report, there is a marked discrepancy between the use of prior authorizations by Original Medicare and Medicare Advantage. Working from the basis that case law already shows that Medicare beneficiaries have a protected property interest in their Medicare benefits, proof that MA plans deny coverage for services that would be considered medically necessary by Medicare constitutes a constructive removal of those benefits through misuse of prior authorization. Additionally, Medicare billing guidelines provide what is needed to support a claim for medical services, but that still does not prevent prior authorization from being used as an inappropriate bar to care. The findings of HHS-OIG are very concerning: “MAOs indicated that some prior authorization requests did not have enough documentation to support approval, yet our reviewers found that the existing beneficiary medical records were sufficient to support the medical necessity of the services.”
This is yet another example of constructive removal that inappropriately limits Medicare beneficiaries’ access to medically necessary care. Even when all the Medicare guidelines are met, the records support the services, and access to needed health care of Medicare beneficiaries hangs in the balance, prior authorizations may still act as a barrier and denial of due process. While this denial of coverage can be appealed, the protections of due process do not start at appeal. Where the denial of benefits appears to arise because of a policy or systemic practice that affects a substantial number of beneficiaries, the source of the problem should be addressed sooner rather than later.
VI. Conclusion
Persons eligible for Medicare benefits under federal law have a constitutionally protectable property interest, which the state cannot deprive them of without first using procedural protections — such as a meaningful opportunity to be heard, the ability to address adverse decisions, and the final decision to be made by a neutral decision-maker. As significant as this protection is, the issues raised in the settlement of the Jimmo and Burwell cases indicate that the complexity of the Medicare program and its critical importance to those who rely upon it now mean that ordinary due process protections have not been sufficient to prevent the federal government — through its agencies, departments, and carriers — from constructively removing the rights of our most vulnerable citizens. This article has provided a few examples of such constructive removal — including insurance companies’ price hike work-around approach to avoid state law guaranteed issue rights, misleading and predatory marketing of Medicare Advantage plans, and abuse of prior authorizations — but this is by no means an exhaustive list. Constructive removal can be used to refer to any scenario where a government program, or its contracting parties, promises a right to an individual that is legally or technically available, but due to some barrier or practice, that same right is practically inaccessible to those who need it.
Many beneficiaries are simply giving up the fight. They are forced to battle for coverage while simultaneously fighting for their health. But this article demonstrates that there is a potential constitutional violation in the form of constructive removal affecting Medicare beneficiaries. Several Medicare cases, like Jimmo, have found a way to address issues affecting Medicare beneficiaries by informing meaningful policy change or advocating for enforceable clarification and correction of misinterpretation or application of existing policies. Now that there is an identified constitutional violation, future efforts will need to be made to address class action requirements, potential remedies, and even justiciability issues applicable to such cases. This must be addressed by professionals in and around Medicare, and it will take a system-wide change to fix all the cracks in the Medicare program. Additional research and preparation are necessary to pursue legal recourse for those unfairly affected by constructive removal.
Additionally, outside the courtroom, this issue will require joint efforts from legislators and stakeholders to amend the deficits in the Medicare program that allow for creative loopholes and pitfalls that devastate one of our most vulnerable populations. If this article can act as a catalyst for beneficiaries, their advocates, elder care professionals, and Medicare litigators in the industry, it could be the beginning of a profound improvement of the Medicare program. Given that this program serves millions of people, it is the job of the informed to fight injustice by providing a voice for those without the means to defend themselves.
1 Cinnamon St. John & Eric Krupa, When Artificial Intelligence in Medicare Advantage Impedes Access to Care: A Case Study, Center for Medicare Advocacy (Apr. 21, 2022), https://medicareadvocacy.org/ai-plus-ma-equals-bad-care-decisions/ (accessed Aug. 26, 2025).
2 Id.
3 Casey Ross & Bob Herman, UnitedHealth Pushed Employees to Follow an Algorithm to Cut Off Medicare Patients’ Rehab Care, STAT (Nov. 14, 2023), https://www.statnews.com/2023/11/14/unitedhealth-algorithm-medicare-advantage-investigation/ (accessed Aug. 26, 2025).
4 St. John & Krupa, supra n. 1.
5 Ctrs. for Medicare & Medicaid Servs., Medicare Monthly Enrollment (Aug. 19, 2025), https://data.cms.gov/summary-statistics-on-beneficiary-enrollment/medicare-and-medicaid-reports/medicare-monthly-enrollment (accessed Aug. 26, 2025).
6 Conn. Dept. of Soc. Servs. v. Leavitt, 428 F.3d 138, 141 (2d Cir. 2005).
7 42 C.F.R. §§ 400–699.
8 Medicare.gov, Get Started With Medicare, https://www.medicare.gov/basics/get-started-with-medicare (accessed Aug. 26, 2025).
9 Ctrs. for Medicare & Medicaid Servs., Introduction to Medicare at slide 4 (Apr. 3, 2023), https://www.cms.gov/medicare/coordination-of-benefits-and-recovery/coordination-of-benefits-and-recovery-overview/medicare-secondary-payer/downloads/introduction-to-medicare.pdf (accessed Aug. 26, 2025).
10 Fox v. Bowen, 656 F. Supp. 1236, 1246–48 (D. Conn. 1987). The court in Fox cited 42 C.F.R. §§ 409.30–409.36.
11 Medicare.gov, Parts of Medicare, https://www.medicare.gov/basics/get-started-with-medicare/medicare-basics/parts-of-medicare (accessed Aug. 26, 2025).
12 Medicare.gov, What Does Medicare Cost?, https://www.medicare.gov/basics/get-started-with-medicare/medicare-basics/what-does-medicare-cost (accessed Aug. 26, 2025).
13 Id.
14 Medicare.gov, Compare Original Medicare & Medicare Advantage, https://www.medicare.gov/basics/get-started-with-medicare/get-more-coverage/your-coverage-options/compare-original-medicare-medicare-advantage (accessed Aug. 26, 2025).
15 Medicare.gov, How Does Original Medicare Work?, https://www.medicare.gov/basics/get-started-with-medicare/medicare-basics/how-does-medicare-work (accessed Aug. 26, 2025).
16 Ctrs. for Medicare & Medicaid Servs., Medicare Managed Care Manual, ch. 11 (Apr. 25, 2007), https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c11.pdf (accessed Aug. 26, 2025).
17 42 C.F.R. §§ 400–699.
18 42 C.F.R. §§ 422.1–422.2615.
19 42 C.F.R. § 422.62(b)(3)(i)(B). An example of such a quality standard could be: “Outpatient services and inpatient hospital services must include short-term rehabilitation services and physical therapy, the provision of which the HMO determines can be expected to result in the significant improvement of a member’s condition within a period of two months.”
20 Medicare.gov, Medicare Rights & Protections (July 2025), https://www.medicare.gov/publications/11534-medicare-rights-and-protections.pdf (accessed Aug. 26, 2025).
21 Medicare.gov, Filing an Appeal, https://www.medicare.gov/providers-services/claims-appeals-complaints/appeals (accessed Aug. 26, 2025).
22 42 C.F.R. §§ 405.1200–405.1204 (Original Medicare SNF, home health, and hospice discharge appeals).
23 42 C.F.R. § 422.620, 422.622 (Medicare Advantage hospital and SNF discharge appeals).
24 As an example, one of the author’s colleagues, also a Medicare specialist with over eight years of experience with the Medicare program, had to seek assistance correcting a Medicare appeal where the Medicare Advantage process used to appeal was conflated with the appeals process for Original Medicare, proving that even the experts may struggle to keep both systems straight.
25 Bob Rosenblatt, Why Medicare Matters to All Americans, AARP (Feb. 7, 2017), https://www.aarp.org/advocacy/why-medicare-matters-to-all-americans-2017/ (accessed Aug. 26, 2025).
26 Constitution Annotated, Amdt14.S1.5.3 Property Deprivations and Due Process, https://constitution.congress.gov/browse/essay/amdt14-S1-5-3/ALDE_00013749/ (accessed Aug. 26, 2025).
27 Leg. Info. Inst., Fifth Amendment, https://www.law.cornell.edu/wex/fifth_amendment#:~:text=strengthen%20its%20case.-,Self%2DIncrimination,In%20the%20landmark%20Miranda%20v (accessed Aug. 26, 2025).
28 Bd. of Regents v. Roth, 408 U.S. 564, 576–78 (1972).
29 Goldberg v. Kelly, 397 U.S. 254 (1970).
30 Id. at 262.
31 Id.
32 Id. at 262–64.
33 Id. at 263.
34 Id. at 269.
35 Lutwin v. Thompson, 361 F.3d 146 (2d Cir. 2004).
36 Fox, 656 F. Supp. at 1244.
37 Id. at 1246–48.
38 Alexander v. Azar, 613 F. Supp. 3d 559 (D. Conn. 2020).
39 Id. at 565.
40 Id. at 588–89.
41 Id. at 618–622.
42 Id. at 600.
43 Id. at 601.
44 Barrows v. Becerra, 24 F.4th 116 (2d Cir. 2022).
45 Id. at 123–24. See also 42 C.F.R. §412.3(d)(1).
46 42 U.S.C. §§ 1395x(i)(A) & (B).
47 Barrows, 24 F.4th at 137–39.
48 Cooper v. U.S. Postal Serv., 577 F.3d 479, 491 (2d Cir. 2009).
49 Id. at 491.
50 Barrows, 24 F.4th at 141–43.
51 Medicare.gov, Inpatient or Outpatient Hospital Status Affects Your Costs, https://www.medicare.gov/coverage/inpatient-hospital-care/inpatient-outpatient-status (accessed Aug. 26, 2025).
52 Jimmo v. Sebelius, No. 5:11-CV-17, 2011 WL 13202352 (D. Vt. Dec. 23, 2011).
53 Id. at 2–3.
54 Id. at 3.
55 Jimmo v. Burwell, No. 5:11-CV-17, 2017 WL 462512 at 3 (D. Vt. Feb. 1. 2017). (Jimmo case style changed after Sylvia Mathews Burwell replaced Kathleen Sebelius as HHS Secretary in 2014).
56 Id. at 9.
57 Id. at 3–4.
58 Jimmo v. Sebelius, 2011 WL 13202352.
59 The LCPLFA is a “national network of holistic law practices that offer legal services, care coordination, and advocacy services to help elderly clients and their families navigate the health care and long-term care maze,” which, among other things, conducts an annual conference where elder law attorneys and their staff from around the country gather to discuss issues facing older adults and the practice of law. See Life Care Planning Law Firms Association, About the Life Care Planning Law Firms Association, https://www.lcplfa.org/about (accessed Aug. 26, 2025).
60 The author served as the moderator for the session entitled “The Medicare Roundtable” at the 2023 LCPLFA UnProgram in Atlanta, which had 17 participants from around the country. He was the only Medicare specialist in the crowd, which was composed of elder law attorneys, elder care coordinators, intake staff for law firms, and law firm staff with experience across the health care industry. It was immediately apparent that Medicare and its policies have frustrated people nationwide. These examples are from the author’s notes of the discussion.
61 Pub. L. No. 111–148, 124 Stat. 119 (2010).
62 Medicare.gov, Get Ready to Buy, https://www.medicare.gov/health-drug-plans/medigap/ready-to-buy (accessed Aug. 26, 2025).
63 Center for Medicare Advocacy, Medicare Prior Authorization, https://medicareadvocacy.org/prior-authorization/ (accessed Aug. 26, 2025).
64 U.S. Dept. of Health & Human Servs., Off. of Inspector Gen., Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care 9–12 (Apr. 27, 2022), https://oig.hhs.gov/oei/reports/OEI-09-18-00260.asp (accessed Aug. 26, 2025).
65 Alexander, 613 F. Supp. 3d 559.
66 Fox, 656 F. Supp. 1236.
67 Cooper, 577 F.3d 479.
68 U.S. Dept. of Health & Human Servs., Off. of Inspector Gen., supra n. 64.
69 Ctrs. for Medicare & Medicaid Servs., Medicare Claims Processing Manual (Original Medicare), ch. 1 (June 25, 2025), https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/clm104c01.pdf (accessed Aug. 26, 2025); Ctrs. for Medicare & Medicaid Servs., Medicare Managed Care Manual (Medicare Advantage), ch. 4 (Apr. 22, 2016), https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/mc86c04.pdf (accessed Aug. 26, 2025).
70 U.S. Dept. of Health & Human Servs., Off. of Inspector Gen., supra n. 64, at “Report in Brief.”