Cares Community Health v. HHS

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 21, 2019 Decided December 20, 2019

No. 18-5319

CARES COMMUNITY HEALTH,

APPELLANT

v.

UNITED STATES DEPARTMENT OF HEALTH AND HUMAN

SERVICES, ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:17-cv-02774)

James L. Feldesman argued the cause for appellant. With

him on the briefs were Matthew S. Freedus and David A.

Bender.

Karen Schoen, Attorney, U.S. Department of Justice,

argued the cause for appellees. With her on the brief were

Joseph H. Hunt, Assistant Attorney General, and Alisa B.

Klein, Attorney.

Before: TATEL, PILLARD, and WILKINS, Circuit Judges.

Opinion for the Court filed by Circuit Judge PILLARD.

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PILLARD, Circuit Judge: A provision of the Medicare

statute we call the Not Less Than Provision, 42 U.S.C.

§ 1395w-27(e)(3)(A), requires that private Medicare insurance

plans’ reimbursements to a Federally Qualified Health Center

(FQHC) for government-subsidized medical services be “not

less than” what the insurers pay other healthcare providers not

receiving such subsidies. Cares Community Health, an FQHC,

claims that the Not Less Than Provision also prevents private

Medicare prescription drug plans from reimbursing an FQHC

less for dispensing pharmaceuticals than they would reimburse

a non-FQHC for dispensing the same drugs. Cares sued the

U.S. Department of Health and Human Services (HHS), the

HHS Secretary, and the Administrator of the Centers for

Medicare and Medicaid Services (CMS), claiming that they

unlawfully allowed an insurer offering Medicare prescription

drug coverage, Humana Health Plan, Inc., to pay Cares less for

drugs that Cares obtains at a discount under a separate federal

program known as Section 340B, id. § 256b, than Humana

would reimburse a non-FQHC for the same drugs. The district

court dismissed Cares’ claim, holding that the Medicare statute

does not mandate that HHS require Humana to reimburse

FQHCs for discounted pharmaceuticals at a rate “not less than”

Humana pays other providers for the same drugs. Cares Cmty.

Health v. HHS, 346 F. Supp. 3d 121, 129 (D.D.C. 2018)

(quoting 42 U.S.C. § 1395w-27(e)(3)(A)). We affirm.

BACKGROUND

To become an FQHC like Cares under the Medicare

program, 42 U.S.C. § 1395x(aa)(4), a health center must

provide “primary health services” to “medically underserved”

communities, id. § 254b(a), regardless of patients’ ability to

pay, see id. § 254b(k)(3)(G). FQHCs are a key part of the

medical safety net for low-income individuals without health

insurance. Recognizing that FQHCs’ central role in treating

3

low-income, uninsured patients means that they provide lots of

uncompensated care, Congress has provided FQHCs various

forms of financial support. See generally Cmty. Health Care

Ass’n of N.Y. v. Shah, 770 F.3d 129, 136 (2d Cir. 2014).

The Medicare statute provides one such support through

governmental “wraparound” payments. Those payments make

up the difference between what private insurers reimburse

FQHCs for providing non-pharmacy outpatient medical

services to Medicare beneficiaries and what traditional

Medicare would reimburse a provider for the same services,

which might be higher. See 42 U.S.C. § 1395l(a)(3)(B).

Because insurers might otherwise be tempted to save money at

the government’s expense by lowering their reimbursements to

FQHCs receiving wraparound payments, Medicare’s Not Less

Than Provision prevents insurers from exploiting the

wraparound support by selectively reducing reimbursement

rates to FQHCs. See id. § 1395w-27(e)(3)(A).

The Public Health Service Act provides a second support

through Section 340B, which requires drug manufacturers

participating in Medicaid to offer pharmaceutical discounts to

FQHCs and certain other safety-net healthcare providers. See

id. § 256b. These drug discounts can produce income for

eligible providers insofar as insurers reimburse them at market

prices that exceed the 340B-discounted price. Notwithstanding

some difference in how these two supports operate, Cares

argues that the Medicare statute’s protection against insurers’

freeloading off the wraparound program also necessarily

forbids insurers from lowering their reimbursements to capture

for themselves the benefit of Section 340B discounts.

A. The “Not Less Than” Payment Mandate

“The federal Medicare program reimburses medical

providers” such as FQHCs “for services they supply to eligible

4

patients” age 65 and older or with disabilities. Ne. Hosp.

Corp. v. Sebelius, 657 F.3d 1, 2 (D.C. Cir. 2011). The

Medicare statute is divided into five “Parts,” lettered A

through E, with Parts A through D each corresponding to a

separate benefit category under Medicare. Id. Traditional

Medicare comprises Part A, which “covers medical services

furnished by hospitals and other institutional care providers,”

and Part B, which covers outpatient care like physician and

laboratory services. Id. Congress authorized wraparound

payments to FQHCs in the Medicare Prescription Drug,

Improvement, and Modernization Act of 2003 (Medicare

Modernization Act or MMA), Pub. L. No. 108-173, 117 Stat.

2066, which “established the Medicare Advantage program” in

Part C, id. § 201(a), 117 Stat. at 2176 (codified as amended at

42 U.S.C. § 1395w-21 et seq.), and added prescription drug

coverage to Medicare in Part D, id. § 101, 117 Stat. at 2071

(codified as amended at 42 U.S.C. § 1395w-101 et seq.).

1. Medicare Part C Services and Wraparound

Payments

Under Medicare Advantage (Part C), private insurance

companies—known as Medicare Advantage organizations—

contract with CMS to offer Medicare beneficiaries a similar

range of medical coverage to what traditional Medicare funds

directly under Parts A and B. See Ne. Hosp. Corp., 657 F.3d

at 2; see also MSPA Claims 1, LLC v. Tenet Fla., Inc., 918 F.3d

1312, 1316 (11th Cir. 2019). CMS pays those insurers (the

Medicare Advantage organizations) a fixed amount for each

eligible Medicare beneficiary they enroll, and the insurers in

turn negotiate agreements with healthcare providers to

reimburse them for services they provide to the insurers’

enrolled beneficiaries. See Ne. Hosp. Corp., 657 F.3d at 3.

Part C imposes certain requirements on CMS’ contracts with

insurers, e.g., 42 U.S.C. § 1395w-27, some of which CMS

5

must require insurers to implement in their agreements with

providers, e.g., id. § 1395w-27(e)(3)(A).

Relevant here, the Medicare Modernization Act includes

three interlocking requirements regarding Medicare Advantage

organizations’ relationship with FQHCs, each of which we

give a shorthand name for ease of reference. See MMA

§ 237(a)-(c), 117 Stat. at 2212-13.

First, the Wraparound Payment Provision, codified in

Medicare Part B, authorizes wraparound payments from the

Federal Supplementary Medical Insurance Trust Fund, a funder

of outpatient services that beneficiaries receive under Part B.

42 U.S.C. § 1395l(a)(3)(B); see also Schweiker v. McClure,

456 U.S. 188, 190 (1982). Wraparound payments make up the

difference between the reimbursement amount Medicare

Part B sets for “[FQHC] services,” 42 U.S.C.

§ 1395k(a)(2)(D)(ii), and what insurers and beneficiaries

actually pay FQHCs for those services under Part C. See id.

§ 1395l(a)(3)(B). That shortfall occurs because insurer and

patient payment methodologies under Part C yield payment

amounts that do not always match what FQHCs are due under

Part B. Id. Wraparound payments thus help to meet FQHCs’

costs of providing outpatient medical services. The parties

agree that the Wraparound Payment Provision’s reference to

“[FQHC] services”—a term that Medicare defines as

outpatient services provided under Medicare Part B, id.

§ 1395x(aa)(3)—does not encompass prescription drugs, so

wraparound payments top up payments for outpatient services

provided by FQHCs, but not their pharmacy services.

Second, the Written Agreement Provision, codified in

Part C under the heading “Payment rule for [FQHC] services,”

helps to implement the Wraparound Payment Provision by

specifying which transactions count for wraparound payments

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as well as when and where the Trust Fund must make such

payments. Id. § 1395w-23(a)(4). The Written Agreement

Provision requires a wraparound payment “directly” to an

FQHC whenever a Medicare beneficiary “who is enrolled with

[a Medicare Advantage] plan under [Part C] receives a service

from a[n FQHC] that has a written agreement with the

[Medicare Advantage] organization that offers such plan for

providing such a service.” Id.

Third, recognizing that wraparound payments could

encourage insurers to reduce their reimbursements to FQHCs

because they know the Trust Fund is on the hook for any

shortfall, Part C’s Not Less Than Provision compels CMS to

police insurers’ reimbursements to FQHCs. Specifically, it

mandates that CMS’ contracts with Medicare Advantage

organizations require the agreements identified in the Written

Agreement Provision to stipulate that payments “to the

[FQHC] for services provided by such” FQHC are “not less

than the level and amount of payment that the [Medicare

Advantage] plan would make for such services if the services

had been furnished by” a non-FQHC. Id.

§ 1395w-27(e)(3)(A). The Not Less Than Provision thereby

prevents private insurers participating in Medicare Advantage

from reducing their reimbursements in order to save money at

the Trust Fund’s expense.

Together, the Wraparound Payment and Written

Agreement Provisions mandate and spell out implementation

of subsidies for FQHCs providing “[FQHC] services” to

Medicare Advantage beneficiaries. The Not Less Than

Provision is applied through the Written Agreement

Provision’s “written agreement” to protect the wraparound

payment regime’s fiscal sustainability. The Written

Agreement Provision identifies which transactions are subject

to the Not Less Than Provision; if the benefit in question is not

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covered by the “written agreement described in” the Written

Agreement Provision, there is nothing through which the “not

less than” mandate can apply.

2. Medicare Part D Prescription Drug Coverage

Like Medicare Advantage, Medicare Part D’s prescription

drug benefit program “operates as a public-private partnership

between [CMS] and . . . private insurance companies called

‘Sponsors’ that administer prescription drug plans.” United

States ex rel. Spay v. CVS Caremark Corp., 875 F.3d 746, 749

(3d Cir. 2017). The Part C and D public-private insurance

programs are in many ways parallel. Prescription drug

coverage need not be provided in combination with coverage

of non-pharmacy outpatient services, but it may be. When

Medicare Advantage plans also offer prescription drug

coverage under Medicare Part D, those dual-purpose plans are

known as MA-PD plans. See 42 U.S.C. § 1395w-101(a)(3).

Reflecting their parallelism, the Part D statute imports

various Part C provisions. As relevant here, it does so through

two additional provisions we dub the Part D Contract Provision

and the Part D Rewording Provision. First, the Part D Contract

Provision applies “section 1395w-27(e)”—which includes the

Not Less Than Provision, id. § 1395w-27(e)(3)(A)—to CMS’

Medicare contracts with insurers sponsoring prescription drug

coverage. Id. § 1395w-112(b)(3)(D). Second, the Part D

Rewording Provision requires that wherever Part C provisions

like the Not Less Than Provision apply in Part D, those

“provisions shall be applied as if” any reference to a Medicare

Advantage plan “included a reference to a prescription drug

plan;” any reference to a Medicare Advantage organization

“included a reference to a” prescription drug plan sponsor; and

“any reference to a contract under section 1395w-27” in Part C

“included a reference to a contract under

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section 1395w-112(b)” in Part D. Id. § 1395w-151(b)(1)-(3).

Notably, the parties identify nothing in the Medicare statute

that applies the Wraparound Payment Provision or the Written

Agreement Provision to Part D or revises for purposes of

Part D the Not Less Than Provision’s reference to a “written

agreement described in” the Written Agreement Provision. Id.

§ 1395w-27(e)(3)(A).

The Part D Contract Provision thus would appear to apply

the Not Less Than Provision to CMS’ contracts with insurers

offering prescription drug coverage, while the Part D

Rewording Provision dictates how to read the Not Less Than

Provision in the Part D context.

B. Section 340B Drug Discounts

Section 340B’s drug discount program, enacted in 1992

within the Public Health Service Act, see Veterans Health Care

Act of 1992, Pub. L. No. 102-585, § 602, 106 Stat. 4943,

4967-71 (codified as amended at 42 U.S.C. § 256b), and

administered by the Health Resources and Services

Administration, is statutorily and administratively separate

from Medicare. See Astra USA, Inc. v. Santa Clara Cty., 563

U.S. 110, 113 (2011). “Section 340B requires a manufacturer

of ‘covered outpatient drugs’ to enter into a contract with the

Secretary of HHS—a condition for eligibility for Medicaid

matching funds—under which the manufacturer agrees to

provide these drugs to certain ‘covered entities’ at discounted

prices.” Univ. Med. Ctr. of S. Nev. v. Shalala, 173 F.3d 438,

439 (D.C. Cir. 1999) (quoting 42 U.S.C. § 256b(a)(1)). The

“covered entities” entitled to pharmaceutical discounts from

drug manufacturers comprise some sixteen types of healthcare

providers, including FQHCs and various other types of clinics

and hospitals, many of which supply “safety-net services to the

poor.” Astra USA, 563 U.S. at 113; see 42 U.S.C. § 256b(a)(4).

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For the quarter century it has been in place, Section 340B

has aided eligible hospitals and clinics in two ways: It has

directly afforded FQHCs and other healthcare safety-net

providers savings on drugs, and it has indirectly benefitted

those providers when insurance reimbursements exceed

discounted pharmaceutical prices. The class of eligible

hospitals and clinics that provides drugs for free or at reduced

cost to qualifying patients saves billions of dollars per year by

obtaining those drugs at discount under Section 340B. See

Medicare Payment Advisory Comm’n, Report to the Congress:

Overview of the 340B Drug Pricing Program 6 (May 2015)

(MedPAC Report); see also 340B Drug Pricing Program

Ceiling Price and Manufacturer Civil Monetary Penalties

Regulation: Final Rule, 82 Fed. Reg. 1,210, 1,227 n.1 (Jan. 5,

2017). In addition to those savings, eligible providers garner

income as a result of the 340B discounts when they furnish

340B drugs to insured patients, because the insurers’ standard-

rate “reimbursements for the [discounted] drugs exceed the

340B prices [providers] pay for the drugs.” MedPAC Report

at 8. A congressionally mandated study of how eligible

providers use this “income from the 340B program,” Patient

Protection and Affordable Care Act, Pub. L. No. 111-148,

§ 7103(b)(3), 124 Stat. 119, 828 (2010), found that the above-

cost insurance reimbursements help safety-net providers fund

the uncompensated care they supply and expand the services

they offer. See U.S. Gov’t Accountability Office,

GAO-11-836, Drug Pricing: Manufacturer Discounts in the

340B Program Offer Benefits, But Federal Oversight Needs

Improvement 17 (Sept. 2011) (GAO Report).

C. Factual & Procedural History

The issue on appeal arises at the intersection of Medicare

and Section 340B. Cares contends that the Not Less Than

Provision, 42 U.S.C. § 1395w-27(e)(3)(A), precludes

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prescription drug plans from paying less for pharmaceuticals

dispensed by FQHCs—including 340B-discounted drugs—in

the same way it precludes insurers from paying less for

“[FQHC] services” to prevent exploitation of governmental

subsidies paid under the Wraparound Payment Provision, id.

§ 1395l(a)(3)(B).

In September 2009, Cares executed a Pharmacy Provider

Agreement with Humana to provide prescription drug services

under Humana’s MA-PD plan. Five years later, shortly after

Cares became an FQHC, Humana sent Cares an amendment to

the Agreement that set reimbursement rates for what Humana

refers to as “340B pharmacy services” at about two-thirds the

rate Humana pays other types of providers for “Retail

Pharmacy Services.” Am. Compl. ¶ 37 (A. 23). “340B

pharmacy services” are the same as “Retail Pharmacy

Services” except that “340B pharmacy services” cover drugs

discounted under Section 340B, while “Retail Pharmacy

Services” do not.

Apparently, Cares’ experience with Humana is not unique;

other 340B-eligible providers report that insurers sponsoring

Medicare Part D coverage recently have “reduc[ed] contracted

reimbursement rates for drugs based on the [provider’s] status

as a 340B provider” entitled to the 340B discount. GAO

Report at 14. Essentially, Humana’s Pharmacy Provider

Agreement amendment lowered the reimbursement it paid

Cares to account for the discount Cares receives under Section

340B, which resulted in Cares receiving less reimbursement

than non-FQHCs for the same medications. As of May 2018,

Cares had recovered some $3 million less—nearly $5,000 per

working day—than it would have recovered absent the

amendment lowering Humana’s reimbursements for “340B

pharmacy services.” Am. Compl. ¶ 41 (A. 24). (HHS itself

decided in November 2017 to reduce Medicare

11

reimbursements for 340B pharmacy services to some eligible

hospitals on the ground that 340B-eligible hospitals “are able

to buy covered drugs at amounts significantly below the

average sales price.” Am. Hosp. Ass’n v. Azar, 895 F.3d 822,

824 (D.C. Cir. 2018).)

After disputing the amended reimbursement rates before

an arbitrator who refused to decide the rates’ lawfulness, Cares

filed this lawsuit claiming that Humana’s differential

reimbursement rates resulted from HHS’ unlawful failure to

enforce the Not Less Than Provision against Humana, in

violation of the Medicare statute and the Administrative

Procedure Act (APA), 5 U.S.C. § 706. Cares asserts two

alternative APA theories: First, HHS unlawfully withheld

required agency action by failing to apply the Not Less Than

Provision’s FQHC payment requirement to Humana’s

Pharmacy Provider Agreement with Cares, see id. § 706(1);

and, second, HHS’ inaction is arbitrary and capricious, see id.

§ 706(2)(A). The HHS defendants moved to dismiss, arguing

that the Not Less Than Provision does not apply to prescription

drug plans’ reimbursement of pharmacy services, so there is no

unlawfully withheld action or arbitrary and capricious inaction.

In response, Cares argued that the Not Less Than Provision

covers pharmacy services because it applies to all “services

provided by [an FQHC],” 42 U.S.C. § 1395w-27(e)(3)(A), not

the narrower, Medicare-defined category of “[FQHC]

services,” id. § 1395x(aa)(3), which excludes prescription

drugs; that Part D applies the Not Less Than Provision to

Medicare prescription drug plans’ agreements with FQHCs;

and that Congress intended savings from the Section 340B

program to remain with FQHCs.

The district court held that Cares failed to state a claim

“because the proposition that the [Not Less Than Provision’s]

payment requirement must be included in Part D contracts or

12

that the payment requirement applies to Part D drugs is wrong

as a matter of law.” Cares Cmty. Health, 346 F. Supp. 3d

at 129. First, acknowledging that the Not Less Than Provision

uses the phrase “services provided by such [FQHC],” not the

defined term, “[FQHC] services,” the court nonetheless

“conclude[d] that the slight variation in phrasing cannot”

justify reading “services provided by such [FQHC]” to include

pharmacy services not counted as “[FQHC] services.” Id.

Next, the court declined to read Part D to apply the Not Less

Than Provision to prescription drug plans’ reimbursement of

pharmaceuticals, reasoning that no Part D provision “alter[ed]

the statutory definition of [FQHC] services, which excludes

Part D drugs.” Id. at 130 (emphasis omitted). Recognizing that

reading the Part D Contract Provision to have no practical

effect on the Not Less Than Provision presents “the possibility

of some amount of surplusage,” the district court nevertheless

concluded that possible surplusage “is not enough to defeat the

plain text of the” statute. Id. Finally, the court rejected Cares’

“statutory purpose argument,” finding no unambiguous textual

“hook” for the contention that “Congress intended FQHCs, not

[insurers], to internalize the benefit of discounted prescription

drugs.” Id.

Cares timely appealed the dismissal under 28 U.S.C.

§ 1291. On de novo review of the district court’s order granting

the motion to dismiss, we assume the truth of all plausibly

pleaded allegations and draw all reasonable inferences in

Cares’ favor. Agnew v. District of Columbia, 920 F.3d 49, 53

(D.C. Cir. 2019).

ANALYSIS

To review Cares’ claim that the Medicare statute precludes

HHS from approving prescription drug plans that reimburse

FQHCs less than they reimburse other healthcare providers, we

13

first “look to the ‘traditional tools of statutory interpretation—

text, structure, purpose, and legislative history.’” In re Sealed

Case, 932 F.3d 915, 928 (D.C. Cir. 2019) (quoting Tax

Analysts v. IRS, 350 F.3d 100, 103 (D.C. Cir. 2003)). Our

analysis begins with discerning “whether the language at issue

has a plain and unambiguous meaning with regard to the

particular dispute in the case.” Roberts v. Sea-Land Servs.,

Inc., 566 U.S. 93, 100 (2012) (quoting Robinson v. Shell Oil

Co., 519 U.S. 337, 340 (1997)). We read statutory text in light

of the “fundamental canon of statutory construction that the

words of a statute must be read in their context and with a view

to their place in the overall statutory scheme.” Id. at 101

(quoting Davis v. Mich. Dep’t of Treasury, 489 U.S. 803, 809

(1989)).

HHS has not requested judicial deference to its

interpretation of the Medicare statute. Cf. Chevron, U.S.A.,

Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 843-45

(1984). We need not decide the significance (if any) of that

omission because Cares does not ask us to “impose a particular

reading of” an ambiguous statute on HHS, Am. Ass’n of Retired

Persons v. EEOC, 823 F.2d 600, 605 (D.C. Cir. 1987), but only

that we follow the statute’s plain meaning, which Cares

contends “require[s]” HHS to ensure that Part D prescription

drug plans reimburse FQHCs for dispensing drugs at a rate “not

less than” those plans reimburse other providers for the same

drugs, Appellant’s Br. 16. Cares never asserts that it prevails

even if the statute permits HHS’ reading, instead resting its

APA claim on the statute’s “unambiguous[]” directive. Am.

Compl. ¶ 49 (A. 25). Under its own framing, Cares must show

that the statute not only permits but requires HHS to enforce

the Not Less Than Provision against prescription drug plans; if

we decide that the statute is ambiguous and permits HHS’

inaction, we need not resolve the ambiguity or definitively

interpret the statute. As Cares acknowledges, Oral Arg.

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Rec. 13:35-46, the statute—with its inconsistent language and

many cross-references—is not a model of clarity, so any

argument that it clearly forecloses HHS’ interpretation has an

uphill climb.

Cares’ contention that the Not Less Than Provision

unambiguously applies to prescription drug plans’

reimbursement of FQHC pharmacy services hinges on two

arguments: First, that the “services” to which the Not Less

Than Provision applies include pharmacy services and, second,

that the Part D Rewording Provision, 42 U.S.C.

§ 1395w-151(b), rewrites the Not Less Than Provision—

including its internal cross-reference to the Written Agreement

Provision specifying Part C written agreements—to apply to

prescription drug plans. Cares must succeed on both arguments

in order to prevail, showing that each of its interpretations is

not only “possible” but “inevitable.” Regions Hosp. v. Shalala,

522 U.S. 448, 460 (1998).

Cares’ first argument would appear to have merit, given

that the Medicare statute does not define the specific phrase the

Not Less Than Provision uses—“services provided by such

[FQHC].” 42 U.S.C. § 1395w-27(e)(3)(A). That undefined

phrase’s “ordinary meaning” encompasses pharmacy services,

FCC v. AT&T Inc., 562 U.S. 397, 403 (2011), not least because

Congress authorizes FQHCs to provide such services, see

42 U.S.C. § 254b(b)(1)(A)(i)(V). To be sure, the phrase

“services provided by such [FQHC]” closely resembles the

term “[FQHC] services,” and the Medicare statute’s definitions

section specifies that “[FQHC] services” exclude prescription

drugs. Id. § 1395x(aa)(3). But “we have repeatedly held that

where different terms are used in a single piece of legislation,

the court must presume that Congress intended the terms to

have different meanings” even if they “can be used

interchangeably.” Vonage Holdings Corp. v. FCC, 489 F.3d

15

1232, 1240 (D.C. Cir. 2007) (alteration omitted). We thus

diverge from the district court in holding that the statutory

phrase “services provided by such [FQHC]” does not

necessarily equate to the defined term, “[FQHC] services,” so

cannot alone defeat Cares’ position that the Not Less Than

Provision covers prescription drugs.

On the other hand, the fact that the Written Agreement

Provision’s heading contains the narrower, defined term

“[FQHC] services” even as that Provision’s text refers to

“services from a[n FQHC],” 42 U.S.C. § 1395w-23(a)(4),

lends support to HHS’ position that the subtly different

descriptions of “services” in the wraparound payment scheme

may all be read as equivalent to “[FQHC] services.” The

Written Agreement Provision’s interchangeable use of

“[FQHC] services” and “services from a[n FQHC]”—an

arguably broader, undefined term closely resembling the Not

Less Than Provision’s “services provided by such [FQHC],”

id. § 1395w-27(e)(3)(A)—“suggests an inadvertent drafting

inconsistency” in how the three Medicare Modernization Act

provisions describe the “services” to which wraparound

payments apply. Montana v. Clark, 749 F.2d 740, 751 (D.C.

Cir. 1984). Contrary to Cares’ position, the different wording

thus may not after all reflect “a deliberate policy choice” to

expand the range of services that the Not Less Than Provision

covers. Id.

With various textual clues supporting and undermining

Cares’ first argument, it is not readily apparent that the

“services provided by such [FQHC]” subject to the “not less

than” mandate necessarily encompasses a broader range of

services than the “[FQHC] services” term that Medicare

defines to exclude prescription drugs. We need not ultimately

decide whether “services provided by such [FQHC]” must

mean something more than “[FQHC] services,” however,

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because Cares does not clear a second obstacle. It fails to

establish that the Not Less Than Provision necessarily applies

to Part D prescription drug plans’ reimbursements to FQHCs.

Spelling out the revisions that the Part D Rewording Provision

dictates, see 42 U.S.C. § 1395w-151(b), the version of the Not

Less Than Provision that would apply to Part D is as follows:

A contract under [the Part D Contract Provision, id.

§ 1395w-112(b)] with [a prescription drug plan

sponsor] shall require the [prescription drug plan

sponsor] to provide, in any written agreement

described in [the Written Agreement Provision, id.

§ 1395w-23(a)(4)] between the [prescription drug plan

sponsor] and a[n FQHC], for a level and amount of

payment to the [FQHC] for services provided by such

health center that is not less than the level and amount

of payment that the [prescription drug plan] would

make for such services if the services had been

furnished by a[n] entity providing similar services that

was not a[n FQHC].

Id. § 1395w-27(e)(3)(A). As Cares reads it to apply in

Medicare Part D, the Not Less Than Provision requires CMS

to ensure that the agreements referenced in the Written

Agreement Provision—which, again, are contracts between

FQHCs and Medicare Advantage insurers for Part C

coverage—stipulate that prescription drug plans’ payments for

drugs supplied by FQHCs to their patients are “not less than”

payments to non-FQHCs for the same drugs, regardless of the

340B discount. Cares’ Part D version of the Not Less Than

Provision raises the question whether a prescription drug plan

sponsor and an FQHC providing prescription drug services

have the “written agreement” described in Part C that is the sole

vehicle through which the “not less than” payment requirement

applies. The Not Less Than Provision would have to appear in

17

a qualifying written agreement in order to bar prescription drug

plans like Humana’s from reimbursing FQHCs like Cares less

for 340B discounted drugs than the plans would reimburse non-

FQHCs for the same drugs obtained without that discount.

Critically, Cares never explains how the “written

agreement described in” Part C’s Written Agreement

Provision, id. § 1395w-23(a)(4), covers Part D prescription

drugs or even exists between prescription drug plans and

FQHCs. Instead, Cares seems to assume that the Written

Agreement Provision refers to contracts between Medicare

Advantage insurers and FQHCs for “FQHC services” that, as

already discussed, the Medicare statute defines to exclude

prescription drugs. Reply Br. 6. Cares’ argument is thus

missing a necessary link—that the “written agreement”

required for implementation of the “not less than” payment

floor covers prescription drug plans’ reimbursements to

FQHCs under Medicare Part D. Perhaps the Pharmacy

Provider Agreement between Cares and Humana could be the

same “agreement” referenced in the Written Agreement

Provision between a Medicare Advantage “organization” and

an FQHC for “[FQHC] services,” but Cares does not so

contend, nor does it identify any other agreement between

insurers and providers through which the “not less than”

FQHC-payment requirement applies in the Part D context.

Rather than grapple with the Not Less Than Provision’s

reference to Part C’s “written agreement,” Cares argues that the

Part D Contract and Rewording Provisions, 42 U.S.C.

§§ 1395w-112(b)(3)(D), 1395w-151(b), implicitly remove (for

purposes of Part D) that cross-reference. Cares notes in support

that neither the Part D Contract Provision, which applies the

Not Less Than Provision to Part D, nor the Part D Rewording

Provision, which explains how to read certain language in

Part C provisions when they apply to Part D, expressly

18

connects the Not Less Than Provision to the Written

Agreement Provision. Reply Br. 6-7. That fact cannot help

Cares because Part D’s failure to address the Not Less Than

Provision’s reference to the Written Agreement Provision

leaves intact duly enacted statutory language linked only to

Part C. Even Cares’ own description of how Part D revises the

Not Less Than Provision retains the Part C “written agreement”

cross-reference. See Appellant’s Br. 26-27; Reply Br. 1.

If anything, Cares’ argument cuts the other way: Part D’s

failure to revise the Not Less Than Provision’s reference to a

“written agreement” contrasts with the Part D Rewording

Provision’s revision of any reference to a “contract” between

CMS and a Part C Medicare Advantage organization to also

encompass a contract between CMS and a Part D prescription

drug plan sponsor. 42 U.S.C. § 1395w-151(b)(3). And Cares

identifies no Part D provision that applies the Written

Agreement Provision to Part D as the Part D Contract Provision

at least appears to do for the Not Less Than Provision itself. Id.

§ 1395w-112(b)(3)(D). Because “Congress include[d]

particular language” to expand the meaning of “contract” for

Part D purposes, we must “presume[] that Congress act[ed]

intentionally and purposely” in not revising the Not Less Than

Provision’s neighboring use of “written agreement” or

otherwise adapting the Written Agreement Provision to Part D.

Gozlon-Peretz v. United States, 498 U.S. 395, 404 (1991). In

short, Cares cannot “require us to read words out of the statute,”

Barber v. Thomas, 560 U.S. 474, 490 (2010), and ignore the

Not Less Than Provision’s unaltered, limiting reference to a

“written agreement described in” the Written Agreement

Provision.

Cares also invokes the canon against surplusage to argue

that, unless we read the Part D Contract and Rewording

Provisions to expand the Not Less Than Provision’s

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application, we impermissibly render those provisions “void

and inoperative.” Appellant’s Br. 24. An important guide to

interpreting statutes, the canon against surplusage ensures “that

effect is given to all [statutory] provisions, so that no part will

be inoperative or superfluous, void or insignificant.” Rubin v.

Islamic Republic of Iran, 138 S. Ct. 816, 824 (2018) (quoting

Corley v. United States, 556 U.S. 303, 314 (2009)). The Part D

Contract Provision expressly states that the Part C subsection

(section 1395w-27(e)) that includes the Not Less Than

Provision “shall apply” to CMS’ contracts with Part D insurers,

42 U.S.C. § 1395w-112(b)(3)(D), yet HHS acknowledges that

the “not less than” requirement has no “practical” effect on

reimbursements paid under Part D, Medicare Program;

Medical Loss Ratio Requirements for the Medicare Advantage

and the Medicare Prescription Drug Benefit Programs, 78 Fed.

Reg. 31,284, 31,285 (May 23, 2013). While HHS’s reading

raises surplusage concerns, those concerns are somewhat

reduced because the Part D Contract Provision indisputably has

“practical effect” on other provisions within the named

subsection, including on both provisions that predate Part D’s

enactment. See 42 U.S.C. § 1395w-27(e)(1)-(2); MMA

§§ 101(a)(2), 237(c), 117 Stat. at 2100, 2213. Those

preexisting provisions may have been the intended target of the

Contract Provision, and its effect on the contemporaneously

enacted Not Less Than Provision may have been overlooked.

Even assuming that Cares has identified a superfluity

problem, the canon against surplusage changes our analysis

only if Cares offers a “competing interpretation [that] gives

effect to every clause and word of [the] statute.” Marx v. Gen.

Revenue Corp., 568 U.S. 371, 385 (2013) (quoting Microsoft

Corp. v. i4i LP, 564 U.S. 91, 106 (2011)). As already

discussed, however, Cares’ interpretation requires omitting the

phrase “in any written agreement described in” the Written

Agreement Provision from the Not Less Than Provision.

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42 U.S.C. § 1395w-27(e)(3)(A). Accordingly, the canon

against surplusage—which, after all, “is not an absolute rule,”

Marx, 568 U.S. at 385—does not unambiguously require

Cares’ reading of the statute.

To complement its textual arguments, Cares reasons that

unless the Not Less Than Provision applies to prescription drug

plans’ reimbursements to FQHCs, insurers may capture

through lower reimbursement rates the discounts that Congress

required pharmaceutical manufacturers to provide FQHCs (and

other eligible providers) under Section 340B. From a policy

perspective, Cares’ position is “intuitive enough,” Cares Cmty.

Health, 346 F. Supp. 3d at 130: If Congress enacted both

Medicare wraparound payments and Section 340B drug

discounts to help fund FQHCs’ provision of uncompensated

care to low-income, uninsured patients, then Congress may

have intended that both benefits remain with FQHCs rather

than redound to insurers’ benefit in the form of lower

reimbursements. Even as it opposes Cares’ reading of the Not

Less Than Provision, HHS acknowledges that the savings that

prescription drug plans extract by paying less for 340B

pharmacy services do not appear to pass through to CMS. Oral

Arg. Rec. 20:47-21:29.

It may be, as Cares contends, that FQHCs are underfunded

relative to insurers offering Medicare prescription drug plans

and that FQHCs’ service mission in medically underserved

communities significantly relies on the funding stream they get

from full-price insurance reimbursements for their provision of

discounted drugs. But “[e]ven if we were persuaded that

[Cares] had the better of the policy arguments, those arguments

could not overcome the statute’s plain language, which is our

primary guide to Congress’ preferred policy.” Sandoz Inc. v.

Amgen Inc., 137 S. Ct. 1664, 1678 (2017). At bottom, Cares

never offers an interpretation of the Medicare statute that

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unambiguously protects the revenue FQHCs generate from

combining manufacturers’ pharmaceutical discounts under

Section 340B with insurance reimbursements pegged to market

prices.

Because the statute does not require Cares’ reading, it

permits HHS to interpret the Not Less Than Provision as

preventing insurers from exploiting the wraparound subsidy

payments, but not protecting FQHCs’ ability to generate

revenue from market-price reimbursements for dispensing

drugs they acquire at a discount under Section 340B. Part D

does not alter the directive that the “not less than” requirement

be “provide[d] in any written agreement described in the”

Part C Written Agreement Provision. 42 U.S.C.

§ 1395w-27(e)(3)(A). Without explaining how the “written

agreement” that implements the Part C wraparound payment

scheme applies in the Part D context, Cares cannot carry its

burden to show that the Not Less Than Provision

unambiguously applies to prescription drug plans’

reimbursement of the pharmacy services that FQHCs provide

to Medicare beneficiaries.

* * *

The Medicare statute does not preclude HHS from

approving prescription drug plans that lower reimbursements

for FQHC pharmacy services based on whether the FQHC

obtained the pharmaceuticals at a discount under Section 340B.

We need not and do not decide whether the statute permits the

contrary interpretation Cares advances or whether, as a matter

of policy, HHS might promulgate regulations requiring

Medicare prescription drug plans to include a “not less than”

term in their agreements with FQHCs to secure to FQHCs

broader financial benefits from 340B drug discounts.

Whatever the merits of Cares’ preferred method of distributing

22

the savings FQHCs enjoy under Section 340B, Cares has not

shown that the statute requires that approach.

For the foregoing reasons, the judgment of the district

court is affirmed.

So ordered.