[00:00:19] Speaker 03:
Good morning.

[00:00:27] Speaker 03:
This case involves what we all in this field come to know, love and know as federally qualified health centers.

[00:00:38] Speaker 03:
In Medicare and Medicaid, but in Medicare especially since that's where this is taking place, there are two kinds of

[00:00:46] Speaker 03:
definitions that operate.

[00:00:48] Speaker 03:
One is something called federally qualified health center services and the other is federally qualified health center.

[00:00:55] Speaker 03:
The two are pretty much the same except that a federally qualified health center can provide services in Medicare and certainly in Medicaid that are different from federally qualified health center services which are tied into getting extra money

[00:01:14] Speaker 03:
in case a managed care organization doesn't pay the FQHC a level that Congress has concluded is necessary for the FQHC to carry on the work.

[00:01:28] Speaker 00:
I have a threshold question.

[00:01:31] Speaker 00:
Yes, Your Honor.

[00:01:31] Speaker 00:
Just trying to understand your claim.

[00:01:34] Speaker 00:
Your complaint alleges a 7061 claim and it alleges

[00:01:44] Speaker 00:
that the agency has failed to act based on an unambiguous interpretation of the statute.

[00:01:56] Speaker 00:
That's the way you pled it.

[00:01:58] Speaker 00:
Yes.

[00:02:01] Speaker 00:
What if we find that the interpretation that you seek is not an unambiguous interpretation of the statute?

[00:02:12] Speaker 03:
In other words, it's only a correct interpretation, but not an ambiguous.

[00:02:18] Speaker 03:
Yes.

[00:02:19] Speaker 03:
I think you have to still give a fact, because the underlying intent of the law, and the law in this case, would be to take a requirement that applies to FQHCs when it's conducting Part B business, when one is, and move over one

[00:02:40] Speaker 03:
requirement, which is that these managed care organizations in Part B, which then become really pharmacy entities which take risk in Part D, if the goal of the statute is clearly to make certain that those entities pay FQHCs not less than they pay the other parties that are doing the same service, then the answer has to be

[00:03:10] Speaker 00:
that the FQHCs get that same pay not less than privilege or right or entitlement, they have in part B to part D. They would have it also in part D. I guess the question that I have is that the way that 7061 claims work, and the Supreme Court said this in the Norton v. SUWA case, the Southern Utah Wilderness Association case,

[00:03:40] Speaker 00:
that 7061 claim of this sort is really akin to a mandamus claim, where you have to establish something akin to clear and indisputable entitlement to relief.

[00:03:58] Speaker 00:
And that's the way you put it below.

[00:04:00] Speaker 00:
And I guess what I'm trying to understand is that

[00:04:08] Speaker 00:
Normally, if a statute is ambiguous, then the agency gets the first crack at interpreting it, and then if it were to come to us on review, that interpretation would get Chevron deference.

[00:04:27] Speaker 00:
It seems that your lawsuit

[00:04:31] Speaker 00:
is going to do an in-run around that if we were to believe that the statute were ambiguous, because you're saying that even if it is ambiguous, we should just pick your interpretation, even if the agency's is also reasonable.

[00:04:47] Speaker 03:
So the ambiguity that I think we're talking about is the ultimate meaning of language, of substantive language.

[00:04:57] Speaker 03:
The non-ambiguity

[00:04:59] Speaker 03:
And the necessity is, and it's clear simply from the language of the statute, and by the way, something that CMS does not fight against is there is a mandatory carrying in of a contract clause which has words in it, or statutory words in it.

[00:05:21] Speaker 03:
There's absolutely no doubt under the statute

[00:05:25] Speaker 03:
that CMS was supposed to, in its contracts, contain a clause stating that this payment had to be made, the pay not less than requirement had to be made.

[00:05:39] Speaker 03:
There's no ambiguity with respect to that.

[00:05:43] Speaker 03:
There's no ambiguity that that language in that applies right now to Part B, the pay not less than language, is to be moved into

[00:05:55] Speaker 03:
Part D. So to me, the real question is, OK, now you're moving the language in.

[00:06:01] Speaker 03:
That you have to do.

[00:06:03] Speaker 03:
There's just no ambiguity whatsoever attached to that.

[00:06:07] Speaker 03:
Now you're moving the language in.

[00:06:09] Speaker 03:
The question is, do you give vitality to the language, or do you look, as the district court did and as HHS argues, do you look to the language and you say, well, when it's in Part B,

[00:06:22] Speaker 03:
We think it really means federally qualified health center services.

[00:06:27] Speaker 03:
Federally qualified health center services as a defined term means work.

[00:06:34] Speaker 03:
It does not contain pharmacy.

[00:06:37] Speaker 03:
And so what you have is you have a dead end or avoiding of any meaning.

[00:06:44] Speaker 03:
But the language itself, the contract clause itself,

[00:06:49] Speaker 03:
has to be mandatorily moved in.

[00:06:52] Speaker 03:
Then the question is, do you give it vitality?

[00:06:55] Speaker 03:
Of course, our argument is that Congress generally is presumed not to want to enact laws that have no meaning, which would weigh in favor of construing in our manner or the way we say it.

[00:07:08] Speaker 03:
And secondly, that when you wind up with this contract, if you follow it through and you put the contract clause into your contract,

[00:07:18] Speaker 03:
The end result, because of the way it gets carried into part D and then changed a little bit to fit part D. Wait, excuse me.

[00:07:30] Speaker 04:
I'm sorry.

[00:07:31] Speaker 04:
I see your point about the language is mandatory.

[00:07:35] Speaker 04:
This provision has to be in the contract, right?

[00:07:39] Speaker 04:
That's what you're arguing.

[00:07:40] Speaker 03:
Yes.

[00:07:40] Speaker 04:
OK, but I don't know how that helps you, because that section that requires it says

[00:07:49] Speaker 04:
It shall require the organization to provide here in any written agreement between the organization and the federal, for a level amount of payment to the federally qualified health center for services provided by such health center.

[00:08:03] Speaker 04:
It still raises the question that, it still raises the question about what does that mean for services provided by such health center.

[00:08:12] Speaker 04:
We still have to define that term, don't we?

[00:08:19] Speaker 03:
So I'm sorry, Ron.

[00:08:21] Speaker 03:
I'm not sure where you're.

[00:08:23] Speaker 03:
Where I take this is, if you will, where I take this is, obviously, pharmacy is a service.

[00:08:32] Speaker 03:
And you can see from the regulations of CMS that it's treated as a service.

[00:08:38] Speaker 03:
So if you have a service and you have language that says an federally qualified health center service,

[00:08:46] Speaker 03:
There is one, and there's a contract with these organizations.

[00:08:51] Speaker 03:
They get paid not less than.

[00:08:52] Speaker 03:
There's no ambiguity.

[00:08:55] Speaker 03:
You have to take that federally qualified health stat, that language, that gets moved in.

[00:09:01] Speaker 03:
And you have to read it as though it's this term of art going back to 1395X.

[00:09:05] Speaker 03:
It isn't the term of art going back to 1395X.

[00:09:11] Speaker 03:
There is obviously an intent to have a result

[00:09:15] Speaker 03:
where the pay not less than requirement is effective, because the moving in provision, it's the 112, actually talks about having it wind up being treated in the same manner as under Part B. Although, Mr. Feldersman, the 112 moving in provision that you talk about has an impact on other

[00:09:39] Speaker 01:
provisions other than 27E3A.

[00:09:40] Speaker 01:
Yes, it does.

[00:09:42] Speaker 01:
And my question is, even if you are right on the services provided by such health center not being one and the same as the X definition of FQHC services, you have another barrier, which is the reference in 27E3A to a written agreement

[00:10:08] Speaker 01:
Because at least that written agreement means the written agreement provided under 23A4 that has to do with the payment of the wraparound payment.

[00:10:23] Speaker 01:
And so at least one function that the not less than language in 27E3A is fulfilling is to require that the wraparound payment not become a slush fund for the organizations, right?

[00:10:42] Speaker 01:
And the question is if written agreement, which is defined in terms of W23A3,

[00:10:54] Speaker 01:
is just that written agreement, then how do you get to the point where, oh, you're saying the written agreement also addresses a prescription drug plan?

[00:11:03] Speaker 03:
Well, because what we say is, and I do see my time is out.

[00:11:06] Speaker 03:
You can answer her question.

[00:11:10] Speaker 03:
So the way we address it is we talked about that section 151, which we refer to at least at some point as our translator.

[00:11:20] Speaker 03:
And 151 does

[00:11:24] Speaker 03:
It does indicate that you're moving, by definition, that the contract under Part B, which is to manage a Medicare Advantage type plan, is now a contract with either a PDP or an MAPD in the shorthand used in Part D. So you've taken the contract, which was previously with an MA entity,

[00:11:54] Speaker 03:
Then you moved it over by virtue of 151, and you've said the contract is now with these other guys.

[00:11:59] Speaker 01:
But that addresses contract.

[00:12:01] Speaker 01:
And I don't know, maybe you're getting to this.

[00:12:03] Speaker 01:
I don't want to cut you off if you are.

[00:12:06] Speaker 01:
So the contract under this section now includes the contract insofar as it addresses pharmaceutical.

[00:12:14] Speaker 01:
But there's also this reference to any written agreement described in W23A4.

[00:12:21] Speaker 01:
And that's a much more particular

[00:12:24] Speaker 01:
So for example, if the organization said, okay, we're gonna comply with the statute, we're gonna have a written agreement

[00:12:35] Speaker 01:
that deals with wraparound and then we're going to have a separate written agreement that deals with prescription drugs.

[00:12:41] Speaker 03:
That's correct.

[00:12:41] Speaker 01:
Then the not less than language would only apply to the written agreement with respect to the services that are covered by wraparound and not to the pharmaceutical services.

[00:12:54] Speaker 03:
So the wraparound provision

[00:12:56] Speaker 03:
only applies or only pertains if the money that the entity gets, the FQAC gets, is less than the sum to which it's entitled.

[00:13:07] Speaker 03:
That whole entitlement really applies to Part B. That entitlement doesn't carry into Part D. Exactly.

[00:13:14] Speaker 03:
Because there's no government or operations sitting side by side.

[00:13:19] Speaker 03:
Part D is just contractors to the agency.

[00:13:23] Speaker 03:
So there's no

[00:13:24] Speaker 03:
sort of, if you will, secondary party that can make good.

[00:13:29] Speaker 03:
And the idea, we think, is that, and to read it consistently, this is not a hallmark of clarity by Congress by any stretch.

[00:13:40] Speaker 03:
Nobody should put a gold medal on its chest over the way it wrote this.

[00:13:45] Speaker 03:
But I think when you have something that says it's supposed to affect in the same manner as it does in Part B, which means it's pay not less than,

[00:13:54] Speaker 03:
And when you go to the effort of saying it has to be moved over, there has to be something in the agreement between the agency in this instance, or yes, with the agency saying that the entity responsible for paying FQs has to do this, has to, in this instance, pay not less than.

[00:14:16] Speaker 03:
That's how we reach the answer that we do, Judge.

[00:14:22] Speaker 03:
It's that law.

[00:14:24] Speaker 04:
Okay, we'll hear from the government.

[00:14:26] Speaker 04:
Maybe he'll explain this to us.

[00:14:30] Speaker 03:
I'm sorry?

[00:14:30] Speaker 04:
I said we'll hear from the government.

[00:14:32] Speaker 04:
Oh, thank you.

[00:14:33] Speaker 04:
Yeah, your time is up.

[00:14:34] Speaker 03:
Thanks.

[00:14:34] Speaker 04:
No, it's okay.

[00:14:42] Speaker 02:
Good morning.

[00:14:42] Speaker 02:
May it please the court, Karen Schoen, on behalf of the government?

[00:14:46] Speaker 02:
The District Court correctly held that the provision at issue here applies only to federally qualified health center services.

[00:14:52] Speaker 02:
Plaintiff's argument is that Congress meant something different because it referred to, quote, services provided by a health center.

[00:14:59] Speaker 02:
But when you look at other provisions in the statute, it's clear that Congress used those terms interchangeably.

[00:15:04] Speaker 02:
And I can come back and give some examples if that would be helpful, but just to finish the point here, so when Congress referred to services provided by a health center in this pay not less than provision, Congress was referring to federally qualified health center services which don't include Part D prescription drugs.

[00:15:20] Speaker 02:
And that's not surprising, given that the pay not less than requirement goes hand in hand with the provision directing CMS to make a supplemental payment to health centers in certain circumstances.

[00:15:30] Speaker 02:
And as we were just discussing before, everyone agrees that that supplemental payment applies only to federally qualified health center services, not to Part D. Now those two provisions, the pay not less than requirement and the supplemental payment provision, were enacted together in the same section of the Medicare Modernization Act,

[00:15:48] Speaker 02:
And the two go hand in hand.

[00:15:51] Speaker 02:
The Pay Not Less Than provision protects the Medicare Trust Fund in light of that supplemental payment.

[00:15:56] Speaker 02:
As CMS has explained, the provision is designed to prevent Medicare Advantage organizations and health centers taking advantage of that supplemental payment by agreeing to artificially low rates, knowing that the health center will get a supplemental payment from CMS to make up the difference.

[00:16:14] Speaker 02:
And since there's no supplemental payment in Part D, there's really no reason to apply.

[00:16:19] Speaker 01:
It's a little bit different, but it does seem like there's a parallel argument that CARES is making here, which is when you have Part D, 112B3D, carrying the 27E3A not less than provision,

[00:16:40] Speaker 01:
into Part D, and they've quite effectively in their brief quoted the 27E3A not less than provision and inserting the prescription drug plan sponsors into it.

[00:16:54] Speaker 01:
And the question is, what role does that play if not the role that they assign to it, which is that a reimbursement

[00:17:03] Speaker 01:
for prescription drug coverage provided by an FQHC is going to be reimbursed at a not less than rate.

[00:17:11] Speaker 02:
Well, I think, you know, as a practical matter, it has no real effect because part D prescription, because sponsors of part D plans don't enter into contracts with federally qualified health center centers, rather, for the provision of federally qualified health center services.

[00:17:29] Speaker 01:
But if, so bracketing your argument, I do understand your argument and I do appreciate that that's the argument that was persuasive to the district court, and I'm not saying it won't be persuasive to us, but just to understand the

[00:17:41] Speaker 01:
different pieces of your argument.

[00:17:43] Speaker 01:
If you put aside that argument about the use of the term slightly different federally qualified health center services versus services provided by such health center, and you look at the rest of the logic of this, assuming that there's room to look at the rest of it, the question then becomes what is the carry into part D of 27E3A

[00:18:08] Speaker 01:
accomplishing and I guess your answer is, well, it doesn't really.

[00:18:11] Speaker 02:
It doesn't really.

[00:18:12] Speaker 02:
I mean, I think as the district court recognized and as we recognize in our brief, it is surplusage.

[00:18:17] Speaker 02:
We don't think it's doing any real work.

[00:18:19] Speaker 02:
But I think if you look at that provision 1395W-27E3, subparagraph A is the pay not less than provision.

[00:18:29] Speaker 02:
If you look at subparagraph B, which would also get incorporated along with it, it clearly contemplates that the pay not less than requirement goes hand in hand with the supplemental payment.

[00:18:40] Speaker 02:
Because if you look at subparagraph B, and this is on page A6 of our addendum, the addendum at the back of our brief,

[00:18:49] Speaker 02:
It clearly contemplates that when that pay note less than requirement applies, the health center would also be eligible for a supplemental payment, and that's the reference to 1395 LA3B in that subsection B. So again, this is 1395W-27E3, and I'm looking at A and B together.

[00:19:15] Speaker 01:
So looking at the

[00:19:19] Speaker 01:
340B benefit that Congress is trying to provide to the federally qualified health centers, that gives those centers a drug discount, and it's supposed to benefit them and make them stretch their dollars further.

[00:19:36] Speaker 01:
And under your reading, that still has a function for patients that have no insurance coverage at all.

[00:19:42] Speaker 01:
because the federally qualified health center is having to pay for those drugs and it's cheaper for them to do that with 340B.

[00:19:49] Speaker 01:
But the argument, I gather, that CARES is making is that when this all was enacted, basically the relevant contracts that deal with what Humana has to cover aren't nuanced for

[00:20:08] Speaker 01:
the patients that are gonna be Medicare Part D patients and other patients.

[00:20:15] Speaker 01:
And so at the end of the day, the market is not gonna give Humana less money because of the drug discount.

[00:20:24] Speaker 01:
They're just gonna pocket a benefit that comes out of the 340B program, which just doesn't really make sense in terms of Congress's intent.

[00:20:37] Speaker 01:
pocket of money that's out there.

[00:20:40] Speaker 01:
It's not even going back to CMS, is it?

[00:20:43] Speaker 01:
Let alone to the Federal Supplementary Medical Insurance Trust Fund.

[00:20:46] Speaker 02:
Well, I mean, I guess in theory, it could potentially go back to CMS in the sense that CMS does make subsidy payments to Part D sponsors.

[00:20:57] Speaker 02:
Now, as a practical matter, whether it has any effect in the subsidies that CMS would provide, we have no way of knowing.

[00:21:05] Speaker 02:
Just to think about it,

[00:21:07] Speaker 02:
Part D sponsors make bids to CMS, and so to the extent that a Part D plan sponsor is lowering its costs, it may submit a lower bid to CMS, and that may require lower subsidy payments.

[00:21:19] Speaker 02:
As a practical matter, though, it's unclear how large this would be, and so it may not make a big difference either way, but it could, at least in theory.

[00:21:28] Speaker 02:
But I think the more fundamental point is that the 340B Discount Drug Program is under a separate statute.

[00:21:36] Speaker 02:
It's a separate and distinct program from Medicare.

[00:21:39] Speaker 02:
And there's nothing in the statute governing the 340B program that suggests that Congress intended federally qualified health centers to retain the benefit of discounted drugs under Medicare.

[00:21:50] Speaker 02:
And I think

[00:21:51] Speaker 02:
And it's important also to keep in mind that federally qualified health centers don't just provide care to Medicare beneficiaries.

[00:21:58] Speaker 02:
As you just noted, Judge Peller, they do provide care to underserved communities and provide care to individuals without any insurance.

[00:22:07] Speaker 02:
And so there is still a benefit for health centers to retain.

[00:22:10] Speaker 01:
Are there any other, other than the services that are subject to the wraparound supplemental payments,

[00:22:20] Speaker 01:
and the Part D pharmaceutical pricing that the plaintiffs are asking for here, is there any other pricing that's arguably affected one way or the other by your position or by the plaintiff's position on not less than?

[00:22:37] Speaker 01:
I mean, if they were to win, are there other things that the not less than would then apply to?

[00:22:43] Speaker 02:
I don't think so, Your Honor.

[00:22:44] Speaker 02:
I think this would have limited effect to what we've just been talking about here.

[00:22:52] Speaker 02:
I'd be happy to answer any further questions.

[00:22:57] Speaker 04:
Thank you.

[00:22:58] Speaker 04:
Thank you, Your Honor.

[00:23:00] Speaker 04:
Council's out of time, right?

[00:23:02] Speaker 02:
Pardon me?

[00:23:04] Speaker 04:
Yeah, okay.

[00:23:04] Speaker 04:
You can take a minute if you'd like.

[00:23:10] Speaker 05:
Thank you.

[00:23:11] Speaker 01:
Mr. Pelsman, I have a question for you which is about the 340B program.

[00:23:23] Speaker 01:
lowers the price, it requires in effect pharmaceutical companies to give a discount to federally qualified health centers.

[00:23:34] Speaker 01:
The notion that in doing that, Congress also intended to extract from PDP sponsors an additional subsidy for the work of FQHCs seems implausible.

[00:23:52] Speaker 03:
So the question is, I mean, to me, yes, there are discounts all over the place in this program, but the idea is for the health centers to be able to make that extra profit because they get these things very cheaply.

[00:24:16] Speaker 03:
And the discount is really for the purposes of lowering drug prices to beneficiaries, not necessarily with respect to the pharmacy.

[00:24:29] Speaker 03:
I mean, there's CVS, Rite Aid, and so forth.

[00:24:32] Speaker 03:
They're making a profit off Part D. It's not like that any of these discounts really are winding up in their pockets, or at least they shouldn't be.

[00:24:41] Speaker 03:
And so first of all, if I've answered your question to my minute,

[00:24:45] Speaker 03:
My minute would be this.

[00:24:47] Speaker 03:
There's a history in this program from really going back to 1989 and 1990 of saying that these FQHCs really are creatures of Congress.

[00:24:59] Speaker 03:
And what we don't want is we don't want those programs to be, in effect, tapped.

[00:25:05] Speaker 03:
They're money that they have for non-pay patients who need services.

[00:25:12] Speaker 03:
We don't want it diluted.

[00:25:14] Speaker 03:
by having to subsidize other programs for it.

[00:25:19] Speaker 03:
All I can say is that in this regard is, if you pay a health center in part D, not less than you're paying Rite Aid or whatever else the major entity is,

[00:25:34] Speaker 03:
you are going to at least cover the health center's costs and not force it to, in effect, subsidize with Part D using 330.

[00:25:47] Speaker 03:
And so the idea, I think, is if you just put everything together, the notion that you get in Part D, you get not less than what others would pay for the same service, coincides

[00:26:05] Speaker 03:
with the goals of Section 330.

[00:26:08] Speaker 03:
And it means that, in essence, money that comes through 330 retains its ability to be used wholly and completely for parties that don't have any money, can't afford to pay, and the health center is getting nothing for them.

[00:26:24] Speaker 03:
So I think when you look at this in a kind of global way or comprehensive way, you can see the common sense

[00:26:32] Speaker 03:
and consistency of the Pay Not Less Than provision applying to Part D. That was what I wanted to say.

[00:26:40] Speaker 03:
Thank you.

[00:26:41] Speaker 03:
Thank you.

[00:26:41] Speaker 04:
Thank you both for your helpful arguments.

[00:26:43] Speaker 04:
The case is submitted.