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January 30, 2012

Washington Health Policy Week in Review Archive 0e348e17-49cd-45cd-b925-249b7e5faa1d

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Individual Mandate and Consumer Protections Must Stay Together, DOJ Tells Justices

By Jane Norman, CQ HealthBeat Associate Editor

January 27, 2012 -- The Obama administration on Friday, in a brief filed with the U.S. Supreme Court, resisted arguments that the entire health care law should be struck down if its individual mandate is found unconstitutional.

Friday was the deadline for the Justice Department to file a brief with the high court on the issue in the legal fight known as severability—how much of the law should die if part is found unconstitutional. It is one of four questions the justices will take up in four separate oral arguments scheduled for March 26-28.

In its brief, the DOJ said that arguments by plaintiffs in the suit—that the entire law (PL 111-148, PL 111-152) should fall if the requirement that all Americans have health insurance is found unconstitutional—is "not properly presented in this case and is meritless in any event."

If the requirement that all Americans should have insurance is found unconstitutional, the only other sections of the law that also should be struck are those dealing with guaranteed issue and community rating, the brief says.

Otherwise, "bizarre results" would occur, it says, such as the end of an extension of a pre-existing Medicare payment provision involving air ambulance services, more rigorous enforcement of drug pricing regulations, reauthorization of immunization programs and more.

The guaranteed issue section of the law requires insurers to provide coverage to all comers and prohibits exclusions for pre-existing conditions. Community rating bars plans from charging higher premiums except on the basis of how old the applicant is, where the applicant resides, whether the applicant uses tobacco, and whether the policy covers individuals or families.

The mandate, guaranteed issue and community rating must stay together, DOJ says. "Congress specifically found that in a market with guaranteed issue and community rating, but without a minimum coverage provision, 'many individuals would wait to purchase health insurance until they needed care,' " DOJ says. Congressional intent is a key issue for courts in considering this question of whether or not to break up the various pieces of the law.

"The guaranteed issue and community rating provisions ensure that all individuals have access to health insurance priced according to communitywide rates rather than individual risk factors," says the brief.

If the mandate and the consumer protections were to fall but the rest of the law remained intact, items such as the sweeping Medicaid expansion, the employer mandate and the premium tax credits would remain. The plaintiffs in the case have not shown how those provisions have to be tied to the individual mandate, the brief says.

Even before the Justice Department submitted its brief, the National Federation of Independent Business, one of the parties challenging the law, said in a written statement that it continues to argue that if the mandate is struck, the entire law should be as well, not just the consumer protections.

"What NFIB will argue is simple: The mandate to purchase health insurance is unconstitutional, and the health care law cannot exist if the court strikes down the unconstitutional mandate that holds it together," said Karen Harned, executive director of the NFIB Small Business Legal Center.

"To argue otherwise would be like arguing a house can stand after its foundation has crumbled," she said.

Twenty-six state governors and attorneys general and four individuals are also plaintiffs.

Actuaries' Amicus Brief

Also Friday, the American Academy of Actuaries in an amicus brief filed with the court did not take sides on the constitutionality of the law's individual mandate, or any other provision. But the nonpartisan professional group said it is sure of one thing: The law will fail if the mandate is severed from related consumer protections.

If the court eliminates the requirement that all Americans must have health insurance, it needs to also get rid of community rating and guaranteed issue, the brief says. If the requirement stays, those provisions also should stay.

"The academy files this brief for the sole purpose of informing the court of its judgment that, from an actuarial perspective, a decision invalidating only the individual mandate provision would impose an unsound regulatory regime on the American health-insurance market—a regime that Congress would not have intended," the actuaries say.

Health care premiums reflect the costs of a plan's enrollees, and rules that allow people to join who have higher costs will put upward pressure on those premiums, they say. Those increased premiums in turn discourage younger and healthier people from buying insurance.

"If the individual mandate provision were struck down but the guaranteed issue and community rating provisions were left intact, the ultimate result would be less stable health-insurance pools, higher premiums and a greater-than-projected number of uninsured Americans," thus undermining the law, the actuaries say.

That means the individual mandate is "a vital mechanism for keeping insurance pools fully stocked with lower-risk individuals," the brief says.

"However the court rules on the constitutionality of the individual mandate provision, therefore, the guaranteed issue and community rating provisions should stand or fall together with it," the brief concludes.

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CMS Officials Aim to Foster 'Rising Tide of Innovation Mojo'

By John Reichard, CQ HealthBeat Editor

January 26, 2012 -- "Summit" meetings are supposed to be filled with a sense of high purpose and high energy. A gathering on the critical importance of health system innovation did not disappoint on either count.

The meeting built on one of the big themes in health policy in recent years—the idea that improving the quality of care is, happily, also the best way to address the national crisis of rising health spending.

Skeptics might dismiss that as fanciful thinking. But it's an article of faith among a number of health policy leaders. Among them are those involved in implementing the health law (PL 111-148, PL 111-152). Former Centers for Medicare and Medicaid Services (CMS) Administrator Donald M. Berwick championed the idea. And the Center for Medicare and Medicaid Innovation Center created under the overhaul is a hot bed of such thinking. Its leaders say there are plenty of real world examples in local communities around the country of how higher quality lowers costs. They say scaling them up nationally would begin to bend down the upward curve in health care spending. Now Berwick's successor, acting CMS Administrator Marilyn Tavenner, is aiming to fan the flames of such innovative thinking.

"Together we are creating a community of innovators, a chance for independent thinkers to meet and hear from others like them," Tavenner said in launching the "Care Innovations Summit" last week.

Through a website, 74 new "innovation advisers" from health systems around the country, and the summit, "We are not only sharing ideas. We're sharing the excitement that comes from creating such ideas," she said.

Surgeon, writer and former Clinton health aide, Atul Gawande set the tone for the event by saying that retooling health care is an absolute must within the next decade. Medicine is facing "the greatest crisis of its existence—and that's cost."

Doctors, he said, are being forced by events to consider costs in treating patients when until recently they had not done so.

"And then you look into our situation with the debt and the deficit and what you realize is that health care is destroying American prosperity. We are destroying the American dream. So what it means thinking about what I do day to day as a surgeon has become immensely more complicated."

Care More Complex Now

Hassles with bureaucracy and insurers complicate the job. But they are only symptoms of the deeper problem, which is the complexity of delivering care, he said. In the past two generations, "we have discovered 13,600 diagnoses—13,600 ways the human body can fail. We have identified 4,000 medical and surgical procedures, 6,000 medications that I am licensed to prescribe. And our job is to deploy that capability town by town to every person alive. There is not an industry that has to deliver 13,600 service lines in every community to everybody. Is it any surprise that we're finding it hard? The complexity is transformational."

The health system was built for a simpler time, he added. In 1970, just over two clinicians—basically a doctor and a nurse—were needed to care for a patient admitted to the hospital. By 2000, "the number of clinicians involved in the care of a patient admitted for a typical problem to the hospital was more than 15."

The system "was built at a time where what you wanted was autonomy and the individual judgment of that lone doctor. But when you have 15 people who have as their highest value autonomy—no communication, no way they knitted together, it breaks down. We've trained, hired, and rewarded people to be cowboys. But what we want are pit crews for patients. And we've not been able to get there.

"We know that it doesn't work and there are obvious signs. Forty percent of our coronary artery disease patients receive incomplete or inappropriate care. Sixty percent of our asthma, stroke, pneumonia patients receive incomplete or inappropriate care. And if you have severe mental illness the problem is even worse."

Doctors, he said, want to say that this is what medicine costs; that arthritis in the knee that once was treated with aspirin is now treated with $15,000 for a knee replacement. But the reality is that there is a wide gap between what the most expensive and the least expensive places are "for the same patient, the same problem.

"If what you needed was to get the most expensive care then we really would be having a rationing discussion. The only choices would be who gets it. But what turns out is that the places getting the best results are not the most expensive places in the country for care. In fact many of them are among the least expensive. And that means there's hope. We need to learn what the positive deviants are doing.

"What we're beginning to see in the lessons is that the most successful behave like systems. That is they somehow make the different components of care —all those specialists, all those drugs, all those devices—fit together somehow."

New Skills Needed

Certain skills must be cultivated. "First is how to tell the difference between success and failure. And the key to that is data," he said. "We need some deep thinking about whether what we need are broad systems that let us see lots of different things along the way. Or some of the most powerful sources of data have come from really registries that are very specific to different problems; registries that look at our cardiac patients, our cystic fibrosis patients, and collect deep information to guide and see how well the care has really gone."

Another skill is to diagnose which types of patients cost the most and pinpoint what about their care drives up costs, Gawande said. The list of such patients includes ischemic heart disease, heart failure, diabetes, chronic kidney disease, and chronic obstructive pulmonary disorder. That helps determine priorities where the most focus is needed.

He said for example that "we have not dug in far enough to know, well, what is most expensive about ischemic heart disease. We have to dig in and understand."

Even once the problem areas are understood, doctors aren't good at figuring out how to deal with them, Gawande added. He said that he, for example, is part of a World Health Organization initiative to reduce surgical deaths. He and his colleagues did not know how to tackle the problem and sought answers in other "high-risk, high-failure" fields such as aviation and building skyscrapers. Like medicine, those fields employ lots of training and lots of technology but they differ in that they rely on check lists.

"Now it's not that check lists are the thing. It's that it's the simplest form of organization to get teams together to think about what great care or great performance looks like and then have a few basic components that are designed to make it so you can do it. We in medicine underestimate the value of careful design, design about how you achieve great care. Restaurants think incredibly hard about how you accomplish it."

The WHO initiative brought in a Boeing engineer to design a check list of the kind pilots use in the cockpit—but for health care teams doing surgery. Items range from making sure it's the right patient to having each member of the team introduce themselves to each other and making sure they've briefed each other on the goals of the operation, how long it will take, the key medical issues and the equipment involved. Using the check list in eight cities in the U.S. and abroad lowered surgical complications by 35 percent and the deaths by 47 percent at the hospitals involved," Gawande said. "And it's free."

On average every complication eliminated saved $14,000.

"The VA system has since adopted it with an 18 percent reduction in deaths. And yet we are still barely penetrated in operating rooms in the United States."

In his talk, Gawande emphasized that it would not cost a lot to make the changes necessary to dramatically bring down health costs.
Retooling health care into a more systematic team based approach "is a battle for the soul of American medicine," he said. "What are here for? What are we trying to do? It is the fundamental issue of this century. Making it possible for people to survive and live the lives they can live with all of the science and knowledge we've discovered and bring it across an entire society."

Just as America in the last century mastered the challenge of economically meeting another human need—food—so too must it find the way to do the same for health care, Gawande said.

Other Ideas

Other speakers at the forum likewise championed the idea that improved care would lower costs. "Sometimes we wonder in health care is it really possible?" said Richard Gilfillan, the head of the innovation center. He too emphasized the need for better data to identify ways to improve care and lower costs. And once those ways are identified, he added, the center is a powerful force for fostering change because it can issue regulations nationally in Medicare for example to pay primary care doctors an extra sum per patient per month to coordinate care if that's found to improve medical outcomes.

At times the meeting seemed akin to a political rally of boisterous young idealists firing themselves up to undertake a long reform campaign. The chief technology officer at HHS, Todd Park, punctuated his remarks with exuberant fist pumps in calling for the greater use of data to foster a retooling of care. "The reinvention of American medicine driven by a rising tide of innovation mojo has already begun!" he shouted in concluding his presentation.

As much energy and enthusiasm as was evident at the event, the future of the Innovation Center is uncertain. Congressional Republicans, skeptical that government can drive innovation from the top down, have questioned whether it is worth the $10 billion budget it has received under the health law.

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GAO Urges CMS to Change Calculation of Private Plan Payments

By Rebecca Adams, CQ HealthBeat Associate Editor

January 26, 2012 -- The Medicare program uses a flawed methodology to pay private health plans that led federal officials to overpay insurers by $1.2 billion to $3.1 billion in 2010, according to a recent study released by the Government Accountability Office (GAO).

GAO analysts urged Medicare officials to change the methodology for these private health plans, known as Medicare Advantage (MA). And House Democrats, who requested the report, pounced on the news as further evidence that Medicare is paying private plans too much.

Medicare payments to private health plans are already poised to go down in 2014 as part of the 2010 health care overhaul (PL 111-148, PL 111-152). But Democrats said officials at the Center for Medicare and Medicaid Services (CMS) should change its methodology as another way to hold down costs for the program.

CMS officials said in a letter to GAO officials that they found the conclusions "informative," but did not say whether they will change the way payments are calculated. CMS officials did not respond to requests for further comment.

The congressional watchdog group is concerned that Medicare Advantage plans are getting paid more to treat patients than providers in the traditional fee-for-service program for beneficiaries with the same medical problems.

Medicare pays health plans a set amount for each patient. The payment is adjusted by the health status of the patient. Plans get paid more for sicker patients and less for relatively healthy people.

But GAO officials found that health plans are categorizing patients differently than the traditional program is. Because of these diagnostic coding differences, Medicare Advantage plans got paid more than they would have if the two programs had used the same criteria.

CMS officials had previously found that coding differences exist and, as a result, reduced Medicare Advantage rates in 2010. But the CMS estimates showed a smaller gap than the GAO estimates found. So even after lowering health plans' payments to make up for overpayments in 2010, the agency still paid more than GAO analysts believe it should have.

The GAO report also said that CMS officials are compounding the problem because they have not recalculated the differences every year. Instead, CMS officials lowered Medicare Advantage payments in 2011 and 2012 by the same percentage that they did in 2010, instead of figuring out what the reductions should have been for each of those years. That exacerbates the overpayments, said GAO officials, because the cumulative effect in later years is greater than it originally was in 2010.

Overpayments to plans could contribute to the high costs of the entire Medicare program, which lawmakers are seeking to cut.

"The accuracy of the adjustments can have important consequences for both Medicare spending and MA plans," the report said.

The federal government spent $114 billion in 2010 on Medicare Advantage, which covers about one-fourth of Medicare beneficiaries.

"As we continue to look for opportunities to eliminate waste, fraud and abuse in Medicare, this should be part of the larger solution to lower the cost curve," Sander Levin of Michigan, ranking Democrat on the House Ways and Means Committee, said in a written statement. "Making this fix would improve payment accuracy for Medicare Advantage and make the program more sustainable."

Ways and Means Health Subcommittee ranking Democrat Pete Stark of California, who has repeatedly characterized MA plans as greedy and a bad value for patients, said in a written statement that the plans shouldn't get more money than the traditional program does for the same types of patients.

"With new data showing the health insurance industry was more profitable in 2010 than ever before, it makes no sense for Medicare beneficiaries and American taxpayers to continue to subsidize them," Stark said.

Lobbyists for health insurers said their plans are doing a better job of overseeing patients' medical services by coordinating their care. They also noted that the report does not say that the Medicare Advantage plans are gaming the system but simply that the fee-for-service and Medicare Advantage programs are not identifying patients' conditions in the same way. The plans may be doing a more thorough job than the fee-for-service system of documenting patients' conditions.

"Conclusions about whether the MA payment system appropriately pays plans should not be based on GAO's analysis," said Robert Zirkelbach, press secretary for the trade association America's Health Insurance Plans (AHIP). "There is widespread agreement among policy makers and stakeholders that our health care system needs to move beyond the outdated fee-for-service system to one that rewards quality, value and better health outcomes.

"Unlike the FFS [fee-for-service] part of Medicare, Medicare Advantage plans work to identify and address beneficiaries' specific health care needs through integrated care coordination, disease management, and quality improvement initiatives,'' Zirkelbach added. "Recent research has found that these programs are improving the quality of care for seniors in Medicare Advantage compared to" the traditional program.

The payment adjustments are a relatively new development. Medicare officials began adjusting plans' payments to reflect the medical diagnoses of patients in 2000 and have taken a series of steps to adjust the way the adjustments were calculated since then.

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States with Least Work on Exchanges Will See Big Benefits Anyway, Study Says

By Jane Norman, CQ HealthBeat Associate Editor

January 23, 2012 -- The uninsured residents in the 15 states that have made the least progress in setting up health benefit exchanges are the ones with the most to gain under the benefits of the health care overhaul, according to study released from the Urban Institute.

The study, financed by the Robert Wood Johnson Foundation, says that 15 states have made little headway on setting up their exchanges and might have to rely on a federal fallback instead. Yet those are states with high rates of uninsured residents, and under the health care law (PL 111-148, PL 111-152), they would see the largest percentage drop in the rate of uninsured residents.

These states "will gain the most from the Medicaid expansion and will receive the most federal subsidy dollars per capita," notes the study. The Medicaid expansion, however, is not dependent on whether a state or the federal government operates the exchange.

Progress around the country on exchanges—meant to be a marketplace for health insurance for individuals and small business—varies widely. But this is a crunch year. States are supposed to demonstrate "significant progress" on their exchanges by Jan. 1, 2013, and have until Jan. 1, 2014, to implement their exchanges though Department of Health and Human Services officials have been stressing flexibility for states that can't make it in time.

The study, by Fredric Blavin, Matthew Buettgens, and Jeremy Roth, divides the states into three groups. The first already has passed state legislation on an exchange or has a governor who has issued an executive order. The second are states whose officials have expressed significant interest in creating a state exchange by passing intent legislation, having legislation pending or receiving an HHS Level One grant for planning.

Then there are the rest, who are resistant to the law. They have Republican governors, GOP-led legislatures, or both. Those states are Alaska, Arkansas, Florida, Georgia, Kansas, Louisiana, Montana, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Texas and Wyoming.

Nine of the 15 have made some progress by creating an exchange study or planning entity. But in six, legislation was not moved or didn't pass in 2011, said the study.

Yet in those states the percentages of uninsured would be cut in half or more through the health care law. In Louisiana, for example, there would be a 60 percent decrease in the number of uninsured. The same would be true in Arkansas, says the study.

Enrollment in Medicaid or the Children's Health Insurance Program would rise by more than 50 percent in these states compared to 30 percent or less in the other states, the study reports. And spending on uncompensated care would also drop the most.

States considered to have made the most progress are California, Colorado, Connecticut, Hawaii, Indiana, Maryland, Massachusetts, Nevada, Oregon, Rhode Island, Utah, Vermont, Washington and West Virginia, and the District of Columbia.

In the second group are Alabama, Arizona, Delaware, Idaho, Illinois, Iowa, Kentucky, Maine, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Tennessee, Virginia and Wisconsin.

Wisconsin's Gov. Scott Walker, however, recently said no work will be done on an exchange in his state until the U.S. Supreme Court rules on the constitutionality of the law, and that the state is giving back $37 million in federal funds allocated for planning its exchange.

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PCORI Launches Comment Period on Research Priorities

By John Reichard, CQ HealthBeat Editor

January 23, 2012 -- How in the world are research studies funded by the Patient-Centered Outcomes Research Institute (PCORI) under the health care law actually going to bend down the health care spending curve in the United States?

It's still too early to get concrete examples pinpointing specifically how that might happen, even though the organization formally released a document last week listing its research priorities.

The draft shows that the organization, PCORI, is planning to cast a very wide net in funding research to identify the best ways to improve health care treatment.

PCORI is the health care law's response to the view of many policy analysts and researchers that there is way too little information available on what treatments work best in health care and that much of medical spending in the United States is wasted. The field is sometimes known as CER, or comparative effectiveness research.

The research areas PCORI listed are an example of the many factors that determine how well health care works. For example, it isn't just a matter of whether treatment A works better than treatment B for a particular medical condition, although that is an oft-cited example to illustrate what is meant by comparative effectiveness research.

It's also a function of how a health system organizes the delivery of care to ensure that it is well coordinated, whether doctors change the way they practice medicine based on studies that reach conclusions on which treatments work best, and in what ways barriers such as language or transportation prevent particular socioeconomic groups from getting effective treatment.

"PCORI, at this early stage of its work and of patient-centered outcomes research as a discipline, does not want to focus on a narrower set of questions or health care conditions, nor does it want to exclude any diseases or conditions," the organization said in the 22-page "Draft National Priorities for Research and Research Agenda."

PCORI proposes the following five priorities for the research it funds: comparative assessments of prevention, diagnosis, and treatment options (40 percent of its funding); improving health care systems (20 percent); best ways of communicating and disseminating research (10 percent); addressing treatment disparities among various socioeconomic groups (10 percent); and "accelerating patient-centered and methodological research" (20 percent).

Efforts by other organizations to establish CER research priorities "have focused on specific high-prevalence or high-cost conditions," the document noted. But "PCORI's priorities and agenda do not place such limits on the scope of research that will be supported." The various criteria the health care law (PL 111-148, PL 111-152) laid out for PCORI to consider in funding studies, "when considered together, do not point strongly to such conditions, but suggest that a more diverse research portfolio that considers a range of conditions, interventions, and research methods, may be more appropriate," the draft says.

The comment period ends March 15. Then PCORI will update its research priorities based on the comments and issue a revised statement of its priorities in April. After that it will invite researchers to propose specific studies with the goal of committing up to $120 million in funding this year.

Then exactly how the research could have an impact on spending may be more clear. But it's apparent that studies comparing one drug to another or a drug to a medical device won't dominate the research plan. That's a victory for product makers who feared that CER would be heavily weighted in that direction.

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Brookings Fellow: Premium Support a 'Premature' Idea

By John Reichard, CQ HealthBeat Editor

January 27, 2012 -- Brookings Institution Senior Fellow Henry Aaron recently said that a premium support system that would cap federal outlays for Medicare is a premature remedy for the budget threat posed by Medicare.

Aaron, who championed the idea in 1995, said that taking that overhaul approach now would be too disruptive to seniors.

Aaron's views are important because they could shape how Democrats respond to pressure on Capitol Hill after the election to overhaul Medicare based on the premium support approach.

Aaron spoke on a panel with Alice Rivlin, who also is a Brookings Institution senior fellow. She is pulling Democrats in the other direction. Rivlin is calling for adoption of a premium support proposal she made with former New Mexico Sen. Pete V. Domenici, a Republican.

The Rivlin-Domenici plan and a subsequent proposal by Sen. Ron Wyden, D-Ore., and Rep. Paul D. Ryan, R-Wis., would give Medicare enrollees a menu of competing plans from which to pick. Traditional Medicare would be one option. Enrollees would go to regional Medicare exchanges to compare plans and enroll. The federal government would set an amount each year it would pay toward the cost of premiums. The amount would be based on the second-lowest bid by insurers competing to provide Medicare benefits.

Rivlin said competition among plans would hold down premium costs. But if Medicare costs in a given year were to exceed the gross domestic product plus 1 percentage point, Medicare would hike its contribution to premiums by no more than that amount.

Aaron said Medicare is much different now than it was in the mid-1990s because the health care law (PL 111-148, PL 111-152) is now in effect. Provisions in the law to control Medicare spending should be given time to work before any attempt is made to incorporate premium support, he said.

He added that the kinks in developing insurance exchanges under the overhaul should be worked out before they are attempted in the Medicare program. The health care exchanges are designed to serve some 30 million Americans, but the regional Medicare exchanges established under premium support would serve far more people—around 70 million a decade from now.

"We have a big job now to get the insurance exchanges up and running," he said. Problems developing exchanges for Medicare may be "intractable," he said. One issue is that many beneficiaries are mentally impaired, he added.

Aaron said competition in exchanges could only work if plans are tightly regulated to prevent cherry picking, under which plans select low-cost enrollees and avoid high-cost ones. But the current political climate is hostile to regulation, he said.

Premium support "is not a terrible idea," Aaron concluded. "I just think it's a premature idea right now."

Rivlin told the forum that a bipartisan deal to control Medicare spending is a must because of the debt crisis the U.S. faces.

She agreed with Aaron on the importance of maintaining provisions in the health care law to control Medicare spending. She said she strongly supports the law's provisions to overhaul Medicare payments, test new ways to organize care and establish the Independent Payment Advisory Board, which has powers to limit Medicare spending if it exceeds certain target levels.

However, Rivlin added that the debt situation is dire enough that both the health care law provisions and her premium support plan should be adopted.

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