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Healthcare Reform Puts Vise Grips on Physicians

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   April 17, 2014

To say doctors are under tremendous pressure may be the understatement of the year. One key indicator to how well they are navigating the healthcare system is reimbursement.

This article appears in the April 2014 issue of HealthLeaders magazine.

When the enrollment period opened for the new health insurance exchanges in 2013, it was a signal to physicians that a key element of the Patient Protection and Affordable Care Act had, indeed, arrived and would start to play out in their waiting rooms this year. Other changes providers are now contending with include the implementation of ICD-10, public disclosure of any financial gain doctors receive from drug and device manufacturers because of the Physician Payments Sunshine Act, and attesting to meaningful use requirements. All of this is happening against the backdrop of an evolving industry in which physicians are facing an influx of more patients with insurance coverage but without annual limits or preexisting condition clauses.

To say physicians are under tremendous pressure may be the understatement of 2014. A key metric to assess how well physicians are navigating the healthcare system is reimbursement.

"The pressure everybody is experiencing, to a large degree, is revenue related," says Armin Ernst, MD, president and CEO of Worcester, Mass.–based Reliant Medical Group, an independent multispecialty physician group with more than 250 doctors at 20 sites in central Massachusetts. The practice has 106 primary care physicians and 150 specialists.

A cornerstone of PPACA is to get healthcare costs under control, which means moving away from a fee-for-service reimbursement system and replacing it with one that rewards quality and outcomes. It's a transition welcomed by most physicians, but alternative payment models are still relatively new and many organizations are treading carefully. For example, in Massachusetts, a state often lauded as a healthcare pioneer, FFS remains the dominant payment method used by commercial insurers. According to a 2013 report from the state's Center for Health Information and Analysis, while state-based payers have implemented some alternative payment methods, only one national payer was participating in an APM model in Massachusetts. The rest relied on FFS.

This means in Massachusetts, and elsewhere, providers are stuck navigating two payment arrangements, if they venture out to be part of an alternative payment model at all.

"It is very difficult to have your feet in two different worlds and to maintain the divide," explains Ernst, who believes the physician of the future needs to prepare for more scrutiny now in order to survive financially.

"There's less money around," says Ernst. "We all have to do more with less, and we've all recognized that quality has to be a significant driver in how we're getting paid."

Reliant has chosen to pursue contracts that put its providers on the hook for more risk, and it has made strong headway. In 2012, $157 million—52% of Reliant's total revenue—was associated with risk contracts. It's a trend that began five years ago, says Marc-David Munk, MD, chief medical officer for Reliant Medical Group.

"Every year, it seems to increase," says Munk. "We're looking forward to a point in our future where we have next to no FFS patients."

Reliant leaders hope to be at that point in five years. For 2014, Reliant's goal is to have more payers handing over risk to the multispecialty practice—up to 80% of its patient panel by year's end. The more risk, the better, according to Munk. Right now, 71,000 of its patients are fully capitated, about 40%.

"Being in a risk environment allowed us to do many of the things that physicians wished they could do," Munk says.

For example, Reliant offers shared medical appointments for certain chronic conditions, such as diabetes. Patients with high blood pressure or cholesterol and weight management issues can also participate in a shared appointment. The 90-minute, once-a-month appointments also give patients a way to be more engaged with their care and understand they are not alone. In addition to a physician, a nurse is present at the appointments to address other issues, such as depression and anxiety. Munk says the appointments are very popular with patients and easier with global-risk contracts because it's difficult to bill for a shared appointment under a FFS structure.

Another program that Reliant is piloting, HomeRun, involves providers seeing frail elderly patients in their own homes. The home visit is done by geriatricians and nurse managers. Munk says he also is looking to begin a separate hospital-at-home program that would allow patients to stay home with support instead of being admitted to the hospital.

"It comes at a lower cost for us," Munk says. "And it's something that we would find difficult to bill for in a FFS environment. The bottom line for us is these kinds of things improve the care that we can deliver to patients and also deliver it to the bottom line. It's frankly a much less expensive way of providing care than waiting for patients to get sick at home and then having them bounce back to the emergency department two or three times and get readmitted. Don't forget we bear the cost of all of those visits. Everybody benefits when we get a little more intelligent about how to spend those dollars."

Reliant's aggressive strategy is due, in part, to its affiliation with Atrius Health, a Newton, Mass.–based nonprofit organization that has assembled more than 1,000 physicians among its seven community-based medical groups in Massachusetts. Atrius is a Medicare Pioneer Accountable Care Organization and has an alternative quality contract with Blue Cross Blue Shield of Massachusetts.

On its own, some Reliant locations have also achieved level 3 patient-centered medical home recognition—the highest level awarded by the National Committee for Quality Assurance. While PCMHs are not necessarily engaged in APM models, payers often offer incentives to practices and physicians that attain the recognition.

Reliant's confidence in succeeding with global risk comes from its history. Before 2011, Reliant was known as the Fallon Clinic, established in 1929 as a medical group in central Massachusetts. Its members embraced the idea of capitated payment and, in the 1970s, created their own HMO known as the Fallon Community Health Plan. Ernst credits the early adoption of capitated care as one reason Reliant has been able to move forward more quickly with modern alternative payment models.

"I think we were lucky here somewhat because of the culture that existed at the Fallon Clinic," Ernst says. "It has a long history of managed care, so it was not a new concept that had to be sold to leadership, administration, and physicians, which certainly helped. But, I don't want to underestimate how difficult this can be if you start out from scratch. I think it's extremely difficult."

In addition to Reliant's cultural comfort with APM models, the medical group has a robust electronic health record system that supports a patient portal to schedule appointments, view lab results, email physicians, and even can support e-visits for patients 18 years old and up. The portal is a "big patient satisfier," according to Munk, especially for the younger patients who communicate digitally.

Reliant's $24 million investment in its Epic EHR system, which is maintained by two dozen full-time employees, took years to customize, but has paid off. The medical group received a Stage 7 Ambulatory Award from HIMSS Analytics, its highest designation, which recognizes an organization for having achieved all the steps necessary for a paperless environment.

Munk says such investments benefit all of Reliant's patients, regardless of the reimbursement method.

"We've built our infrastructure to support risk, which means that our FFS patients benefit from many of the same initiatives that our capitated patients benefit from," he says. "For example, we know that giving flu shots only saves us money down the road; we have an excellent flu shot delivery rate, but our FFS patients receive them at the same rate as our capitated patients."

Still, Ernst is counting on getting more patients covered by risk-based contracts. Increasing the population of patients who are considered fully at risk is a key to Reliant's financial bet on leaving FFS behind for good.

"If you are FFS, you can get away with, say, 100 patients, and you just see them 100 times a year and get paid 100 times," he explains. "That doesn't work anymore under this model so it really has to be the number of covered lives—that is the new currency against which our success is being measured. And that, I think, is foundationally different."

Embracing independent physicians

Reliant is not alone in seeking new types of relationships with payers to support the need for a more viable post-FFS reimbursement model.

San Francisco–based Dignity Health, a 21-state network of 39 acute care centers, including hospitals, primary care and urgent care clinics, and 56,000 employees, launched a physician alignment effort in 2011 that gives independent physicians who work with Dignity hospitals an opportunity to collectively negotiate with payers to not only get better rates, but also to participate in APM models that include shared savings. It's called clinical integration, and while it's in an early phase of development, Dignity has five CI networks operating in the three states where it operates acute care hospitals: California, Arizona, and Nevada.

Robert Lerman, MD, vice president and medical director for physician integration at Dignity, shares Ernst's ideas on the stress that physicians are operating under in the current environment.

"It's a very difficult time to be a physician," says Lerman. "Doctors are facing reduced reimbursement; they have regulatory requirements, increased costs to run a practice. And these pressures really sort of mirror some of the same things the hospitals are going through with value-based purchasing, penalties for readmissions, and shrinking margins for Medicare."

Instead of trying to solve the problems inside the walls of the hospital, Lerman says Dignity saw an opportunity to collaborate with the 9,000 physicians who work with its hospitals. Dignity has a distinctive relationship with physicians: Only 10% are employed by the health system. The rest are independents, many of whom, Lerman says, are confused and scared about their future.

"A lot of our physicians really do want to stay independent, but they want and need help in order to be successful in the new healthcare environment."

The physician-led Dignity Health CI programs provide a support network to those independent physicians. If they join one of Dignity's CI networks, they get access to tools and staff they otherwise might not be able to afford. For example, in concert with developing the CI networks, Dignity also is creating a healthcare management program that includes social workers, nurse coordinators, and pharmacists working with physicians and their practices to develop team-based care protocols that are found in PCMHs. In fact, Lerman says, Dignity is beginning a major initiative this year to bring as many PCMH elements into physician practices as possible.

"We don't look at the PCMH and CI network models as being mutually exclusive at all," he says. "We are making major investments in population health management information technology that we'll offer to our physician practices to allow them to have things they don't have or couldn't afford, like software that will facilitate communication with care management teams."

There is no membership fee or cost to physicians to join the CI network, but they are expected to play a significant role in building the network to include primary care physicians and specialists. In fact, every aspect of a CI network is physician-led and physician-governed.

Each network has a board of managers that is composed of both primary care physicians and specialists. The individual networks also have a quality committee, which works with the group to develop metrics and standards. Lerman says that, on average, there are 100 quality measures for each CI network.

"The quality committee gets together and they go through every single medical specialty," he says. "They talk to their peers, they develop potential quality metrics that might be utilized, and they select between five and 10 metrics per specialty, and that's how you get to about 100 for each organization."

Lerman says Dignity also recognizes that to attract physicians to the CI network, the metrics have to be reflective of the physicians' community. Likewise, to attract health plans to the CI networks, he says, the organization strives for standardization, as well. To achieve balance between the two sets of standards, Dignity created, with the help of physicians, a menu of 160 quality- and cost-related measures.

"Out of those 160, we ask the physicians to pick 90–110 measures from that menu," says Lerman, who also says that community-specific metrics can be added; but again, the process is entirely physician driven.

"We want all the physicians to feel that they have a voice," says Lerman.

Physicians who join a Dignity CI network are also expected to hold each other accountable for the quality metrics each network adopts. It's an opportunity to collaborate with other providers in a local community to develop a common set of quality and clinical standards. Dignity's theory is that patient care will improve, costs will go down, and physicians will have more job satisfaction.

Despite a built-in relationship with 9,000 physicians across three states, Dignity decided to recruit physicians for its CI network initiative in order to create closer partnerships with many of those physicians. The health system wasn't starting at ground zero, but this did represent new ground for the organization to hit the streets and convince physicians to join and, Lerman says, recruiting physicians hasn't been difficult.

"We had hoped that by July of 2012 we would have about 800 physicians throughout Dignity Health in the various CI networks, and we had about 2,700," he says. "The physician participation has been tremendous and the progress that we have made has exceeded our expectations." The number of physicians who've joined a Dignity CI network is now nearly 3,000.

The Arizona Care Network, an ACO based in metropolitan Phoenix, has 695 physicians, and the "vast majority" already has a relationship with Dignity or with its partner Abrazo Health Care, says William Ellert, MD, who helped develop the CI network as chief medical officer of St. Joseph's Medical Group, the employed physician group of Dignity's St. Joseph's Hospital and Medical Center located in Phoenix. Ellert is also chair of the Arizona Care Network's utilization review committee and chief medical officer for Tenet Healthcare's Arizona region.

Ellert says the Arizona Care Network has been able to attract physicians because of St. Joseph's long history in the area.

"St. Joseph's, which is one of the flagship hospitals of Dignity Health, has been in this community since the 1800s, and so partnering with the physicians was not a new thing for us," says Ellert. "We have a long history of trust with the physicians and so when Dignity Health says, 'This is the direction I believe we need to go in order to prepare for the future of healthcare,' a lot of the physicians believe them."

Another reason physician participation in the ACN is so large is because of the network's partnership with Abrazo Health Care, which is now part of Dallas-based Tenet Healthcare. Ellert, now chief medical officer for Tenet's Arizona region, says the addition of Abrazo's six hospitals, outpatient facilities, and medical group in the Phoenix area expand the ACN footprint throughout all of central Arizona, where two-thirds of the state's population lives. The geographic area is known as the Valley of the Sun, and Ellert says the partnership with Abrazo allows both systems to look at delivering care in a whole new way.

"As a network, we have geographic reach throughout the entire valley, and that was important for the community because you might work in the east valley and live in the west valley, so you have to have access to healthcare throughout the entire valley," he says.

The ACN gained status as a Medicare ACO in January 2013. It plans to commit 70% of the shared savings to physicians and 10% to hospitals. The remaining 20% supports the infrastructure of the ACN, with hospitals agreeing to give back 50% of their shared savings to support existing ACN infrastructure, if necessary.

Ellert says the ACN is going beyond the Medicare ACO model and is entering into a contract with Aetna that has a shared-savings component to it, as well as working with UnitedHealthcare. Giving independent physicians a voice in negotiating with payers is a big selling point of the ACN and the rest of Dignity's CI networks.

Even without years of data showing improvements in quality because the CI networks are still new, Ellert says early results from the first eight months of 2013 are promising. From January to August, Ellert says ACN saw a drop in inpatient admissions from 403 to 278 per 1,000 patients; for that same time period, there was also a reduction in emergency department visits from 419 to 353 per 1,000 patients. ACN is also credited with reducing hospital readmission rates, year over year, from August 2012 to August 2013 by 10%, from 16.1% to 14.5%. Ellert says the data indicates the CI network shows potential, and health plans are now approaching the network.

"Almost all the health plans are coming to us and saying they want to do this," he says. "Our goals are becoming more aligned. The trick is how do you jump from point A to point B, and that's where a lot of the difficult negotiations come in because we recognize that we're still building the infrastructure to be successful and the health plans, rightly, and the patients are saying, 'We want it now.' " 

Both Ellert and Lerman are banking on the entrepreneurial spirit of the independent physicians to propel the network forward quickly. Ellert says the CI networks could be of particular help to primary care physicians.

"The thing that is either going to make this or break this is if we can somehow put aside some of our individual needs and biases and look at what the needs of a community are and the needs of our patients, and address those," says Ellert. "That's what PCPs have always done, but we're now being given some of the tools we need to make this successful."

Primary care's 20-minute milestone

Primary care physicians are often cited as the group of doctors under the most pressure. The American Medical Association, Association of American Medical Colleges, and more recently the National Center for Health Workforce Analysis, all project a shortage of primary care doctors by 2020.

Among the ideas to help fill the future gap in primary care practices include increasing the number of nurse practitioners and other medical staff, as well as expanding the scope of practice for nurses, putting them in more of a leadership role in primary healthcare; however, the idea isn't without criticism from the physician community.

"What's important to realize is that because of the differences in education and training, even doing the same service is different," says Reid Blackwelder, MD, president of the American Academy of Family Physicians, which represents 110,600 family physicians, family medicine residents, and medical students.

Blackwelder is also a practicing family physician in Kingsport, Tenn., and says as a trained physician, he may pick up on an issue with a patient's health that a nurse practitioner may overlook or attribute to something else unrelated to the visit.

"If I'm doing a well-child visit, for example, I'm noticing things differently than a nonphysician provider would."

Blackwelder says there is a place for NPs and others in a practice to help alleviate the patient load, but he firmly believes that the answer to primary care pressures is team-based care, led by a PCP.

Many modern care models include aspects of team-based care. Reliant, for example, puts PCPs at the center of its model, and Dignity's CI networks aim to coordinate patient care beginning with a PCP. But the biggest hurdle providing this type of care is the payment system, says Blackwelder.

"One of the biggest barriers is the reality that our current system pays for volume, and that has created some significant challenges all over the country in that we're not used to recognizing the value of primary care especially in the setting that physician-led teams can bring to the table," he says. "So as we transition from paying for volume to paying for value, the system we're trying to get away from doesn't have a way for me to easily document and be paid appropriately for it."

Blackwelder's complaint about not getting paid for the work he does to help manage patient care is echoed by many physicians. But that is changing, at least for Medicare patients. In 2015, physicians will be able to use a newly created "G-code" that the Centers for Medicare & Medicaid Services outlined in late 2013. The new code reimburses doctors for 20 minutes of care per month given outside of a face-to-face visit for Medicare beneficiaries who meet certain requirements. CMS calls the new code a milestone toward care coordination, but it may be more akin to a baby step if the administrative work physicians put in to manage their patient population exceeds 20 minutes.

Primary care's trailblazer

Some PCPs are not waiting for the government or insurers to catch up to the reality of how their daily practices are run. Instead, Tom X. Lee, MD, is meeting patients' demand for a high-tech, high-touch doctor visit with One Medical Group, a primary care practice he founded in San Francisco in 2005 that has since expanded to 27 sites in San Francisco, Boston, Chicago, Washington, D.C., New York City, and most recently, Los Angeles.

One Medical Group has been described as concierge medicine without the concierge price tag. But Lee describes it as a completely reengineered doctor's office.

"We are not concierge," he says. "Concierge is really designed for the affluent; ours is designed for everybody. It's a primary care system focused on delivering higher-quality care and service at lower cost. The way we manage that is through overhead reduction … and support systems."

The "support systems" are proprietary technologies Lee helped develop. The $199 annual membership fee that patients pay helps support noncovered services that are supported by technology. That in turn reduces the administrative burden and gives patients what they want now, which is access. Patients can make same-day appointments online or through the One Medical app. They can email their physicians directly, view lab results, access their medical record, request prescription refills, and request treatment for common issues—all from a smartphone.

Efficiency is what Lee focuses on most, and One Medical Group's offices are nearly paperless.

"What people underestimate is the complexity of workflow in healthcare in general, but particularly in outpatient and primary care," he says. "Unfortunately, traditionally the way doctors evolve is they have a very simple office to start, but through growing administrative and clinical complexity, they have hired staff and layered process on top of process and have continued to use legacy systems like paper and fax that are less efficient in today's world of technology."

Lee's concentration on maximizing One Medical's efficiency has reduced administrative staff from four employees per physician to two, or fewer in some offices. Lee does not want doctors spending time on paperwork; he wants them spending time with patients—a key measure he keeps track of constantly.

"In my mind, time is the key investment that we're making right now," he says, noting that a typical 10-minute doctor visit is not enough time to listen to a patient, make a diagnosis, and manage the patient's care.

"Our general bias is that in the office visit, time is the missing ingredient, and we've added that back. We're seeing 15–16 patients a day, about 30 minutes on average."

One reason Lee has been able to expand his model of primary care so quickly comes from his deep connection to Silicon Valley. After medical school, he earned his MBA from Stanford University, and while there developed Epocrates, the drug and medical reference app that debuted on Palm technology but has successfully migrated to smartphones. It is one of the most common apps physicians use today with more than 1 million downloads.

The success of Epocrates showed investors that Lee was a smart bet when it came to healthcare; venture capitalists have given him $77 million to date to invest in One Medical.

It is easy to point to the money and the technology Lee has had access to as the reason why he's been able redesign primary care for his patients, but he insists that those resources alone would not have produced such a result.

"It's a combination of process, technology, and people; all of those elements are interacting together," says Lee. "I think there are a lot of ideas in healthcare and not many people doing them. We're actually putting the ideas into action."

Lee's vision for designing a primary care practice is rooted in the days of his residency at Boston-based Brigham and Women's Hospital. He was disappointed at what he saw—heavy administrative burdens that interfered with a physician's ability to treat and care for patients. So instead of going into private or group practice, Lee headed to business school to find out how to run a practice the way he wanted to.

Now that he is, and getting attention for it—Forbes dubbed Lee one of its 12 Most Disruptive Names in Business in 2013—he wants people to know that his solution to redesigning primary care is not turnkey.

"It's hard to do," he says. "You can't model it. This isn't, frankly, assembly line production. Assembly line production is very moldable; you can calculate changes. The workflow that comes into doctors' offices is a lot more complicated."

Room for specialists

While Lee has focused on primary care redesign, Consultants in Medical Oncology and Hematology, an eight-physician oncology group in Drexel Hill, Pa., believes it has found a model of care that can be rolled out to other oncology practices. The strides made by CMOH's leader, John Sprandio, MD, FACP, focus on both improving care for patients and building a payment infrastructure for specialty physicians that can survive the transition from volume to value.

In 2003, Sprandio started building the Oncology Patient-Centered Medical Home® after being struck by what Alice Gosfield and James Reinertsen, MD, wrote in a 48-page white paper titled Doing Well By Doing Good: Improving the Business Case for Quality, which looked critically at barriers that prevented physicians from delivering consistent care.

"In that paper there was a list that details the barriers that physicians face on their way to becoming more accountable for the quality of care delivered. These barriers also happen to be significant physician time-stealers, things like utilizing an EMR that doesn't really match workflow or processes of care, communication and documentation burdens, the lack of coordination systems, etc.," says Sprandio. "All those things were really clear after reading the article, probably a dozen times."

On a mission to reduce variability and—like Lee's vision for One Medical Group, become more efficient—Sprandio began working in earnest to identify where work could be standardized among the three CMOH sites. He focused first on getting physicians to manage symptoms in the same way so that CMOH's nurses were giving consistent advice to patients who called the telephone triage system, which was designed to allow immediate patient access to clinical information and advice.

"There was a lot of variation in terms of how we managed symptoms as a practice," says Sprandio. Dr. A handled delayed chemotherapy-induced nausea different than Drs. B, C, and D. Another important goal was to try to minimize clinically irrelevant physician activity and to give physicians consistent data and have them not just be able to respond to it, but hold them accountable for responding to it."

The solution, he says, was basic communication. The physicians discussed why they liked one approach to managing symptoms over another until they finally came to a consensus on managing specific, predictable symptoms related to chemotherapy and complications of disease.

"We embraced the Dr. Brent James/Intermountain Healthcare philosophy that it rarely matters that you get symptom management strategies perfect the first time, but you have to start a process of doing things the same across your organization and then measuring the outcome and making changes based on the success or failure of those efforts," he says.

Sprandio helped physicians maintain the clinical standards they chose with a robust EMR system that he says created efficiency by getting rid of data that was irrelevant and integrating a documentation template that prompted physicians to facilitate communication with patients and referring physicians.

Once that variation in data and diagnosis was eliminated, Sprandio worked on getting physicians to improve their documentation turnaround time, which in 2006 was "abysmal."

"It was three, three-and-a-half, four weeks," he says. "We improved it to a couple of weeks in 2009–2010. After we inserted Dragon dictation into our software overlay, we're down to a day-and-a-half. That's where we are right now."

The documentation improvement, process standardization, and EMR system (along with the custom software that supplemented it), added up to fewer variations in care and the realization that CMOH was basically a PCMH.

"We turned around in 2008 after we did all this, and it was clear to us that we met or exceeded the NCQA criteria for PCMH recognition," he explains. CMOH did earn Level 3 PCMH status in 2010. Sprandio is also pursuing a new NCQA Patient-Centered Specialty Practice recognition program that aims to identify specialty practices as meeting the same stringent requirements as those that cover primary care.

Sprandio's efforts in standardizing the way symptoms are managed with the centralized phone triage system has led to an increase in the number of cases that can be handled over the phone with a nurse. In 2006, Sprandio says, 77% of all symptom-related calls were effectively managed at home; in 2012 it rose to 85%.

ED evaluations per chemotherapy patient per year have also steadily declined from 2.6 visits in 2004 to 0.82 in 2011.

Sprandio attributes the decline in ED evaluations to the physician-led care teams that engage the patients early by asking them to call the telephone triage line as soon as they suspect a problem. He also directly credits the improvement to the quick document turnaround time by physicians.

"It provides up-to-date clinical information to our triage nurses with detailed information regarding current patient-specific symptom management recommendations," he says.

CMOH's initiative to work toward better outcomes at a better value have caught the attention of payers who are willing to test specialty-based APMs. Sprandio says CMOH now has three APM contracts, in total, with Keystone First, a Pennsylvania Medicaid managed health program; Aetna; and Independence Blue Cross. All three are pay-for-performance contracts, and among them Sprandio says 54% of his patients are now covered by APMs compared to about 15% a year ago.

But for Sprandio, the desire to pioneer a way that rewards value over volume is really rooted in figuring out a way to give his patients consistently good care.

"This was all driven by the fact that I wanted patient X, Y, or Z, who was initially referred to me to get the same level of attention, same process of care, same symptom management that I would have given them if I were seeing them. And there was a tremendous amount of variability. Anybody who says, 'There's five doctors or there's 20 doctors and we all do things pretty much the same,' they're delusional. They're completely delusional. If you want to drive quality, you have to create an environment where consistency is a default mode."

Reprint HLR0414-2

This article appears in the April 2014 issue of HealthLeaders magazine.


Jacqueline Fellows is a contributing writer at HealthLeaders Media.

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