CMS proposes increasing outpatient hospital payment rates by 2.7% and considers paying average sales price plus 6% for drugs acquired through the 340B program.
CMS recently released the outpatient prospective payment system (OPPS) proposed rule that would increase Medicare hospital outpatient payment rates by a net 2.7% in calendar year 2023 compared to 2022.
For hospitals that participate in the 340B Drug Pricing Program and that were affected by CMS' OPPS cuts in recent years, the agency announced it would restore the payment to average sales price plus 6% for calendar year 2023, given the recent Supreme Court decision.
CMS also noted that it is evaluating how to apply the Supreme Court's decision to the prior year cuts and is seeking public comment on potential remedies affecting cost years 2018-2022.
Concerns have already started pouring in from hospital groups unhappy with the inadequate payment rate amount, much like what we saw with the recent inpatient payment system proposal.
American Hospital Association (AHA) Executive Vice President Stacey Hughes said, "We are deeply concerned about CMS' proposed payment update of only 2.7%, given the extraordinary inflationary environment and continued labor and supply cost pressures hospitals and health systems face," according to the association’s statement.
In contrast, the AHA is happy with the end of the 340B payment cuts and it demands repayment.
"Having now recognized what 340B hospitals are owed under the law, we urge the Administration to promptly reimburse those hospitals that were affected by these unlawful cuts in previous years. Additionally, we continue to urge the agency to ensure the remainder of the hospital field is not penalized for their prior unlawful policy, especially as hospitals and health systems continue to deal with rising cost for supplies, equipment, drugs, and labor," Hughes said.
Among other proposals, CMS would require prior authorization for an additional service category, remove 10 services from the inpatient only list, and add one procedure to the ambulatory surgical center covered procedures list.
CMS will accept comments on the proposed rule through September 13.
A recently released fact sheet lays out ways CMS can accurately reflect the cost of providing hospital care to patients and communities.
The American Hospital Association (AHA) released a new fact sheet urging CMS to make two critical changes to the fiscal year (FY) 2023 inpatient prospective payment system rule.
The goal of the fact sheet is to arm hospitals and health system leaders with information to share with their state representatives and senators. The ultimate goal, the AHA says, is to reflect the cost of providing hospital care more accurately to patients and communities.
AHA is requesting that CMS retrospectively adjust the market basket update for FY 2022 to account for unprecedented inflation and eliminate the productivity cut for FY 2023.
"Since the market basket and associated productivity update use historical data to forecast into the future, the current rising inflation and massive growth in expenses facing hospitals and health systems were not adequately considered in the estimates," AHA said in a recent letter to members of the House and Senate.
According to the AHA, Congress should urge CMS to use its "special exceptions and adjustments" authority to make a retrospective adjustment to these market basket amounts. In addition, Congress should urge CMS to eliminate the productivity cut for FY 2023, it said.
The American Hospital Association (AHA) urged Congress to streamline Medicare Advantage plans' prior authorization requirements in lengthy letter.
The AHA submitted a letter to the House Energy and Commerce Oversight and Investigations Subcommittee calling for greater congressional oversight to protect access to care for Medicare Advantage (MA) beneficiaries.
The letter urged Congress to support legislation for the following:
Streamline MA plans' prior authorization requirements
Prohibit MA plans from using more restrictive medical necessity and coverage criteria than traditional Medicare
Establish a provider complaint process and enforce penalties for plans that fail to comply with federal rules
Clarify states' role in MA plan oversight
"Inappropriate and excessive denials for prior authorization and coverage of medically necessary services is a pervasive problem among certain plans in the MA program. This results in delays in care, wasteful and potentially dangerous utilization of fail-first imaging and therapies, and other direct patient harms," the AHA said.
"In addition, these practices add financial burden and strain on the health care system through inappropriate payment denials and increased staffing and technology costs to comply with plan requirements. They are also a major burden to the health care workforce and contribute to worker burnout."
To this point, the AHA refers to an advisory issued last month by Surgeon General Vivek Murthy, that notes that burdensome documentation requirements, including the volume of and requirements for prior authorization, are drivers of healthcare worker burnout.
In the letter, the AHA also urges Congress to require MA plans to publicly report on standard performance metrics related to coverage denials, appeals, and grievances and for CMS to conduct more audits for plans with a history of inappropriate denials.
This latest letter from the AHA comes on the heels of last month's request for CMS to take "swift action" to hold MA plans accountable for inappropriately and illegally restricting beneficiary access to medically necessary care.
Here, the AHA cited an OIG report that found that MA organizations often delay or deny services for medically necessary care, even when prior authorization requests meet coverage rules.
A concern with the MA payment model is the potential incentive for organizations to deny services in an attempt to increase profits, the study said. As more and more people enroll in MA, the issue of inappropriate prior authorization denials can have a widespread effect.
"Denied requests that meet Medicare coverage rules may prevent or delay beneficiaries from receiving medically necessary care and can burden providers," the report said. "Although some of the denials that we reviewed were ultimately reversed by the MA organizations, avoidable delays and extra steps create friction in the program and may create an administrative burden for beneficiaries, providers, and MA organizations."
Since 2010, 138 rural hospitals have closed, with 19 shutting down in 2020 alone.
To help mitigate this trend and promote healthcare equity in rural communities, CMS released a proposed rule with conditions of participation allowing a facility to be a Rural Emergency Hospital (REH).
This conversion allows a facility provision of services, such as emergency services and observation care, that do not exceed an annual per patient average of 24 hours, according to ACDIS.
The designation of REH was created in 2021 to help curb hospital closures, and CMS seeks now to further enable small facilities and critical access hospitals in rural areas to “right-size their service footprint and avoid potential closure,” the rule’s fact sheet stated.
CMS also stated they are seeking comments on specific standards for the rural facilities. Some of these include whether a REH should be required to provide outpatient surgery services if surgical labor is necessary, and whether it can allow certain providers with training or experience in emergency medicine to be on call by telephone or onsite within a certain timeframe.
“The availability of the new Rural Emergency Hospital provider type will maintain access to essential healthcare services and help to reduce disparities in rural communities,” said Chiquita Brooks-LaSure, a CMS administrator, in a statement.
The executive director of revenue cycle management at Banner Health details lessons learned from deploying revenue cycle automation.
The healthcare industry is constantly evolving in ways that revenue cycle leaders can't control. Changes in billing requirements, payment models, and patient access can cause struggles for organizations with poor processes.
Successful organizations must enhance their revenue cycles and create the bandwidth to address these challenges. This means the use of technology and AI to streamline revenue cycle processes is essential.
Jamie Davis, executive director of revenue cycle management at Banner Health, recently spoke with HealthLeaders about Banner's journey in implementing the use of AI and automating its revenue cycle management. It wasn't an easy process, but it was necessary to protect the organization against revenue leakage.
Davis has over 20 years in healthcare and is the liaison for Banner Health's revenue cycle performance and strategic alignment with its regional c-suite. She oversees the revenue cycle portfolio, including vendor management, revenue cycle roadmap, continuous improvement, and strategy.
Banner Health currently has 22 day-to-day bots helping with its revenue cycle management. These bots complete tasks like adding insurance information and updating medical records. "All the things that our human resources shouldn't waste their time doing," Davis said.
These bots manage roughly 90 million records for Banner Health, and from mid-2020 to 2021, Banner has saved about 1.73 million man-hours by deploying them, Davis explained. Banner Health also has machine learning in its refund and variance space to help with credit and debt balances.
When it comes to taking on such a large automation endeavor, partnerships are needed Davis says.
"Our automation is done completely in partnership with our IT group. They have their own robotic process automation center of excellence, but they've also started dabbling in some process mining in our health plan data. And we are working towards automating things like low balance accounts receivable management and denials," Davis says.
"The automation of the denials, low balance accounts receivable management, and the variances is really fun and innovative. That's where it's really rolling into that intelligent automation space since it's using machine learning that is predicting and reacting," Davis says.
Don’t go big at first
While Banner Health is fully rolling with a plethora of streamlined and strategic automation throughout its revenue cycle, it wasn't always smooth sailing. This, Davis says, is where you need to make sure to take your time and don't expect to go big at first.
"In full transparency, we tried to run first, and then we fell. We realized we needed to slow down a little bit, which was a great lesson learned," Davis said. "I think anyone who is trying to be innovative has those horror stories where something worked out really well in the boardroom and not so much in real life."
At the time Davis started developing its automation, Banner Health already had its IT team working with its medical records team to manage records and move them with bots. From there, it made sense to the team to expand its automation.
"The theory is, we want our technology to pay for itself. We thought a great way to do that is to add machine learning to implant charge capture and it will increase that revenue. And we were very strategic about it—so we thought," Davis said. "We deployed process engineers and documented the processes. We found all the variants and began to write Python code and machine learning. And it worked until it didn't work. What happened was that the processes that we had documented varied from facility to facility."
Banner Health has 30 hospitals, and the appropriate workflows weren't aligning.
"So, we automated a dysfunctional workflow, and it ended up being more cumbersome to utilize the machine learning. It was a good learning experience—we did the fail-fast theory."
Moving forward
After stepping back, realigning its strategic planning, and partnering with IT, Banner's deployment process started to turn around.
"We ended up creating hierarchal scoring for all of the automation that we wanted to consider. On one side, we have the benefits: for example, net revenues, compliance, or full-time employee re-allocation. We would then weigh those scores and compare them to the complexity of the build: for example, how many process variants does it have? How many systems are in there?" Davis shared.
After gathering those scores, Banner would use a classic grid to determine automation that was low-effort, low-return, and high-effort, high-return. This hierarchical approach made all the difference for them.
"Once we did that, we applied a continuous improvement team member to have oversight and to help be that subject matter expert in the revenue cycle to make sure we aren't recreating core processes. And from there, our automation just went gangbusters," Davis said.
Banner had about five bots at the time, and in almost no time they had 15 bots. Now they are at 22, Davis says.
"And we have governance over all of it as well. So, just because we can automate something, doesn't mean we should."
Managing all of this automation has become easier too, Davis said. The team now brings all of the automation to the table, just like they would do for any other project, and explain it to governance oversight so they can agree that it's strategically aligned.
It's also important to make sure the automation doesn't tax resources that are taxed elsewhere and to make sure there is monitoring in place.
"We have dashboarding that monitors what those bots are doing, when they stopped doing it, and when they start doing it the wrong way. Because, you know, just like humans, a bot needs to learn, be educated, and be monitored," Davis said.
Davis credits its first failed attempt at deploying automation to the success it has today.
"I really think this playbook that we created has been really successful because now we have our feet under us from a bot perspective, and we are running really quickly."
Beginning January 1, the CPT coding format for office and other outpatient visits will apply to hospital inpatient and observation visits, consults, and services in the emergency department, nursing facility, home, and residence, according to Part B News.
As a result, history and physical examination will no longer contribute to the level for these visits. Instead, for most visits practices will select codes based on medical decision-making (MDM) or time. The only exception will be emergency department visits, which will be MDM-only because the codes do not have a time component.
Among the most radical changes, Part B News says the AMA plans to delete all observation care codes and merge observation services with initial and subsequent hospital care codes.
The guidelines also include a revised definition of "New and Established Patients" that includes this addition: "In the instance where a physician or other qualified health care professional is on call for or covering for another physician or qualified health care professional, the patient’s encounter will be classified as it would have been by the physician or qualified health care professional who is not available."
According to Part B News, you’ll also find a new definition of "Initial and Subsequent Services" for patients who have been admitted to hospital inpatient, observation, or nursing facilities. In effect, the initial care codes apply when the patient has received no face-to-face services "from the physician or other qualified health care professional or another physician or other qualified health care professional of the exact same specialty and subspecialty who belongs to the same group practice, during the inpatient, observation, or nursing facility admission and stay," the guidelines state.
The update includes revisions to the MDM chart. Under low complexity of problems addressed, "1 acute, uncomplicated illness or injury requiring hospital inpatient or observation level of care," will be added to the list. In addition, there are two revisions to the examples for high risk of morbidity. Parenteral controlled substances will be added to the list of examples and "Decision regarding hospitalization" will be revised to "Decision regarding hospitalization or escalation of hospital-level care."
HealthLeaders' regulatory round up series highlights five essential governing updates that cover every aspect of the revenue cycle that leaders need to know. Check back in each month for more regulatory updates.
The revenue cycle is complex, detailed, and always changing, so staying on top of regulatory updates and latest best practices requires revenue cycle leaders' constant attention in this ever-changing industry.
In this revenue cycle regulatory roundup, there were an ample number of updates published by CMS and the Office of Inspector General in June, including code updates and audits of Medicare Advantage organizations.
Here are the five updates you need to know.
There were thousands of reasons for your coding departments to be overwhelmed in June.
A total of 1,176 new diagnosis codes were finalized within the fiscal year (FY) 2023 ICD-10-CM code update. The CDC also posted the FY 2023 coding guidelines along with the code update.
In addition to the 1,176 new diagnosis codes, the update also includes 28 codes that had revisions to their descriptors, and 287 codes deemed invalid.
On top of this, the FY 2023 ICD-10-PCS procedure code set and the ICD-10-PCS Official Guidelines for Coding and Reporting were released by CMS. The procedure code update includes 331 new codes.
Both updated ICD-10-CM and ICD-10-PCS code sets are to be used for discharges occurring from October 1, 2022, through September 30, 2023.
The coding department is one of the most critical parts of the revenue cycle. Because coding occurs mid-cycle, it provides an opportunity to catch errors introduced earlier in the process, as well as preventing similar errors in the future.
Staying abreast of these regulatory coding updates is important for revenue cycle leaders as coding—and its completeness and accuracy—has a profound impact on an organization's bottom line.
Tighten up your revenue cycle to avoid major penalties as the Office of Inspector General (OIG) takes aim at Medicare Advantage organizations (MAO).
On June 3, the OIG published a reviewof whether select diagnosis codes that Peoples Health Network, a MAO, submitted to CMS for use in the risk adjustment program complied with federal requirements.
The OIG conducted the audit by selecting 242 enrollee-years with the high-risk diagnosis codes for which Peoples Health received higher payments for in 2015-2016. The OIG found that 144 of the 242 enrollee-years had diagnosis codes that were not supported in the medical records and resulted in $412,938 in overpayments.
The OIG estimated that Peoples Health received at least $3.3 million in overpayments for these high-risk diagnosis codes in 2015 and 2016.
The OIG recommended that Peoples Health refund the federal government for the estimated $3.3 million in net overpayments, identify similar instances of noncompliance that occurred outside the audit period and refund any resulting overpayments, and enhance its existing compliance procedures to identify areas where improvements can be made to ensure high-risk diagnosis codes comply with federal requirements.
Peoples Health did not concur with any recommendations and said the OIG used flawed audit and extrapolation methodologies, did not evaluate the overall enrollee-year payments or risk scores, and failed to follow CMS' risk adjustment audit rules. The OIG says it stands by its original findings.
The Spring 2022 Semiannual Report to Congress was sent out by the OIG.
Some of the findings in the report include COVID-19 tests driving an increase in total Part B spending on lab tests, state performance in oversight of nursing homes, a study of Medicare beneficiaries utilizing telehealth services, and more. The OIG published a press release on the same date to accompany the report.
Medicare and beneficiaries paid substantially more to provider-based facilities in eight states than they paid to freestanding facilities in the same states for the same services.
On June 13, the OIG published a report of how much Medicare paid for certain services performed at provider-based facilities in 2010-2017 compared to what Medicare and beneficiaries would have paid for the same type of services performed at freestanding facilities during that same time period.
The OIG focused this review in eight states. It found that Medicare paid $3.1 billion and beneficiaries paid $794 million for E/M services at provider-based facilities when the same type of services at a freestanding facility would have cost $1.8 billion for Medicare and $460 million for beneficiaries during this time period.
In addition to the significant payment differential, beneficiaries would have only had to make one coinsurance payment if the services were performed at a freestanding facility rather than two that they had to make for the services at the provider-based facility. Cost-sharing generally would have been lower because it would have only been based on the freestanding facility rate.
The OIG noted that while CMS has taken some steps to equalize payments, those changes would not have completely leveled costs during the audit period. The OIG recommends CMS pursue legislative or regulatory changes to lower costs both for Medicare and for beneficiaries by equalizing payments as appropriate between provider-based and freestanding facilities for E/M services. CMS did not agree or disagree with the recommendations but noted that any changes now may require legislative action.
Inaccuracies in Medicare's race and ethnicity data hinder the ability to assess health disparities.
On June 15, the OIG published a review of the accuracy of Medicare's enrollment data on race and ethnicity. The OIG said this data, which currently only comes from the enrollment database, is key to ensuring that Medicare is able to assess health disparities appropriately.
The OIG found that the data is less accurate for some groups–particularly beneficiaries identified as American Indian/Alaska Native, Asian/Pacific Islander, or Hispanic beneficiaries. It noted that there are limited race and ethnicity categories and missing information, and while there are algorithms meant to improve the existing data, that falls short of self-reported data.
The OIG also said Medicare's enrollment data on race and ethnicity are inconsistent with federal data collection standards.
The OIG recommends CMS develop its own source of race and ethnicity data, use self-reported race and ethnicity information to improve data for current beneficiaries, develop a process to ensure that the data is as standardized as possible, and educate beneficiaries about CMS' efforts to improve race and ethnicity information. CMS did not explicitly concur with the first recommendation but concurred with the other three recommendations.
Special addition this month:The 2023 end-stage renal disease prospective payment system proposed rule is here.
Proposals include a change to the methodology for calculating outlier threshold for adult patients, rebasing and revising of the end-stage renal disease bundled market basket, and a permanent 5% cap on decreases in the end-stage renal disease prospective payment system wage index beginning in 2023.
CMS also proposed changing the definition of “oral-only drug” to include wording stating that it’s a drug or biological product with no injectable functional equivalent or other form of administration, and it proposed clarifying the descriptions of the end-stage renal disease prospective payment system functional categories to help ensure CMS supports innovation of completely new drugs and not variations of existing drugs.
CMS estimates payment updates in the rule will increase end-stage renal disease payments for freestanding clinics by 3.1% and increase payments for hospitals by 3.7%. The proposed CY 2023 end-stage renal disease prospective payment system base rate is $264.09. CMS published a fact sheet on the proposed rule on the same date. Comments are due by August 22.
Revenue cycle automation takes time, and as those at the University of Utah Health point out, you need to walk before you can run.
While time is always of the essence in the revenue cycle, implementing wider-scale change, like new processes and software, is better taken at a methodical pace.
Revenue cycle leaders at the University of Utah Health (U of U Health) successfully established an automated and streamlined audit process that identifies potential errors at the point of coding. When doing so, U of U Health was careful not to do too much too soon as it was imperative the workflow was right before getting too far.
Nancy Treacy, MPH, RHIA, CDIP, CCS, who helps oversee data integrity at U of U Health says that at least once in the process, it held off on implementing the next stage until issues were resolved and teams were truly ready to move on.
A timeline should be realistic and have a level of flexibility to it and taking time to slowly build on a new program has its perks that go beyond the organization.
The ultimate reason for automating and streamlining an audit process goes far beyond making the jobs of those in the revenue cycle easier, says Treacy.
"I believe coders and auditors are patient advocates. Patients are tasked with so much responsibility beyond focusing on getting well, and we help make sure they have a quality experience all the way to the end. With the proper tools and processes, we can ensure they get sent only one claim, helping to reduce confusion about what they can expect to pay. That's something we take seriously and are proud of," says Treacy.
Read more about U of U Health’s journey automating their audit process here.
New research estimates that a single primary care physician could add $124,435 in preventative services to their practice's annual revenue if coding and billing practices were rectified.
Physicians left a large amount of money on the table for services that were provided but not coded and billed, according to a recent study published in the Annals of Internal Medicine.
Researchers from Brigham and Women's Hospital and Harvard Medical School used national survey data to conclude that a single primary care physician (PCP) could add $124,435 in prevention services and $86,082 in coordination services to their annual revenue if coding and billing practices were resolved. They also estimated that each PCP provided preventive services worth up to $40,187 in additional revenue.
The authors analyzed 34 distinct prevention and coordination codes, representing 13 distinct categories of services for Medicare patients. They found that although services were provided to up to 60.6 percent of eligible patients, billing codes were only used at a median 2.3 percent.
According to the authors, the results suggest that having to navigate the eligibility, documentation, time, and component requirements of numerous separate codes may be too high of a hurdle to warrant the effort from PCPs to use prevention and coordination codes.
The physician fee schedule plays a dominant role in how primary care and other physicians are paid. However, core features of primary care—first-contact care that is continuous, comprehensive, and coordinated—are poorly matched with visit-based payments.
CMS has made efforts to address this issue by adding billing codes for these aspects of primary care including preventive services and for coordination services, but many of these codes have been characterized by low rates of adoption, suggesting that the codes are not being adequately used, the authors said.
Revenue cycle leaders share their experiences with measuring staff productivity in this new, remote workforce environment.
Like most of healthcare, the revenue cycle workforce has changed dramatically within the last several years. An entire office floor that previously housed a revenue cycle department is now silent and desolate as most staff have been working remotely for years at this point.
While working remotely has been a success for most organizations and is now a permanent work model, measuring productivity has moved to the forefront of concerns since staff are no longer under physical, constant supervision.
During the recent revenue cycle Healthcare Workforce of the Future virtual roundtable, executives got together to discuss how productivity has changed in recent years and share best practices for measuring productivity in order to get the most out of their fully remote or hybrid staff.
Marvin Mickelson, system director of PFS-shared revenue cycle at University of Kansas Health System, said that the productivity of his customer service team went through the roof when they were sent home at the start of the pandemic. In the office, the team couldn't meet their call documentation goal, which was three minutes.
"We have a goal of three minutes per call, and our customer service team was hitting four and five minutes a call while still in the office," Mickelson said. "Once they became remote, the team has been below three minutes a call for the past 22 months straight."
However, other departments didn't see the same boost in productivity, Mickelson said.
"Productivity per department is a mixed bag for us too," said Derek Dudley, assistant vice president of revenue cycle operations for Wellstar Health System.
"When we first sent staff home, like Marvin, we saw an immediate boost in productivity", Dudley said. "There was less distraction. Now though, I think distractions have started to creep back in and now we're dealing with the same productivity levels and potential challenges that we did pre-COVID-19."
Remeasuring productivity measures
These ebbs and flows of productivity since the beginning of the pandemic have made it essential for leaders to step up their procedures for measuring productivity across all departments, both in-house and remote.
Revenue cycle leaders now have to be more reliant on reports and work queue volumes. Instead of being able to manage staff in person by walking around, leaders now have to pull reports, activity logs, and manage work by volume.
"Our best gauge of productivity now is running daily productivity reports," says Dudley. "Productivity measures vary by department since the complexity of tasks can differ greatly, such as those writing complex appeals versus simple appeals."
"There's also a degree of variability in value-add tasks," he says. "When it comes to measuring our productivity, that's really what we're looking for: accounts that are being successfully resolved, reports showing system actions, and the staff's time in and out of the system. There is a myriad of ways that we can check from a distance to make sure staff is working effectively."
Mickelson agrees that his organization is similar. "We're also looking at touches on accounts. Staff have to work a certain number of accounts a day to meet the goal for productivity," he adds.
Quality assurance is also a really big part of measuring productivity, Mickelson says. "Staff can 'touch' an account for an hour if they want to, but if they don't do anything with it, it's not helpful. The team will have a lot of re-work to do."
Jason Driskell, vice president of revenue cycle at Lakeland Regional Health, says his organization can see how long staff are in a specific account and what tasks they performed while in that account, which has proved to be helpful when it comes to measuring productivity.
But, Driskell says, they can't see what revenue cycle staff should have done with an account through a report. "It would be more helpful to see exactly what staff should have done based on a work queue designation or denial code to resolve the account. We want to see if staff were able to address any follow-up issues that they needed to and compare that to what they actually did," he says.
The future for the revenue cycle workforce
Now that revenue cycle leaders are working to perfect new productivity measures for hybrid and remote staff, are these new standards here to stay, or will we need to dust off those dirty office cubes since staff will be back in the office full time? These leaders say remote work is the new norm and it's here to stay. At least for them.
"I’ve heard other leaders say that if staff can’t meet their productivity while working from home, we will just bring them back in the office," Driskell says. "I've actually had a complete and opposite approach to that."
"If their job is now at home, bringing them back to the office is no longer an option,” he says. "So, if staff can't manage our new productivity measures, then they have to be placed on a performance improvement plan. At that point, staff have to decide to work faster and more accurately. There isn't an option for coming back in the office to help with productivity because we don't have anywhere to put them at this point—we've eliminated those departments' on-site work areas."
Dudley agrees. "That's the same mentality we have in our organization, " he says. "We have had that transformative shift to remote work, and we aren't looking to bring staff back to an office. And plus, we are downsizing our offices, so we will not have the same level of space anymore."
The option of bringing staff back into the office to encourage productivity is officially designed out.
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