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Shifting Motivations: Rethinking Primary Care Physician Incentives In Health IT Implementation


July 21st, 2014

Clinician adoption and implementation of health information technology (IT) has increased significantly since the passage of the HITECH Act in 2009. Dedicated efforts and large financial incentives have spurred innovation and motivated progress in many aspects of information technology, including information exchange and community-level health IT implementation. Yet poor usability of systems and overwhelming reporting burden still present barriers to optimal use of health IT.

Health IT capabilities — such as automated performance feedback; shared documentation with patients; population health tools; and clinical decision support, facilitating evidence-based health care — can potentially drastically improve quality of care, particularly in primary care practices. However, the current incentive and payment structures are not aligned with productive use and spread of health IT innovation. When many primary care physicians use electronic health records (EHRs), the problems they are now tasked to solve relate to billing and coding compliance and to achieving “meaningful use” through the Centers for Medicare and Medicaid Services (CMS) EHR Incentive Programs; many clinicians and systems are not encountering or using EHRs as productive clinical tools.

Perhaps the focus of providers and health systems on meeting the technical and administrative requirements of “meaningful use” has obscured the creative opportunity for clinicians to explore how to use EHRs to improve care, and to see their own actions as part of the solution to effective implementation. Strategies that focus on creating space for discovering ways that IT can support effective health care — e.g., more flexible payment models with emphasis on population health outcomes — may be more successful than those that focus on health IT adoption.

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The Alternative Payment Methodology In Oregon Community Health Centers: Empowering New Ways Of Providing Care


July 21st, 2014

Editor’s note: This post is part of a periodic Health Affairs Blog series, which will run over the next year, looking at payment and delivery reforms in Arkansas and Oregon. The posts will be based on evaluations of these reforms performed with the support of the Robert Wood Johnson Foundation. The authors of this post are part of the team evaluating the Oregon model.

The Alternative Payment Methodology (APM) demonstration project enables participating Oregon community health centers to receive a monthly payment based on the size and composition of their patient population. This payment replaces the model of earning revenue based on the number of individual patients seen, shifting the paradigm from the number of doctor visits to the provision of high-quality, team-based, patient-centered care.

So what are the real changes physicians are seeing on the ground in clinics where APM is being implemented?

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Positive Results For 2012 Physician Quality Reporting System And eRx Program


July 17th, 2014

In April, the Centers for Medicare & Medicaid Services (CMS) released the 2012 Physician Quality Reporting System and Electronic Prescribing (eRx) Experience Report, showing a significant increase in participation in two programs that allow eligible professionals to earn incentive payments through voluntary participation.

Record Participation in 2012

With over 430,000 professionals participating in the Physician Quality Reporting System (PQRS) and more than 340,000 e-prescribing, the 2012 report marks encouraging progress in efforts to improve quality measurement and reporting through the PQRS and eRx programs. Thanks to increased participation, more clinicians are actively measuring and reporting on quality and focusing on improvement.

CMS is beginning to add this information to Physician Compare, a website that can be viewed by patients. Measuring, transparently sharing, and improving quality performance provide the keys to a better health system.

At CMS, we are pleased by the success of these programs and other CMS quality measurement programs. We are also encouraged by the potential of these initiatives to empower patients and providers with information that can support care coordination and improved delivery of care.

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Investing In The Social Safety Net: Health Care’s Next Frontier


July 7th, 2014

Editor’s note: In addition to Jennifer DeCubellis, Leon Evans also coauthored this post. 

The United States spends 250 percent more than any other developed country on health care services, yet we are ranked below 16 other countries in overall life expectancy. A less frequently discussed statistic, however, is the degree to which the U.S. under-invests in social services: for every dollar spent on health care, only 50 cents is invested in social services. In comparison, other developed countries spend roughly $2 on social services for every dollar spent on health care. The U.S. is 10th among developed countries in its combined investment in health care and social services.

This imbalance has ramifications for the nation’s Medicaid program, where just five percent of beneficiaries with complex health and social problems drive more than 50 percent of all program costs. Many individuals in this high-cost group have chronic complex medical, behavioral health, and/or supportive service needs, and in the absence of coordinated intervention, they tend to be frequent visitors to emergency rooms and have high rates of avoidable hospital admissions.

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Payment And Delivery Reform Case Study: Cancer Care


July 3rd, 2014

Editor’s note: In addition to Darshak Sanghavi, Mark McClellan, and Kavita Patel, this post is also authored by Kate Samuels, project manager at Brookings. It is adapted from a forthcoming full-length case study, the second in a series from the Engelberg Center’s Merkin Initiative on Physician Payment Reform and Clinical Leadership designed to support clinician leadership of health care delivery, payment, and financing reform. The case study will be presented during the Merkin Initiative’s “MEDTalk” event on July 9 from 10:30 AM to 12:30 PM EDT, featuring live story-telling and knowledge-sharing from patients, providers, and policymakers.

Oncology practices and hospitals across the nation struggle with providing sustainable, comprehensive, and coordinated cancer care. Clinical leaders with strategies and models to improve the quality and value of health care often don’t know how to navigate the landscape of payment and delivery reform options to sustain their innovations.

We use a case study approach to investigate and tell the story of the New Mexico Cancer Center (NMCC), an independent cancer center that is experimenting with innovative ways to improve patient-centered oncology care. We identify challenges for creating sustainable and supportive payments models, and we share the broader strategic and policy lessons for adopting alternative payment models.

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The Payment Reform Landscape: Bundled Payment


July 2nd, 2014

Getting a good deal for a package price is something we’re all familiar with as consumers.  In health care, that might mean creating incentives for health care providers to improve the continuity and coordination of care, leading to better patient outcomes and lower costs. Paying for a set of services, not “per unit of care delivered’ under the fee-for-service model, is typically called bundled or episode- based payment.

Bundled payment is a single payment to providers or health care facilities (or jointly to both) for all services to treat a given condition or provide a given treatment. Unlike some of the other payment reform models I’ve discussed on Health Affairs Blog, such as pay-for-performance, bundled payment asks providers to assume financial risk for the cost of services for a particular treatment or condition, as well as costs associated with preventable complications.

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Exhibit Of The Month: The Medicare Reimbursement Margin


June 30th, 2014

Editor’s note: This post is part of an ongoing “Exhibit of the Month” series. Readers who’d like to highlight other noteworthy exhibits from the same issue are encouraged to make their pitch in the comments section below.

This month we look at three exhibits from the June issue’s care span article, “Medicare Home Health Payment Reform May Jeopardize Access for Clinically Complex and Socially Vulnerable Patients,” published in the June issue of Health Affairs.

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Correcting The Blind Spot In Accountability: The Role Of Pharmacy Care


June 25th, 2014

Editor’s note: In addition to William Shrank, this post is also coauthored by Andrew Sussman, Patrick Gilligan, and Troyen Brennan.

The Centers for Medicare and Medicaid Services (CMS) recently issued a Request for Information (RFI) to solicit suggestions about how to improve the Accountable Care Organization (ACO) programs. CMS stated that they seek recommendations about how the ACO program might evolve to “encourage greater care integration and financial accountability.”

The RFI explicitly stated that they seek information about how to better integrate Part D expenditures into ACO cost calculations to make pharmaceuticals part of the approach to care delivery and health care transformation.

The deadline for comments about encouraging Part D integration in ACOs has now passed. But the issue extends beyond ACOs. In addition, bundled payments and patient-centered medical home programs target hospitals and primary care providers to promote higher quality and lower cost care. All these programs have largely excluded prescription drug costs in their calculus, and offer no direct incentives for Part D plans to participate in and improve care.

Nonetheless, retail pharmacies and Part D plans have developed a number of strategies to participate. As CMS and policymakers reconsider ACO regulations to stimulate greater integration of prescription drug use in delivery system reform, we thought it important to offer a description of the marketplace response to payment reform activities at large.

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This Is Not Your Mother’s Payment Model: Reflections On The APM Pilot


June 18th, 2014

Editor’s note: This post is part of a periodic Health Affairs Blog series, which will run over the next year, looking at payment and delivery reforms in Arkansas and Oregon. The posts will be based on evaluations of these reforms performed with the support of the Robert Wood Johnson Foundation.

In early 1994, as I went about finding a practice to join after residency, every physician with whom I spoke discussed managed care at length. As a young family physician dedicated to prevention and early intervention, I was convinced that managed care answered many of the historical challenges faced by primary care physicians. At last we’d be able to pay for the social workers who could facilitate important mental health care and human services for our patients and for the group nutrition classes we wanted to run in our practices.

Yet just four years later, as I left private practice to return to academic medicine, managed care was virtually dead. All its promise had been undermined by a range of structural and environmental challenges.

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The Payment Reform Landscape: Capitation With Quality


June 6th, 2014

When I began this blog series in February, I explained how Catalyst for Payment Reform (CPR) views different payment reform models along a continuum of financial risk. Thus far, we have used this series to explore the evidence behind “upside only” models that give providers the chance for a financial upside, but no added financial risk, or downside. We’ve looked at the evidence behind pay-for-performance and per-member per-month payments to support patient-centered medical homes. This month, we move across the risk spectrum to examine a model that offers both upside and downside financial risk for providers—capitation.

What is Capitation? Is It Widespread?

Capitation is nothing new when it comes to paying for health care. It had its heyday in the HMO era of the 1990 s, but something was seriously lacking in the capitation arrangements of the past that led to a strong backlash from consumers. Consumers feared their health plans were more interested in saving money than providing them with the quality care they needed; in a Kaiser Family Foundation Survey at the time, most reported they or someone they knew had a problem with their plan. Some of these fears proved to be warranted. Fortunately, since the 90s, payers and providers have worked to put quality safeguards in place.

When tracking value-oriented payment, CPR only examines capitation arrangements with a quality measurement and incentive component — what we call “capitation with quality.” CPR defines capitation with quality as “a fixed dollar payment to providers for the care that patients may receive in a given time period, such as a month or year, with payment adjustments based on measured performance and patient risk.”

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The Cost Of A Cure: Medicare’s Role In Treating Hepatitis C


June 5th, 2014

Editor’s note: In addition to Tricia Neuman, Jack Hoadley and Juliette Cubanski also coauthored this post.

For a patient with hepatitis C, a potentially deadly disease, the prospect of finding a cure with minimal side effects is a really big deal. Also a big deal is the cost of Sovaldi (sofosbuvir), an oral drug approved by the Food and Drug Administration in December 2013 for the treatment of chronic hepatitis C. Sovaldi has been priced by its manufacturer, Gilead, at $1,000 per pill, or an estimated $84,000 for its entire 12-week regimen. It joins the treatment arsenal with several older drugs generally thought either to be less effective or to have more side effects, and another newly approved drug to be taken in combination with other drugs. More drugs are expected to gain approval within the year.

Sovaldi’s price tag has drawn attention in part because an estimated 3 million Americans have the hepatitis C virus and could be considered candidates for new drugs. Patients will clearly benefit from a long-awaited cure, and public and private payers could potentially see a reduction in health care spending over the long term if Sovaldi successfully cures this disease and fewer patients require high-cost liver transplants. But private insurers and public programs will face significant budgetary pressures if a large number of patients receive this treatment at current prices.

To date, attention has focused on cost implications for private health plans, Medicaid, and the Department of Veterans Affairs (VA). For example, UnitedHealth reported that the cost of Sovaldi was “multiple times” its expectations. State Medicaid officials and Medicaid plans have warned that the cost of the new treatments will pose significant fiscal challenges to state budgets and plan payment rates, even though Medicaid receives a 23.1 percent rebate (discount) for all brand drug purchases. The VA has decided to cover the drug and secured from Gilead a discount of 44 percent, one that applies to certain other federal purchasers, but is targeting treatment to the sickest patients while waiting for less expensive drugs to become available.

Less attention has been paid to the cost implications for Medicare, where coverage of Sovaldi will fall under Part D, the program’s outpatient prescription drug benefit administered by private plans. Given the drug’s effectiveness, most if not all of Part D plans will likely cover Sovaldi. The anticipated impact on costs to Medicare will be revealed to CMS later this month, when plans submit premium bids for 2015. Plans will increase their bids to cover the expected costs of new treatments, which will raise costs for both the federal government and Part D enrollees who pay premiums. CMS will release the average Part D premium for 2015 in August.

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Making Markets Work In Health Care: What Does That Mean?


June 3rd, 2014

Editor’s note: See Robert Berenson’s post on consolidation and market power in health care, also published today, and watch for more on these subjects in Health Affairs Blog.

Health Affairs last week posted a set of papers that represent several perspectives on Provider Consolidation in Health Care: Challenges and Solutions. To provide a context for these papers and for the broader discussion of how to make markets work in health care, I suggest a couple of thoughts.

There are two types of markets in health care: the market for health services and the market for health coverage—these markets are interrelated, and both of them are broken.

The historical correlation between provider concentration and both higher prices and lower quality is well-documented. With the increased focus under health reform on collaboration across providers and settings, and the increase in physician and hospital consolidation and the purchase of physician practices by hospitals, the concern is that this trend may lead to adverse consequences for the health system.

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Acknowledging The Elephant: Moving Market Power And Prices To The Center Of Health Policy


June 3rd, 2014

Editor’s note: See Stuart Guterman’s post on consolidation and market power in health care, also published today, and watch for more on these subjects in Health Affairs Blog.

Health Affairs recently published a set of papers addressing the problem of provider consolidation and consequent increased prices. Perhaps even more striking than the specific arguments made in these papers is the very fact that smart and busy people other than antitrust economists and lawyers now are actually spending a great deal of their professional time thinking about this problem. High prices and the distortions in markets resulting from differential pricing power have been the unacknowledged elephant in the policy room for decades, even as the policy community and policy makers have wrung their hands over what to do about rising health care costs. More than 40 years ago, President Nixon declared that health care spending increases were “unsustainable.” And here we still are grappling with health care spending.

Over the decades I have been told by smart health economists that the main culprit behind increasing health spending is technology, although the definition of technology turns out to be pretty flexible — new ways of providing care are considered new technology, not just machines and drugs. And nominees for the reason our baseline spending exceeds other countries’ by so much have included administrative complexity in our multi-payer, crazy quilt organization of health care; defensive medicine caused by malpractice concerns; and fraud and abuse. Jack Wennberg and colleagues at Dartmouth have argued that variations in service use that do not increase quality explain spending variations, at least in Medicare where payment (price) variations are not permitted other than to reflect differences in input costs.

All of these explanations have merit, but for non-government payers, prices have actually been the main source of high spending and variations in spending, at least in the recent past and probably for much longer. Prices for commercial and self-funded insurance products result from market negotiations between insurers and providers; the balance of power in these negotiations has sometimes shifted, most recently toward many providers, but certainly not all of them — the relatively few remaining independent hospitals and the solo and small physician practices have become “price takers,” even as other providers are able to negotiate payment rates far higher than Medicare benchmarks.

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Bundled Payments: Moving From Pilots To Programs


June 2nd, 2014

Sometimes myths take way too long to die. A case in point was last month’s Health Affairs Entry Point by Rob Cunningham on the “Payment Reform Paradox.” In it, he cites years-old information about the then difficulties of engaging providers in risk-based contracts for bundles. The myth that has surrounded the paper Cunningham references has been astonishingly difficult to dispel despite the significant factual evidence that proves it wrong.

A new report, to be released tomorrow, might help change the perception that bundled payments are either ineffective for private sector payers, or too complex to administer, or both. In their third annual review of bundled payments in the United States, Michael Bailit and his colleague Margaret Houy make the point that we have moved from pilots to full-blown implementations, with private and public sector payers.

There are now thousands of contracted bundles in force between providers and payers, most with downside financial risk — not just for the usual suspects of joint replacement or cardiac procedures, but also for chronic and acute conditions. In New Jersey, Horizon Blue Cross Blue Shield is administering hundreds of bundled payment contracts per year, covering pregnancies and deliveries, joint replacements and breast cancer. Remedy Partners, one of the largest convener-awardees in the Medicare Bundled Payment for Care Improvement program, is working with hundreds of providers covering well over $1 billion in total bundled payments per year today, increasing to over $15 billion in a few months.

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ACO Results: What We Know So Far


May 30th, 2014

Editor’s note: For more on this topic, stay tuned for the upcoming June issue of Health Affairs, which features a series of articles on accountable care organizations. 

Accountable care is a relatively recent addition to the health care vernacular, but its roots can be traced to the decades-long effort to coordinate medical care. In the United States, health care has evolved into a fragmented pay-for-volume system which has both driven up cost and decreased quality. Coordination of care is meant to reverse this trend. Through such solutions as Health Management Organizations (HMOs), Integrated Delivery Networks (IDNs) and now Accountable Care Organizations (ACOs), policymakers, providers and payers have sought to consolidate and coordinate patient care.

Contemporary care coordination efforts focus on accountable care which increases provider accountability for the cost and quality of care. The driving principle behind the formation of ACOs is the Institute for Healthcare Improvement’s triple aim: improving the patient experience of care, improving the health of populations and reducing the per capita cost of health care.

One of the broadest applications of this concept is the creation of Medicare ACOs under the Patient Protection and Affordable Care Act. This includes the Pioneer ACO Program and the Medicare Shared Savings Program. More recently, states have also pursued ACO contracts to cover Medicaid populations. In the private sector, providers have forged ACO contracts with commercial payers. At the close of 2010, only 41 preliminary Accountable Care Organizations existed. The number of ACOs more than tripled to 138 a year after the passage of the PPACA. By 2012 the number nearly tripled again, and by the end of 2013 more than 600 ACOs were operating across the U.S.

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Implementing Health Reform: Third-Party Payments And Reference Pricing


May 22nd, 2014

On May 21, Secretary Sebelius released a letter providing a further clarification of what has become a rather muddled policy regarding the ability of third parties to pay for premiums and cost-sharing for qualified health plans (QHPs). The issue was first raised on October 31, 2013; Secretary Sebelius stated in a letter to Congressman Jim McDermott (D-WA) that QHPs were not federal health care programs and thus presumably were not subject to the anti-kickback laws, which generally prohibit payments by providers for business. The letter raised the possibility that hospitals or other providers could pay premiums for QHP enrollees, thus keeping them insured and the hospitals’ bills covered. This possibility was attractive to hospitals, which could often at minimal expense help high-cost, low-income patients cover their hospital bills through health insurance.

HHS quickly attempted to shut down this possibility though a November 4, 2013 Frequently Asked Questions document encouraging insurers not to accept premium payments from hospitals or other health care providers or commercial entities, and expressing a fear that such payments could distort the risk pool. CMS did not clarify on what authority it was discouraging such payments.

This FAQ, however, was seized on by insurers to refuse to take any premium payments from third parties. On February 7, 2014, therefore, CMS issued yet another FAQ clarifying that the earlier FAQ did not bar payments by Ryan White programs, Indian organizations, or private charitable foundations.

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Patient-Centered Medical Homes In Arkansas


May 20th, 2014

Editor’s note: This post is part of a periodic Health Affairs Blog series, which will run over the next year, looking at payment and delivery reforms in Arkansas and Oregon. The posts will be based on evaluations of these reforms performed with the support of the Robert Wood Johnson Foundation. The authors of this post are part of the team evaluating the Arkansas model.

In 2011, Arkansas embarked on a multi-payer comprehensive payment reform to convert a majority of private and public payments to a value-based purchasing model. An underlying goal of this effort, the Arkansas Payment Improvement Initiative (APII), is to incentivize quality and cost-effective care delivery rather than volume of services provided.

In our previous blog post, we described the design and implementation of the episode-based component of Arkansas’ system. This episodic approach focuses mostly on acute conditions and rewards providers who meet quality targets and provide lower average risk-adjusted spending per episode. Chronic care patients are more difficult to fit into an episode-based system due to the longitudinal nature of service delivery and the presence of multiple comorbidities. It would be challenging to design chronic care management episodes to account for simultaneous presentations in one patient, such as diabetes, hypertension and congestive heart failure.

Given these issues, Arkansas has also developed a Patient Centered Medical Home (PCMH) payment model to work in tandem with its episodic payment reforms. (A third component of the APII, the health home, for populations with the most complex care needs, is still being developed.) In this post, we outline the state’s PCMH approach.

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Tweeting Up A Data Revolution


May 16th, 2014

In the first 24 hours after the Department of Health and Human Services opened up data on CMS reimbursement for 880,000 Medicare providers, the deluge of analysis coming in 140-character increments was breathtaking. Critics have complained that such data tweets are, at best, a disservice and, at worst, an injustice.

Undoubtedly, many snap judgments will later be viewed as data caricatures—embellishments of a few outliers. Indeed, taken out of context, some providers may even be unfairly criticized when deeper analysis provides a logical explanation for data anomalies.

However, uncovering unwarranted variation in practice patterns has never been a linear exercise in finding the right answers. Forty years ago, when Jack Wennberg first published his seminal work in Science that uncovered dramatic variation in procedure rates, the data were far from perfect. There may have been many reasons why tonsillectomy rates more than 10 times higher in some Vermont communities than others, and Wennberg could not really know the root causes at that point. But unleashing the data did demonstrate that “geography was destiny,” and Wennberg’s brave research started a conversation — one that would evolve into the Dartmouth Atlas, and ultimately plant the seeds of an entire movement for measuring the value of care provided.

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Risk Corridors And Budget Neutrality


May 14th, 2014

Editor’s note: The topic of risk corridors will also be addressed in an upcoming Health Policy Brief. The briefs are produced by Health Affairs through a grant from the Robert Wood Johnson Foundation.

The Department of Health and Human Services (HHS) stated on March 11 in its Preamble to the Final Notice of Benefit and Payment Parameters for 2015 that it intends to implement the ACA’s risk corridor program “in a budget neutral manner.” HHS had previously indicated in its March 2013 Notice, when insurers were making decisions about marketplace participation, plan design, and pricing, that budget neutrality during the program’s three-year life was not required by statute and that “payments will be made regardless of the balance between receipts and payments.”

Then, on April 11, HHS issued a FAQ explaining how it will achieve budget neutrality. The upshot of the new policy is that health insurers can no longer be assured of receiving risk corridor payments as specified in the law. This has produced considerable angst among insurers, especially those who could be financially challenged if their costs turn out to be higher than projected when they priced policies for 2014.

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Managed Competition 2014: Rescued By The Private Sector?


May 12th, 2014

Managed Competition (MC) among health care financing and delivery systems was first conceived as a proposed public policy to drive delivery system change in the private sector by assuring consumers that they have choices, as well as rewards for choosing high-value providers. Many legislative proposals have used MC ideas in whole or in part. The Affordable Care Act’s (ACA) exchanges reflect the MC idea, but the three percent of the population they cover is too small to drive large scale change.

The new private corporate exchanges are also based on MC. While they cover few people now, private exchanges have the potential to change the incentives for tens of millions of consumers, and — if done right — to drive large scale delivery system reform. The combination of both kinds of exchanges could be powerful.

This post puts the idea of managed competition in a historical context, then describes how private exchanges are operationalizing the concept. I conclude with a brief look at how managed competition may develop going forward, and how MC may change the health care system.

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