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Buy-Right for Health Care Quality: Evidence and Indicators—Transcript of Web Conference (continued)

Penny Daniels: So that's how we think physicians will react. Now what are the results to date from your actual research surveying real physicians?

Dr. Gary Young: I can give you some preliminary results. At this point in our study, we have surveyed randomly selected physicians participating in two of the seven programs regarding their general attitudes about pay-for-performance, and specific experiences to date in their respective programs. The two of the programs together, we have obtained over 700 completed physician surveys, about a 40 percent response rate so far. So in discussing these results I won't identify the two programs because we have not yet completed the survey, and so results are not final.

Regarding general attitude, we asked physicians in the survey question to indicate on a five-point scale their level of agreement to several statements, where 1 is strongly disagree, and 5 is strongly agree.

Penny Daniels: I'm sorry to interrupt you, I just want to point out that these are the same factors we looked at before. You want to go back to the other slide. Right there, okay.

Dr. Gary Young: Okay, great. And as you can see from this slide, the great majority of physicians indicated that they should be rewarded for improving quality. But at the same time you can also see physicians were more divided as to whether they believe a pay-for-performance approach will lead to actual quality improvements. Also, the survey results point to some substantial differences among physicians as to whom they believe should be the recipient for incentive money. In some cases, it's individual physicians, but others may believe that organizations such as hospitals and physician group practices should receive the money. And while the majority of the physicians we surveyed did not seem very concerned that pay-for-performance would hinder their ability to provide good patient care, there is at least a minority of physicians who are not yet sure, or had some real concerns.

Penny Daniels: This is what I saying before, that these are the factors that you initially thought would be important. In effect, here they go.

Dr. Gary Young: That's right.

Penny Daniels: Real reactions.

Dr. Gary Young: With respect to specific experiences, we asked physicians in each of the two programs to respond to several statements, again on a 1 to 5 disagree/agree format, addressing each of the factors I mentioned earlier: awareness, salience, credibility, scope of control, fairness, and unintended consequences. We also asked them to respond to statements addressing whether they were receiving adequate feedback about their quality performance, and whether the program was having a positive impact on quality improvement as they perceived it.

Looking at this slide, the result is separated to each of the two programs, but note that the pattern of results are very similar for the two programs also. The scores for awareness with salience well below 3 approaching the low end of the scale, suggesting that physicians do not believe they have a firm understanding of how their programs work, and do not perceive the incentive money as particularly attractive.

As for the credibility of the quality targets, scores are above 3. Physicians may not perceive the targets as the next best thing to sliced bread, but they do not appear to have fundamental concerns about them either. The scores for scope of control and fairness are around 3, the middle of the scale, suggesting that physicians may have some reservations about their ability to achieve the targets and how fairly the programs are administered.

For unintended consequences, now here the scores are lower in the case that they indicate the physicians do not have substantial concerns about being distracted by their incentive arrangements relative to providing good patient care. And then for feedback and impact, the scores are again below 3, suggesting that physicians desire more timely information about their quality performance, and they are not yet, at least at this point, they are not struck by any strong link between the program and the quality improvement. But again, keep in mind these programs are all fairly new, and they really have not had much opportunity to have an impact on quality improvement.

Penny Daniels: So Gary, just if you would, a brief summary of what you have learned so far from your evaluation of the Rewarding Results demonstration projects?

Dr. Gary Young: I would point out that the survey results suggest that physician attitudes towards pay-for-performance may be more positive than what sometimes media coverage might suggest, and actually our own focus groups. We've been doing focus groups for physicians in all of these programs, and the attitudes of physicians in the focus groups often suggested some negativity, but at least from the survey results, physicians in fact may be quite positive, or at least have a positive attitude going into these programs.

Also, providers appear to want more information about how the programs work, and again that came through in the survey results, and it also came through in the focus groups that we did, that I just mentioned. In particular, they appear confused about the scoring systems that are used to distribute incentive money, some of which I must say are very complex.

And finally, as I noted earlier, providers seem comfortable with the quality targets in terms of their relevance to patient care, but the associated dollars, what they can actually get for achieving the targets, well there it appears that many providers may not feel the program sponsors are putting enough money on the table.

As far as whether or not these programs can actually improve quality, and whether there will be cost savings to go along with it, we don't know yet, but hopefully future research will shed some light on that.

Penny Daniels: Gary, thank you very much. Okay, now we turn to our provider and purchaser leaders to get their perspective on pay-for-performance issues and strategies. I am pleased to introduce Stephanie Alexander who is senior vice president in charge of the Health care Informatics Unit of Premier Inc., an alliance of 200 non-profit health care systems representing 1,500 hospitals. Stephanie, thanks for joining us. Some of our listeners may not be familiar with your organization, Premier. Who makes up your alliance?

Stephanie Alexander: Penny, thank you. Premier is, as you said, an alliance of not-for-profit hospitals and health care systems. They're national representation, rural, urban, academic-all types of hospitals and health care systems. As an alliance we strive to help health care organizations achieve high levels of quality as well as financial performance.

Penny Daniels: What has been unique or special about Premier's approach to this issue?

Stephanie Alexander: A number of years ago, our alliance and Board of Directors made a strategic decision to invest in the development of clinical comparative database that we call Perspective. It's the largest clinical database of its kind, and it's being used by the FDA for both quality comparisons for acute care and pediatrics. It's also the foundation for this CMS project as Mark mentioned.

Premier was built around the idea that quality and financial performance is inseparable, and we have an intense interest in proving that high quality and low cost are not mutually exclusive. We also spend a lot of our resources and energy around identifying best practices so that they may help hospitals achieve top performance. Given that we've conducted a number of improvement collaboratives with our members based upon the Institute of Healthcare Improvement's methodologies, the graphic here represents what we've learned. That typically we find a small group of hospitals that we describe as an "innovation group", the innovators, maybe the low-cost, high-quality group. And then there's those hospitals that are in what we call "performance group", those hospitals that we believe will learn from each other. And then there is a group that we would call an "opportunity group" that typically needs one-on-one assistance to improve.

For example, in CABG you'll see that the average comp differential for CABG patients is a $10,000 spread between the "innovation group" and the "opportunity group", and the same variation exists with the quality indicators. Bringing the hospitals together in learning collaboratives, we saw improvement in both cost and quality, and we also were able to compare those that were collaborating with us or collaborating together versus those that were trying to improve on their own. So as you see, the non-collaborators, their financial performance over a period of a couple of years and CABG for example, rose significantly. But at the same time, the collaborators' cost remained pretty much the same, and started at a much lower base line.

Penny Daniels: We understand that Premier is part of an important project that Mark McClellan mentioned earlier, the Hospital Quality Incentive Demonstration project. Stephanie, tell us how this project evolved?

Stephanie Alexander: Around the same time that we were seeing these results from the collaboratives, as I mentioned, we learned that CMS was interested in developing a pay-for-performance project involving hospitals. Our Board of Directors and our Quality Improvement Committee urged us to move forward with CMS in a belief that such a project like this could expedite improvement. We were seeing improvement, but I think it was Meredith that just mentioned that we see the need for much quicker improvement in quality.

We shared the results that I just shared briefly with you with CMS and they began to engage in discussions about how this might happen. And this is really over a two-year period. What we developed together was a three-year project that pays incentives to top-performing hospitals and establishes a performance baseline to push the lower performers to improve. We have 278 hospitals participating, and they are across the nation as you can see; there's rural, urban, academic, all types of hospitals represented in the project.

Penny Daniels: This is really exciting Stephanie. Tell us a little bit in more detail how it works, especially the incentive payments?

Stephanie Alexander: Once we've collected the data, what we have to do is determine who the top performers are. And the way we're doing this is, CMS has come up with a Composite Quality Index and as the name indicates, the index is a combination of the various clinical measures. We break the index into two components, process versus outcomes, then we weight them proportionately to the measure set in each clinical disease group to come up with an overall composite quality score. Now as I mentioned, we are using quality measures, 34 quality measures. We have outcomes and processes, but they're nationally accepted measures through the National Quality Forum and Joint Commission, and obviously the AHRQ organization.

On the incentive side, what we do is we use that Composite Quality Index with all the measures included, and we use that to identify the top performers. Now actually the project defines top performers as those in the top 50th percent. So those hospitals that are in the top 50th will be recognized publicly on the CMS Web site and their individual quality indicator results will be posted. Now the transparency will not include the actual composite scores. We felt since these hospitals were already top performers as compared nationally, that we should not rank them publicly.

On the payment side, the top decile performers will receive a 2 percent additional Medicare payment for the patients in each clinical focus area, so each of the five there will be different groups of recipients of the awards. And then performers in the second decile will receive 1 percent Medicare payment. The payments take place each year, so they'll be three separate payment offerings.

There is a performance threshold for this project. It will be established after the first year of the project, which started last October, and it will be at the 9th and 10th decile as represented by the red line on the graph. But it's important to understand that the project is designed to raise every hospital's performance in such a way that the entire group will improve. As this example shows, the lowest performing hospitals in the third year may be scoring much higher than the lowest performing hospitals in the first year.

We also expect to see compression of the performance deciles. In other words, we're going to lower variation with quality, and that the top performing hospitals are already at, or very near 100 percent performance at many measures and we believe that, that will happen by the third year.

The potential for reduced payments does exist only in the third year of the project, and any hospital below the threshold established in year one would face a reduction of 1 percent for performance in the 9th decile, and 2 percent in the 10th decile. We strongly believe that this will not happen to any of the hospitals. We believe that a rising tide will lift all the boats up, as the expression goes. Now, however, there is no specific reward for specific improvement or the most level of improvement. So I agree with Meredith-building programs that reward improvement is critical.

Penny Daniels: Stephanie, have you collected enough data at this point that you're seeing any performance trends among your hospitals, participating hospitals?

Stephanie Alexander: Just this week we actually got the first six months of data analyzed. It is preliminary, but we were able to get to it to you. And we're extremely excited about the improvement. We're able to compare the first six months to baseline data that we had collected before the project already started, and in general what we're seeing is that performance is going up in most every indicator. In the example shown, heart failure for example, each process indicator has improved as well as the overall composite score.

We also compared the first quarter, the blue bar, with the full cumulative six months of data for all 34 measures. This is a composite score that is only relevant to this project, not to individual hospitals. We're just taking all five disease groups and looking at all 34 measures, and as you can see, there is an improvement from top to bottom in each of the deciles. So we are excited about the improvement so far.

54 minutes

Penny Daniels: Do you have a sense of why exactly performance is improving?

Stephanie Alexander: I believe it's the combination of the competition, the organizational focus that the CEOs and C Suites in these hospitals have for this project, the public, the potential public scrutiny, the transparency of the measures, and the incentives. The hospital CEOs are competitive; they want to do well, particularly when their results are public. And of course, they want the incentive payments as well, building upon what you've heard in Gary's research.

Penny Daniels: Any final thoughts before we move on? What have you learned?

Stephanie Alexander: Most importantly we've learned that hospitals are not just willing-in many cases they're extremely eager to participate in these sorts of efforts. A lot of hospital leaders believe in quality improvement, and want to improve the payment system so that it rewards high quality, and doesn't ignore it. And we also learned that it's extremely important to align the physician payment to these types of rewards, given that was one of the biggest issues at the beginning of this project. Some of the hospitals didn't join because they felt like as hospitals were incentivized, physicians ought to be as well.

Penny Daniels: Very interesting, Stephanie. Thank you so much. Dr. Robert Galvin now is in charge of health care purchasing for General Electric Corporation. GE, of course, has a major interest in this subject because it spends more than $2.5 billion every year on health care, for more than a million people. That includes current GE employees, GE retirees, and all of their dependents.

Bob, speaking from your vantage point with one of the largest private employers in the country, what are major U.S. corporations doing to get more value for your health care dollars?

Dr. Robert Galvin: Let me take a step back for a second to a couple of things. The first is, I've really never seen research, health services research, this relevant and this close to what's going on in the market. So thanks to the people in the room, on the phone, and I think to Carolyn, who has been funding this. Because it really is much closer than you usually see to what we're trying to do, so I think that's great.

As part of the step back, let me try and put pay-for-performance in some perspective, and it really goes into what we're trying to do with value. And that is, just to remind everyone, employers and the employees who are really paying for this-fund about half of the system; half of it is Medicare and the other public and the other half are employers and employees. We have been at this for a while. We've known for a long time that we're not getting near the value that we want to get out of this system. You know costs are going up at three or four times the consumer price index. All of the data out on the variation in quality just tells us that we're not doing a very good job of buying this health care for our employees, and the system really isn't delivering anywhere near what we want to. So our perspective is always-remember we're employers, so we work in companies that by definition are doing pretty well because they're still in existence, and they-the very clear paradigm outside of the health care sector which is, you keep driving quality better and better and efficiency better and better, and you end up with a better and better product.

So we think our role of employers is, how do we move the money-and it's about $400 billion on the employers' side in the country-how do we move this money in a smarter way so that we can advise the system to do that. So the slide that's up now kind of shows how we're looking at this, and I would also say that this strategy that you're seeing here came about really after the collapse of what we tried in the '90s, which was managed care. There was a time that many in the room might remember where we thought managed care as going along pretty well. But it ended up really not working, and when we looked at why we thought it failed, we thought what had happened was essentially two things, and one probably the most important in the system, consumer, or our employees and the clinicians who take care of them weren't constructively engaged. They were engaged, but not very constructively.

So a number of us got together, formed the Leapfrog Group, which now has about 116 members and represents over 30 million covered lives on the employers' side, and asked: How do we use our purchasing power to do better? That's what you see on this graph, and pay-for-performance fits in here. What this graph really shows you is we're trying to restructure the system with our payments really based on three principles that you see there. The first is transparency, which is every employee, every family member should know the performance of every doctor or hospital they're going to all the time. The next is that they should be incentivized to choose the best care, and particularly, and that's what we're talking about today, that the doctors and hospitals that provide the care ought to be rewarded for what they deliver.

If you were to look at the rest of the chart, it gets to our top version, we think, and it needs to be enabled by IT. But I mean really, that's the version, and I would just say that we say we think we're doing pretty well with transparency; there is some really exciting stuff going on in transparency. I think Leapfrog has catalyzed some of it; NCQA, CMS, National Quality Forum, and lately we've been very happy to see the AMA and the American Hospital Association all coming on board to really commit to make performance measures public. So we think that's great, and that's happened in a pretty short period of time.

We think that's necessary, but we don't think that's sufficient. And we think what really is going to be sufficient is getting the payment's system right. So the slide that's up now is just to show the latest on how many initiatives we have. It was mentioned before, that 35 number had been doubled or more. This was funded by The Commonwealth Fund. This is just up for reference for the people on the Webcast at the Web site. This is a free, searchable Web site, and there are over 80 initiatives, pay-for-performance initiatives, in the private and public sector going on.

Now I'm going to talk about one of them, if you move to the next slide. This is just an example, this is one of the 80, and it's one that was studied in Rewarding Results, and also in Meredith's research and it's called Bridges to Excellence. The bridge is across the chasm and trying to get to excellence. What we tried to do here was something a little bit different than we saw what managed care had done in the '90s in a couple of ways.

First, we really tried to engage doctors in it, so doctors were basically the architects of this system. They worked with a bunch of employers to develop a system, because if you're going to reward, we thought it made sense to ask them what they thought a reward was. And we found out a lot of different things than we would have done sitting in our rooms. So physicians were a major part of deciding what the reward was.

The second thing we did, and it was brought up I think by a number of the speakers, is if employers are going to do this, we want to drive quality, but we want it to save money. So we went out to independent actuaries, and basically said, let's start somewhere, this is 1.0. Let's start where we think doing the right thing also saves money. Where we went out, and we ended up; we happened to begin with diabetes, which is on this slide, so that's the second thing we think we did differently.

The third, again going back to this Leapfrog principle, is how do we get the consumer, the employee, the patient engaged in this? You'll see that on the charts. I think those are the three different kinds of techniques we used versus the '90s when I think a lot of managed care plans also trying to reward did it in a way that I don't think captured consumers or clinicians as well as we hope this does.

Basically just to go over this in a second, this is nephro-diabetes. We essentially said to physicians: If you can get recognized or certified, which meant that they had to be pretty good at treating diabetes. They had to not only do the right things in the office; the cholesterol levels had to be at a certain level; the blood sugar levels had to be at a certain level, and if they were, and you could get certified-and this was done by NCQA, which is a very trusted source, then our actuaries told us that would save $350. And what used to happen is, if you saved the $350, the money would all go to the employer, or the money would all go to the health plan. And because providers, doctors were part of this, they said, "Let's split this."

So we ended up splitting the money. We called it gain-sharing. Interesting in the conversation, if you look at that slide, when we were trying to figure out what to do about consumers, we, the employers, who should be very close to our employees, were really saying, "Let's get to that in Phase 2," and what the doctors said was, "There is going to be no Phase 1 unless you really engage consumers," and they said for diabetes we can do a great job. But if the patient goes out and gets some Twinkies or has a cheesecake, we can't keep the sugar down; we can't keep their cholesterol down. So you can see that part of the incentive also goes to the patient or the employee. So at the bottom it just kind of shows how much money gets shared, and I think some of the research has shined a nice light on whether that is or is not enough. But that's the idea of the program.

Penny Daniels: This is really very interesting. I guess the bottom line is: is it working? Are you seeing more quality, and are you saving money?

Dr. Robert Galvin: That's what we depend on the health services researchers to tell us. They've heard a little bit before-it is early and we're just getting some early data back. But I can tell you from an operational point what's going on because remember, we've got to get enough people involved; we've got to get enough patients involved, and enough physicians involved really for the researchers to have enough data to tell us if it's working or not.

We've got some challenges, and I think you've heard some of this in what Gary just said. Doctors are signing up, but they're signing up slowly. Part of it is just getting to them, and letting them know what is going on and I think some of it is what he mentioned, is the trust, and do they understand, and is the money enough. But that has been a challenge. Rewards are being paid out. We have some big ceremonies in Cincinnati and Boston where we've paid checks out. But the question is: what is enough? I think that was brought up in the research, and we're getting a better idea of what is enough. But we might need to pay out some more. That really goes into these programs as to how many payers are engaged? So in other words, if this is employer-driven, you need enough employers so they have enough employees who have diabetes, to get this paid out. And that is expanding, but it's not expanding fast enough.

We've had something exciting happen, which is United Health Group, one of the largest health plans in the country; it has like 20 or 25 million covered lives has licensed this product from [inaudible], and have a plan to disseminate this across their book of business, which I think will be a nice expansion.

The patient's incentives, you can see they're present, it isn't clear to us yet whether the $75 you saw is going to be enough. We simply don't know, we need the researchers to tell us. And the evaluations in process, we had actuaries tell us that this was going to save us money, and we are paying out the money to the physicians, I mean, but this is GE and UPS and a number of other financially savvy companies, and so we need to find out whether the business case is really showing out.

Penny Daniels: So what do you think the future holds in general?

Dr. Robert Galvin: I think I've been at this for a while, and I bet a lot of people on the phone have been at this for a while and I think what you realize when you're trying to do new things, mid-course corrections are the rule, not the exceptions. So we've tried to take what we've learned, and what I just told you on the last slide, and we're really thinking about moving to a model, and cast a couple of pilots are starting out across the country that, kind of what this slide exemplifies.

And let me talk you through this slide for a minute. This is hospitals, not doctors, so we're moving to the inpatient. This happens to be one procedure, this happens to be coronary artery bypass grafting, so this is CABG. And this is a town, and what we did was we simply tried to find out who was doing the best in this kind of procedure in terms of both quality outcomes, in other words like President Clinton, where they might have a good outcome, you know was the surgery going to go well, were they going to recover? In terms of, as you can see on the y-axis, efficiency. How much it costs, because you know quality, better quality sometimes saves money, but better quality and better efficiency together always saves money, and I think that's 1-we're moving to a 2.0, because I think a lot of what you heard in the pay-for-performance that the researchers talked about, and all the models are showing are quality of loan. I think where you see this moving, I think it's a business case issue, is into this idea of integrating efficiency into the quality for the pay-for-performance.

So what this shows you, the bubbles are really the size or the number of people that went to these different hospitals over a couple or year period. And so just to go through this simply, in terms of effectiveness, if someone were to come to me as a physician in this particular market and say, "Boy, where do you think I should go for surgery?" If I had this data I would look at that vertical line and I would say, "Boy, you want to go to the right." So, hospital B, you're taking your chances, but if you go to E, F, or G, it isn't-the data aren't perfect, but the data indicates that these institutions are better.

Now as kind of a payer, a purchaser of this and remember-our employees are paying really the freight on this-the issue is, what's more efficient? When you look at efficiency models you now want to be below the horizontal line. So the bottom line is you want to be in the right-lower quadrant on this thing.

What this shows, and it's very interesting, this is a combination of a number of different employers over a short period of time, but if you actually do the math and you add up the bubbles in the right-lower quadrant, and put it over all the bubbles, the answer is 50 percent. So the answer at this point is about half of the people are going to the places that are both high-quality and most efficient. So I think what you're going to begin to see is in addition to integrating efficiency into this, you're going to begin see the benefit designs of a lot of employers changing to incentivize.

I don't know any employers that are thinking of doing anything but waiving co-pays or making it more economically beneficial to go to the better places. I think people are very concerned about penalizing the ill, or charging them more. But there are a number of pilots now beginning across the country where in fact, if a person has to pay $150, $200, or more to go to a hospital, they have their choice of wherever they want to go, where managed care restricted choice and people didn't like it. But in this model, you can go wherever you want in the network you signed up for, but if you go to specific hospitals, you simply won't have to pay the co-pay.

So I think there's a real 2.0 happening where we're going to work much more in incentives, much more on adding efficiency in and continuing to reply in pay-for-performance. Before I get off the stage I just want to say to all the health services researchers, and the AHRQ people in the room, and say we really would be very interested in finding out all the things you did on pay-for-performance. What kind of results are they going to bring?

Dr. Meredith Rosenthal: We would like your data.

Penny Daniels: Yes, you seem to have a lot on patient incentives, which is very interesting and a little bit unique, don't you think? This has been very interesting. This concludes our speaker presentations, but we have a lot more on this program because a lot of interesting information has come out, a lot of discussion points. A lot of questions have been generated, and I know you all have questions out there in the audience. Before we get to that, though, I have some administrative stuff I must take care of, and we'll get to your questions in just a few moments.

First, more information about the studies and programs we've been talking about on this program is available on the Web. You can find a list of these links by going to the registration Web site for this conference, clicking on the "Download Slides" button, and selecting "Supplementary Web-link Resources." There you'll find how to get the Evidence-based Practice Center Report, discussed by Adams Dudley, and the Health Care's article we talked about with Meredith Rosenthal. It also lists the URLs for AHRQ's Quality Improvement Resources, the CMS Demonstration Projects, and the Rewarding Results program talked about by Gary Young.

In a moment we will open up the discussion for questions as I said, but first there are two ways that you can send in your questions, so listen up. We encourage you to ask your question by phone. If you're already listening by phone, all you have to do is press * 1, to indicate that you have a question. If you're listening through your computer and you want to call in with questions, what you should do is dial 1-877-407-8289, the number that's up there on your screen and also that we mentioned before, and then press * 1. While you're asking your question on the air, please do not use the speaker phone. We all love those speaker phones, but we understand that it will be much harder to understand what you're saying, and if you've used a speaker phone, or been the recipient of one, you know that is the case.

If you're listening to the audio through your computer it's important that you turn down your computer volume after speaking with the operator, because there is a significant time delay between the Web and telephone audio, and we will get feedback if you don't turn down the volume, so please do that.

If you would rather send us a question by E-mail, all you have to do is click on the button marked "Q & A" on your event window on your computer screen, then type in your question and then click the "Send" button. Please note that if you prefer not to use your name when you talk with us, that's fine, but we would like to know what State you're from, and the name of your department or organization. So please give us those details regardless of how you're sending your question.

As you're formulating your questions or queuing up on the phone lines I'd like to say a few words about our sponsors. First, AHRQ. The mission of AHRQ is to support and conduct health care services research designed to improve the outcomes and quality of health care, reduce its cost, address patient safety and medical errors issues, and broaden access to effective services. We would appreciate any feedback you have on this Web conference. At the end of today's broadcast a brief evaluation form will appear on your screen. Easy-to-follow instructions are included on how to fill this out. Please take the time to complete this form; it will be very helpful to us in formulating additional Webcasts in this series and others.

For those of you who have been listening by phone only and not using your computer, we ask that you stay on the line after the Webcast is over because the operator will ask you to respond to the same evaluation questions using your telephone key pad. Your comments on this audio conference will provide us, as I said to you, with a valuable tool on planning future events that better suit your needs.

Alternatively you can E-mail your comments on our program to AHRQ, at Now we go to our questions from our audience.

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