Tag Archives: health care reform

Back in the Saddle

So, the holidays are over, the Supremes have spoken and the backlash is started. So, I guess I should finish this thing.

Section 1323 of the PPACA gives money to the territories to help them enact the provisions of the PPACA. Puerto Rico (remember them) gets $925,000,000; and all the other territories get to split $75,000,000.

Section 1324 is entitled “Level Playing Field“. I don’t think they are talking about baseball, or cricket though. What is does say is that if a state offered plan is exempted from a law, then the privately offered plans in that state must also be exempted from the law. These exemptions are mostly in the areas of renewals, ratings, preexisting conditions, non-discrimination, etc. Presumably, this will maintain competition for privately offered plans.

Section 1331 gives states the right to establish different health care programs for lower income, but not eligible for Medicaid, individuals. These plans cannot cost more than an individual would pay for private insurance. The plans must also be competitively bid out to those who would provide the health care. One interesting point about these alternative plans is that people who participate in them cannot also purchase insurance through an Exchange. Presumable, this is to prevent double paying, or other cost increasing tactics.

Section 1332 gives states the right to do better. They can be waived from all requirements of the PPACA if they provide as much coverage as, without being more expensive than, and cover as many people as the PPACA, without increasing the Federal deficit (i.e., just giving everyone Medicaid). So, get out there and innovate, states!

Section 1333 deals with the sticky wicket that is the fact that insurance is typically sold on a state basis, and not a national one. Insurance plans can offer themselves in more than one state, but they have to be subject to any individual state laws that deal with insurance. These “compacts” as they are called here cannot be offered before 2016.

Section 1334 discusses multi-state health plans. These appear to be mostly the plans that will be offered in the exchanges, and requires that there be at least two such plans available through the Exchanges. States can increase the health coverage offered through these plans, at their own cost.

The next sections deal with reinsurance, and risk adjustment, so will probably take some more explaining.

Welcome back to the PPACA!

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Consumer Choice

Since the word on the street is that the Supremes will decide on this law by the end of June for sure – I am making a concerted effort to finish going through it before then.

Section 1312 is entitles Consumer Choice. Since one of the criticisms of this law is that it removes Consumer Choice – by forcing people to buy health insurance – let’s see what this section actually says.

The first part says that qualified individuals (defined below) may by qualified health care plans and that qualified employers (defined below) can provide qualified health plans. Those individuals can then pay the premiums. Oh boy.

All people who purchase individual insurance are considered part of a single risk pool. All people in the Small Group Market are part of a single risk pool. States can require that these plans be merged.

These Exchanges don’t prohibit individual insurance from being offered outside the Exchange and they don’t change what States already require to be offered.

It states then that the Exchanges are voluntary. No person has to participate in the Exchange. No person is compelled to purchase a qualified health plan. Unless you are a member of Congress. Members of Congress (and their staff) must purchase plans that are created by the PPACA, or are in an Exchange. Which of course leads me to the question – does this imply that members of Congress are not people?

There are no fees imposed if people choose minimum essential coverage outside of the Exchange. It creates brokers and agents to facilitate enrollment in the Exchanges.

Qualified individuals are people seeking insurance who are residents of the State they are seeking insurance in. Those people in prison or jail don’t count. Qualified employers are small employers who to choose to allow their employees to have access to the insurance plans in the Exchange. In 2017 the Exchanges are opened to large employers. You must be a citizen or lawful resident to participate in the Exchanges.

We still haven’t gotten to the fee portion of the PPACA – that will be exciting when we do.

Section 1313 relates to Financial Integrity of the Exchanges. They will keep receipts! They will be subject to investigations! Audits! If they are bad, the Feds will take away their allowance. (No really – they will reduce the payments they are eligible for under this Act). There will be GAO oversight about operations, administration, utilization, improvements, cost and affordability, and access.

We are 10% done! With 13 posts. You may end up seeing more than one a day as we get to the end. But onward!

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Moving into the future

The next set of sections are the 1300’s. The main title is “Affordable Coverage for All Americans”. Subtitle – Qualified Health Plans. Another scintillating section, I’m sure.

Sec 1301 – Qualified health plans are ones that are 1) certified 2) provide essential services (remember those guys!) 3) are offered by insurance companies that offer plans in silver and gold. No really, that’s what it says “silver level” and “gold level”. Don’t know what those are – I suppose we will learn that down the road.

Co-op programs offered by the state are included, as well as Medical Home type plans.

Unless specifically identified, self-insured plans are not counted as “health plans”.

I’m sure these details will be debated by health plans (or NOT health plans as the case may be) to get out of these requirements

Sec 1302 – Essential Health Benefits

We talked about these briefly in post “Sorry for the hiatus” but here they are in their own section.

Essential health benefits actually have more to them that offerings. They also have to limit cost-sharing according to the Act, and offer more metalized health plans – bronze, silver, gold and platinum. I’m really looking forward to figuring out what these are.

SO it is up to the Secretary (of Health and Human Services) to define these benefits, but they will be in these categories:

Ambulatory patient services

Emergency Services


Maternity and Newborn Care

Mental Health and Substance use services

Prescription Drugs

Rehabilitative services

Laboratory Services

Preventative, wellness and chronic disease services

Pediatric services – including oral and vision!

This last one is especially interesting, since it wouldn’t require separate insurances for dentistry – and presumably would alter the amounts that are reimbursed. Also, not all insurance plans currently provide maternity care.

It is sometimes argued that people shouldn’t have to pay for other people’s babies, but then health people shouldn’t have to pay for lifestyle induced diseases either then, under that logic. I think we all need to just accept that if we have a health care system at all, we are paying for other people’s choices. If we don’t like it – there are plenty of countries where the medical care is completely non-existent. Move there.

There are then lots of details about how you get certification. The required elements include: not weighting one section more than another; not discriminating against people due to age, disability or expected length of life; take into account diverse health needs; not denying this coverage to individuals (not sure how that is different than discriminating, but then I’m not a lawyer); no pre-authorization of emergency services (whoever once thought up the idea that what you should do when you are getting rushed to the emergency room is call your insurance company is probably 1) rich 2) a real jerk); not charge extra for out-of-network charges; and review this issues.

Cost –sharing gets some treatment as well. Cost-sharing, starting in 2014, shall not exceed $2600 for individuals, and $5150 for families. This is based on 223(c)(2)(A)(ii) of the Internal Revenue Code of 1986, so if that section is updated, so are these numbers. Also, the Act itself allows for increases based on premium increases.

Cost-sharing includes deductibles, co-insurance and copays, but not premiums, charges for out-of-network, or uncovered services.

Aha – we have now come to what the metals mean:

Bronze – plan provides benefits that are actuarially equivalent to 60% of the full actuarial benefits

Silver – plan provides benefits that are actuarially equivalent to 70% of the full actuarial benefits

Gold – plan provides benefits that are actuarially equivalent to 80% of the full actuarial benefits

Platinum – plan provides benefits that are actuarially equivalent to 90% of the full actuarial benefits

I don’t know about you – I like platinum.

Some people (under 30, poor, or those who cannot get affordable coverage otherwise), who may not want expensive metal health insurances, can get catastrophic plans instead. These plans have 0 benefits, until you spend the above numbers, although they do provide 3 primary care visits per year.

So that looks like there is an option for people who don’t really want much health insurance. Kind of like the liability insurance in the car world.


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Sorry for the hiatus – teething baby!

Subtitle C – Quality Health Insurance Coverage for All Americans

Section 1201

Here is the part that prohibits both denying coverage for pre-existing conditions, and prohibiting discriminatory health insurance rates. Insurance companies are still allowed to charge different rates for individuals or families, by geographic area, by age, and tobacco use. But not by gender. Or health status. Or medical condition. Or past medical claims. Or evidence of insurability. Or disability. Or genetic information! Or receiving health care at all.

It also requires that health insurance plans accept all employers and individuals, if they offer insurance to any employer or individual, although imposing enrollment time periods for changes are still ok. This coverage must also be renewable.

You can also still offer discounts for participating in wellness programs, subject to certain requirements, even if those wellness programs encourage things that could be described under the terms medical condition (like weight loss, or decreasing BMI). Reimbursements for fitness centers, diagnostic tests, encouraging preventative care, smoking cessation programs, and attendance at health seminars, as long as they are offered to everyone, are not subject to the requirements of other wellness programs.

Health insurance plans can also not discriminate against health care providers.

Individual and small-group plans must provide certain minimum “essential coverage“. Cost-sharing is subject to limitations. They have to provide child-only plans, if they offer any plans at all. And you can’t make people wait more than 90days for coverage.

There are also protections for people engaging in clinical trials, allowing them to participate in those trials, prohibiting conditions or limits on routine costs of participation, and prohibiting discrimination if they participate in the trial. It does not require them to cover the cost of whatever the clinical trial is studying, or the costs of creating data. NIH – you are still in the business of paying for that.

Section 1251

You don’t have to terminate any health care you had when the Act went into effect. Whatever insurance you had, you keep. Some of the provisions of the Act will apply to these plans, however (reducing excessive waiting periods, rescission elimination, extension of dependent coverage, and annual limits). Adult children provisions only apply if the adult child is not eligible for other group health insurance.

Section 1252 – Rating Reforms Must Apply Uniformly to all Health Insurance Issuers and Group Health Plans. The title says it all.

Section 1253 – Reports shall be generated for self-insurance plans. Reports I say!

Section 1254 – Studies shall be done! Of Large Group Markets! And to see if these reforms will cause more employers to self-insure. And whether self-insured health plans lead to lower costs. And whether insurance plans offer fewer benefits in economic downturns. And conflicts of interest of self-insured companies. Reports! That no one will probably ever read.

Section 1255 – effective dates!

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A Three-fer for you!

Section 1002 – Finally!

This section is entitled” Health Insurance Consumer Information.”  Here the Federal Government wants to help the states create programs to help the consumers of health care insurance (us!) navigate the sometimes difficult process. It offers grants to create both assistance programs, and ombudsman (I love that word. Om-buds-man. There are so many things you could do with that.) for dealing insurance.

To get the grant, you have to create these offices, which will help people file appeals, track what problems people are having with insurance, educate consumers, assist them in enrolling in group health insurance, and resolve tax credit problems. They also have to track this data, and submit it to the Secretary of Labor. There was $30,000,000 available in the first year, and then it has to be reauthorized every year after that.

And that, my friends, is IT for section 1002.

Section 1003 – Ensuring that Consumers Get Value for their Dollar

This section also amends the Public Health Service Act (remember that from the first day!). This section allows the Department of Health and Human Services to review premiums to ensure that they are not rising too quickly. Health plans that are found to have unreasonable increases must justify their increases. This premium review process will continue, with Federal government support, to identify patterns of increases. It also addresses how this premium review process will affect the Health Insurance Exchanges that are part of the overall larger mandates for health insurance. That comes in around section 1300 – so we’ll get to it. There are funds appropriated for this process, and states can apply for grants to get them of between $1,000,000 and $5,000,000 a year. Given that they allocated $250,000,000 for the whole process, they have enough money for every state to get the maximum.

This section also creates something called a Medical Reimbursement Data Center. These will help to develop geographically accurate fee schedules, update these using the best statistical tools, and make the information public, about both the fees and the methodologies. This attempts to address the issue of transparency in the fees – which directly impacts the doctors that are receiving reimbursements. However, the insurance companies are not required to give data to these centers. So how accurate they might be is debatable.

Section 1003 – done!

Section 1004 just lists the effective dates of the sections preceding, with 1002 and 1003 immediately, and the rest six months later. So they have been in effect for a while. Has everyone been enjoying their ombudsman?

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Sec 1001 – the final push

Since I’ve already determined that I will need to get through more than one section a night to get to the end of this law in a reasonable time, I’ll attempt to get through at least the end of Section 1001 tonight.

There are three remaining sub-sections. The first, while long, can be summed up rather succinctly. Entitled “Bringing Down the Cost of Health Care” it requires that health insurance plans submit details of their plan premiums (or revenues) versus losses (or claims).

We should pause for just a moment to recognize that this terminology implies something specific. When you go to the doctor, your insurance company doesn’t think this is a good idea that could potentially save your life – they see it as a loss to their company – the same kind of loss that the grocery store entails when they have to throw away expired milk. Insurance companies would like nothing better than for you to pay premiums every day of your life and never, ever go to the doctor. Unlike car insurance, or fire insurance, where there is a strong chance that you can go your entire life without needing the payout, people are going to go to the doctor. But, we shan’t dwell too much on the fact that insurance is a stupid way to provide a product that everyone is going to need as some point. The best insurance companies can do is try to have more healthy people than sick (at least that they pay for).

Ok, so back to the Act. The insurance plans submit a report with the claims, the costs for improving health care quality, and non-health related costs (often referred to as administrative costs). Then, if the plan spends less than 85% (for large market plans, 80% for small market) of the premiums on health care claims, or quality improvement, they have to give money back to the people who paid the premiums. This started in 2011. In 2014, this payment is based on a three-year average of the ratio.

The second part for tonight requires that plans have an effective appeals process for denied claims, that complies with these regulations , which give some basic timeframes for appeals.

The last part (oh the progress!) says it is called “Patient Protections.” These protections state that you can pick any participating primary care provider that you want. Additionally, that emergency services, if offered, are covered without pre-authorization (because not everyone remembers to call the insurance company on the way to the hospital when they are dying), and covered at the same rate, regardless of whether the doctor or the emergency room is ‘in-network’ or not. The Act defines emergency medical conditions in terms of what is reasonable to a layperson, rather than an insurance administrator, and an emergency service to be an exam and stabilization. It allows you to choose to pick a pediatrician for the primary care provider of children. Finally, the protections ensure that you do not need a referral to see a gynecologist or obstetrician. If you see an OB/GYN, then the care he or she authorizes is as if the primary care physician had done so. It apparently doesn’t require that the plans offer these cover ages, just discusses what happens if they do.

So, we have come to the end of Section 1001. Hopefully the Supreme Court Justices can hold off on their decision until I’ve finished the whole thing, and then they can just read this blog instead of the Act itself. 😉

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From my cold, dead, but presumably healthy (except the dead part), hands

The next part of Section 1001 (yes, we are still in section 1001) discusses ensuring quality of care. Quality of care is an important issue, or should be, to most people who are in the health care industry. The United States spends the most money per capita on health care of any country on the planet. We spend almost $2500 more per person than Norway, although as a percentage of GDP, Norway has us beat  However, the WHO ranks our health system as 37th,  our preventable deaths as  14th, and our life expectancy is 24th  (lower than Malta! – who has even ever heard of Malta?).

So, we spend more money than anyone – why don’t we have the best health? The PPACA supports addressing this question, and this next part of Sec 1001 begins to do so. The Act calls for a coalition of insurance providers, quality experts and other stakeholders to develop reporting requirements to improve health outcomes.  The whole reporting requirement comes into play in 2 years after the signing of the act – so now. The specific outcomes the Act wants to address include care coordination, case management, and chronic disease management. This section also addresses the concept of medical homes.

The Medical Home concept was introduced many decades ago, initially to improve the care of children who had multiple specialists dealing with their medical care. In the medical home model of today, also called the patient centered medical home (PCMH), the patient has a team of caretakers, starting with a personal physician. This physician should be part of a team that deals with care coordination, and integrates this care across the whole spectrum. The PCMH is intended to reduce cost while improving health. While there are many more details I could go into, the fact that this methodology was specifically addressed implies, but does not require, that the PPACA would prefer that health care providers implement these practices.

However, the PCMH is a vast change in the way that medicine has been practiced for many years. Currently, doctors are paid by seeing patients and doing things to them. Visits get one level of reimbursement, procedures another. The insurance company doesn’t pay a doctor to have a nurse call you to make sure that you are taking your pills (an example of one implementation of a PCMH intervention). The doctor has to pay the nurse out of their own income. So, for many single practice doctors, or doctors with high levels of Medicare and Medicaid patients (which pay less), implementing this would be very difficult. We’ll discuss the evolving payment structure of health care in later posts.

The Act also wants reporting on how to reduce hospital readmission (coming back for the same problem within a short period of time), patient safety and reduction of medical errors, and implementing wellness programs. That’s a lot to ask for doctors that are often struggling with making rent, paying malpractice insurance, and what was that – oh right, treating patients.

The wellness programs are where the 2nd Amendment comes into the situation. It is specifically designated as “Protection of Second Amendment Gun Rights”. No wellness program may ask for, or maintain, information about the lawful ownership of firearms or ammunition in the home of any patient. You also can’t increase insurance rates on a person who lawfully owns a gun. So even though 2,811 people, including 114 children died in 2009 from firearms, doctors can’t ask about it.  The confusion about this Act becomes clear here, because I know of at least one person who blames the PPACA for a new requirement to ask their patients about guns. Ah, Americans.

I estimate three, maybe four, more days on this section. Woo-hoo!


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Section 1001 – continued!

I did mention section 1001 was a doozy – right?

The next part Section 1001 discusses the prohibition of discrimination in favor of highly compensated individuals. In order to understand this portion of the PPACA, we have to delve into the Internal Revenue Code of 1986. I hope that we are not like the dwarves of, sorry – this should be Mines of Moria, Helm’s Deep, and dig too deep. (My Lord of the Rings knowledge is slacking – must watch all three movies in a row!)

The Internal Revenue Code of 1986 is the name Congress gave to the Internal Revenue Code of 1954 when they updated it in, you guessed it, 1986. (The Federal Government is renowned across the world for its inventive naming system.) It is also referred to as Title 26 of United States Code. Because one name isn’t confusing enough. The PPACA refers to section 105(h)(2) of the aforementioned IRC of 1986 in describing what requirements group health plans under the new system have with regards to highly compensated individuals.

So one implication of this is whether or not the awesome health care provided to the highest paid officers of a business, among others, counts as income for purposes of taxation. It does not, assuming that the business does not discriminate solely in favor of providing health care to the fancy pants employees, and leave the regular joes and joettes alone in the dark, crying out for their Lipitor. Health care plans are not allowed to give great care to the people in charge, and not include everyone else. In any case, the CEO must declare the excess reimbursement for the personal doctor that flies with her on the jet, and pay the Tax Man. (These prohibitions have always applied to self-funded insurance plans, but this part adapts and applies them to group health insurance plans as well).

The next section on ensuring Quality of Care has some nifty stuff about the 2nd Amendment in it, so we’ll save that for tomorrow. (Who knew that guns were so healthy!)


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Section 1001

Yes, Section 1001 is the first section. Hey – don’t blame me, I didn’t number this crazy thing.

The first four sections of the PPACA are grouped under the title “Immediate Improvements in Health Care Coverage for All Americans”. The first of these sections, section 1001, does several things. In part, it amends a previous document, the Public Health Service Act. This Act, enacted in 1944 with subsequent revisions, essentially created the Department of Health and Human Services. DHHS includes many federal agencies, with the most recognizable being the FDA, the CDC, the NIH, and the biggy, CMS. For those of you unfamiliar with acronym bingo, the first makes sure your meat contains a minimum of rat parts, the second tries to keep Contagion from becoming reality, the third trains scientists, and the last is Medicare and Medicaid.

Rather than changing existing text, the first part of section 1001, of the PPACA adds protections for the consumer of health care. Lifetime limits are removed completely. Annual limits are subject to certain requirements. It does allow annual limits on items that are not considered “essential health benefits”. These, benefits (defined in part 1302(b) of the PPACA, which is about 45 pages later than where we are) include ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance abuse treatment, prescription drugs, rehabilitation, lab services, preventative care, chronic disease management, and pediatric care, including dental and vision. I’m not therefore, sure exactly what isn’t essential care – maybe things that are covered under certain plans, like IVF, or elective surgeries, can still have limits. But that’s a heck of a lot of things that are now unlimited.

This part also removes rescission – or the ability of a health insurer to drop you because you are too expensive. The actual rates of rescission are hard to identify. Insurance companies have no incentive, and no compulsion, to publish these rates. As of the passage of PPACA, however, they can only drop you for fraud. They can try really, really hard to find ‘fraud’, but it does mean that there is some burden of proof standard that has to be followed.

Preventative care is the next section. It eliminates cost-sharing (co-pays or deductibles) for several items. Those services recommended, and rated ‘A’ or ‘B’ by the Preventative Task Force. This list is not very long – I’ve included a link here: Task Force Recommendations ; immunizations recommended by the CDC, all preventative care for children recommended by the Health Resources and Services Administration; preventative care for women recommended by the same agency, and not included in those from the Preventative Task Force.  Plans are not prohibited from adding additional services.

Does preventative care save money? Evidence is mixed, with much of it depending on how much health care the people saved through preventative care will consume in the future, and whether or not that care will be more expensive or less.  And preventative care unequivocally saves lives.

Coverage is extended until children turn 26 – without the restrictions of being in school. Given the state of the jobless recovery, this isn’t a bad thing for most people. Presumably this will end up being cost-effective, since those insuranceless 24 year olds will no longer just hoof it to the ER when they get the sniffles.

Then there are a whole list of standards about how information about benefits will be given to the public, including how many pages (no more than 4), what type font (no less than 12), what language (culturally and linguistically appropriate), and content (definitions, exceptions, cost-sharing, examples, minimum essential coverage criteria, contact information). This may be an example of excessive government regulation, but there are sections of the original Public Service Act that dictate what level of radiation you have to use on X-rays, so this is not new for the government.

I originally thought I would try to do one section per day, but this is quite the dense document, so I’m going to take more days per section, as needed, and boy, does 1001 need it.

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Health Care in America – a brief tutorial

Let’s start with some background. Why did we even need health care reform? What was driving the passage of this legislation? What does health care in American look like?

Health care in the U.S. is a patchwork of different institutions, at different times in a person’s life. Children are usually covered under their parent’s health insurance, if their parents have it, or a child-only policy. As with all health insurance the benefits of these policies can vary widely. Before PPACA, many of these policies would have both annual and lifetime caps.

If a child’s parents cannot afford health care insurance, either through work, if it is offered, or individually, states have lower-income health insurance plans that are available for small premiums, typically called CHIP or SCHIP plans. These plans are intended to cover those families that are not eligible for Medicaid.

When a child is from a family that meets the low-income and other qualifications for Medicaid, then they are eligible for this program, which is jointly funded by the federal government and the states.

Even with all of these programs, 11% of the nation’s children were uninsured in 2010.

In 2010, most insurance plans allowed children to stay on their parent’s insurance until they were 19, or 23 if they were enrolled in college. After that, you were responsible for your own health insurance. Most adults who have health insurance have it through their employer. There were no laws requiring employers to offer health insurance. The prevalence of employer-based health insurance arose during WWII, when wages were restricted. As any economist would tell you, this lead to non-wage offerings in order to entice workers. One of these was the employer paying for some or all of a health insurance policy. This was supported by the tax-deductibility, for the employer only, mind you, of this cost.

If your employer doesn’t choose to offer health insurance you have to either get it independently, which is usually more expensive due to the concept of adverse selection (the fact that people who need insurance are more likely to want to buy it) or go without. In 2010, 16% of the adult population did just that, and had no health insurance.

If you make it to 65, then you are eligible for the social insurance program known as Medicare. This federally run program guarantees medical care for all citizens over the age of 65. As of 2010, this program accounted for 3.6% of GDP. This was about 75% of what US defense spending was in 2010. It was also more than the GDP of all but 19 of the countries in the world. Because this is an age-based system, no person over 65 is technically without health insurance, although they don’t have to use it if they don’t want to.

What does it matter if people are uninsured? When people aren’t insured, they don’t go to the doctor regularly. This can lead to illnesses that are more expensive to treat, resulting in higher bills overall, when they do finally go to the emergency room, where they are required to be treated. It can lead to higher public health costs, as they are sick and continue to work rather than treating illness. It also forces them to spend money on health care that they could be spending on new cars and sweaters, which can lead to lower employment. Plus there’s the human suffering. But that’s harder to put a number on (but we can try!)

So there you have it, the basic motivation for why health care needed reforming, in 600 words or less.

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