In response to this morning’s blog about “gap” invoices being increasingly used to mitigate fee reduction(s) imposed on consultant surgeons, many emailed me and disagreed.
It is of no surprise the vast majority who disagreed work for insurance companies.
Some were quite vocal in the dislike of “gap” invoices.
They were of the opinion cost extraction was the ONLY way to reduce the cost of premiums.
That alone would make private health insurance more attractive.
Faced with a smaller number of potential or existing policyholders, insurance companies have sought to make the offering more attractive by making it cheaper.
But is cost extraction really the only way to make private medical insurance more attractive?
The implication of such a view, confirms the belief that price is the single factor when a patient takes out insurance.
GAP invoices, being diametrically opposed to that aim, should be resisted.
However, are patients really that fixated by cost?
Or are there other factors they consider?
Some patients are happy to pay Gap invoices. That suggests the cost is not the only factor.
Some are completely unaware of the fee reductions being imposed on their consultant.
So are they really that concerned with the cost?
To a certain extent of course they are.
All patients looking for a package with a private hospital, for example, will be price conscious.
However, that may not be the overriding factor.
Whilst they will certainly be looking for a value for money, it is more likely the perceived value of the package is more of a driver than just the cost.
Deeply involved in the perceived value is the reason the patient wants to be seen privately in the first place.
The prime reason a patient takes out private insurance is that they wish to be seen as quickly as possible, as conveniently as possible and by the consultant they want.
Yet insurance companies seem almost fixated with taking cost out of the private insurance market.
Seldom do they seem to be interested in what else the patient is seeking?
Seldom do they emphasize that a patient with medical insurance can be seen quicker and more conveniently.
Private health care is deemed to be expensive.
Whether it is or not is actually secondary.
What is more relevant is the perception it is.
So the insurance companies react by trying to take cost out. They begin a race to the lowest fee or to the bottom if you will. In doing so they sometimes shifting the emphasis away what the patient really wants.
To be seen not only at a reasonable cost but as quickly and conveniently as possible.
Keep reducing fees and sooner or later the fees will be so low the private consultant can no longer make a reasonable return.
Add in the fact there are fewer people who have private medical insurance now than at any time since the early 90s – and consistently reducing costs in search of a smaller pool of potential patients creates almost a perfect storm.
All of my clients have substantial NHS obligations which, incidentally, they perform to exactly the same skill level as their private work.
They are hard-wired to perform both in the best possible way.
So why does an NHS patient ask an MHM client if the consultant can see them privately?
By no means does that suggest a patient will pay any price to see their consultant of choice.
They want to see their consultant of choice and the most convenient time to themselves.
They do not, for whatsoever reason, want to wait
So why is it that insurance companies concentrate so much on taking cost out of the private healthcare offering, whilst almost failing to point out that private medical insurance offers rapid convenient access to a high level of facilities and a choice of whom the patient may see.
Doesn’t the existence and acceptance of GAP invoices, actually suggest that patients are prepared to pay more and not less to see a consultant as soon as they possibly can and where they wish?
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I argue with medical insurance companies all the time.
Let me, however, be very specific about when and why I argue with them. I argue with them when I think they are wrong or when I think they have made a mistake.
A real example will illustrate why and when to argue with an insurance company.
MHM has a client who performs a specific test at a consultation with a patient. He has done so on more than one occasion obviously and with patients holding cover provided by all the major insurance companies, I’ve invoiced for him many, many times. Per normal MHM won’t reveal who the client is, his specialism or indeed the true value of his charges. For the purposes of this example please assume the charge is £125 for the consultation and £75 for the test.
The invoice was raised and sent electronically to the insurance company. It detailed all the correct details i.e. patient’s name, complete address, date of birth, policy number, pre-authorisation number. The correct CCSD code for both the consultation and the test were used. It also indicated the correct price for each and a total value for the combination involved. In other words xxxx (the consultation) = £125. The yyyy (test) = £75. Total value = £200.
Surprisingly, when the remittance arrived electronically from the insurance, only the consultation had been paid. A note appeared on the remittance advice stating it was not possible to charge for a consultation and that particular test at the same time.
Except, you can.
Before picking the phone up to call the insurance company concerned I first visited the insurance company’s website. The codes were correct. The fees for each code were correct. There was no indication that the combination could not be charged alongside each other whatsoever. I was pretty certain even before I’d checked that I was right but it doesn’t hurt to check. I could have been wrong. More likely it could have been that the rules had been changed.
Establishing the facts is vital when raising invoices for medical billing. Actually its true of all commercial situations but is dependant on what is deemed to be a fact. What some claim to be facts turn out to be anything but sometimes. In this case, though the facts were as I thought them to be. It was perfectly acceptable to charge the two codes together. Only then did I call the insurance company.
Having passed the normal Data Protection requirements i..e patient identifiers etc, I asked WHY this particular charge had been reduced? It was explained to me that the combination was invalid. It was unbundled as they say. Except I insist it was valid, was not unbundled and further, the insurance companies OWN website said the combination was permissible. The phone went quiet for a while and then I was told the insurance company was wrong and I was right. The £75 would immediately be paid to the consultant involved.
Despite what you may think it is not unusual for an insurance company to make a mistake, admit they have made a mistake and then rectify it straight away.
Don’t, however, call an insurance company and twist the facts. By that I mean don’t call them and say their fee isn’t right and should be much higher. That is not a fact, it is an opinion. When faced with a combination of codes that can’t be charged together do NOT separate them into two invoices one being sent on a Monday and one on a Tuesday. Don’t unbundle in other words. Insurance companies may make mistakes but they aren’t stupid.
Its very much a case of “picking your arguments” and challenging an insurance company in the right way and on the right subject.
But is also very, very much a case of noticing that the insurance company have made a mistake and asking them to rectify it. The number one statement made to me by private consultant surgeons is that fees are too low (I agree for what its worth) and that insurance companies are really, really difficult to deal with. They are not.
As regards fees, however, if you want to increase your fees the first port of call is actually to check you have a) charged the right amount to begin with and then b) making sure you ARE ACTUALLY PAID the right amount. In the example above the £75 wasn’t lost, it was paid to the medical professional concerned.
Look at it this way. His total charge was £175. If I hadn’t noticed the £75 had been deducted in error, he would have received 43% less than he was perfectly entitled to be paid!
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Getting paid the most he or she can at the earliest possible date is the aim.
Such a simple aim but it is one that many sometimes forget.
How do you achieve that aim?
The first step is to make sure you are provided with all the necessary details to put on the invoice. Regardless of whether you invoice electronically or in paper form you will need this information. Without it you will struggle to raise an invoice. And thus the aim is harder to achieve. Let me provide you with three real examples I’ve had to resolve this morning:
The patient was (not his real name) Mr P. J Smith. If the invoice is being raised electronically you’ll need to know what the P stands for (was actually Paul). But – and this is the important point – I had to go away and look at the patient’s registration form which itself just had the initial. It was only when I looked down at the name of the policy holder that I saw the name Paul. It sounds really silly but a single omission like that needs to be resolved. Thus the aim is not met quickly and efficiently.
It was not on the registration form anywhere. Again if you are going to invoice electronically, you’ll need the patient’s postcode. Solution: go to the Post Office postcode finder on the internet and look it up. Simple solution but one that had to be done in order for an invoice to be raised. Again, although it only took a few minutes to resolve it was a task that should not have been necessary.
This one was more difficult. The solution involved telephoning the consultant surgeon’s secretary to ask what the date of birth was. She actually didn’t know and had to call the patient to find out.
Of course there are solutions to each of the above. For example: many of the on-line offerings will enable you to find the missing data. There is no major issue in sorting things like this out. They are more irritants. They have to be resolved but that really isn’t the point.
The point is that all three of the above should not have been allowed to happen.
If the aim of invoicing for a private consultant surgeon or any medical professional for that matter is to ensure they get paid, it must be done quickly and efficiently.
Cause and Effect
What was causing this issue? It is far too easy to blame someone. Blame the consultant surgeon’s secretary. Or blame the hospital for not ensuring the patient’s registration form was not completed correctly. It may be either. Interestingly, on many occasions when I’ve pointed out to a med sec the necessity of getting all the right details they have replied that they didn’t realise how crucial the information was. Nobody had told them! The problem thus goes away.
Let me illustrate by reference to a real MHM client. He held an outpatient clinic Monday evening and saw 9 patients. The clinic list was delivered to me electronically on Monday evening. By 10am Tuesday morning, all 9 patients had been invoiced.
But only because both he and his med-sec understand the importance of making sure all the patient’s details are correct and complete.
And thus he will get paid quickly.
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Every so often I take a phone call from a self funding patient. The patient requires a receipt for their payment. The patient can then re-claim the amount paid from their health cash plan provider.
For example: a patient visits a private surgeon and pays for their treatment. MHM issue a receipt on behalf of the surgeon. The patient can then claim the fee back from their Health Cash plan provider.
The Cash Plan Provider insists on a receipt as proof of payment before reimbursing the patient.
Alternatively the patient is insured but outpatient appointments are not covered under their policy. The patient has to pay before claiming the funds back from another source.
So what are Health Cash Plans?
Health Cash Plans are designed to ease the financial burden of having such regular health checks.
They are NOT the same as a private medical insurance policy.
Well on some occasions it has indeed transpired that the patient’s private medical insurance cover does NOT include outpatient appointments. Other items may be excluded too. Instead the patient has a health cash plan to cover the cost of their treatment.
But unlike full blown insurance cover, the patient is required to pay the charges they have incurred. They then re-claim the payment from the Health Cash Plan provider.
And that’s why they require a receipt.
Thus it is important to understand what a Health Cash Plan is and how it may compliment a private medical insurance policy.
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Top up (or GAP) invoices – asking the patient to agree to pay the difference between a consultant’s fee and the fee an insurance company is prepared to pay.
The discussion concerning them seems to take place more in whispers than anything else.
And sometimes they are even deemed to be almost a taboo subject because they don’t exist.
But they do.
So, and for the record:
I have no problem issuing them on behalf of my clients. Why and when?
Consider the case of a real consultant surgeon whose patient is quite happy to pay, for example, £852 for a surgical episode.
But the patient is insured with XYZ Insurance.
XYZ will only pay a “customary and reasonable fee” of £639. The fee was £852 but due to “market conditions” XYZ has reduced it by 25%.
Thus the consultant may now as part of his recognition protocol only charge £639
Most consultants actually perform the same procedure throughout the month.
Empirical evidence using MHM clients confirms they all perform, in their own specialism obviously, the same code(s) on average 5 times a month.
If that code happens to be the one reduced by £213 each time, the reduction in revenue is over £1,000 each month.
In the original scenario though, the patient has chosen to see that particular consultant.
His/her decision has zero to do with fees.
That is the consultant the patient has chosen.
If the patient is advised the fee for their procedure is £852 but their insurance company will only pay £639 towards it and then if they – the patient – is asked beforehand to pay the difference and agrees, where is the problem?
Ah no, say the insurance company, you can’t do that for that is above our customary and reasonable fees and anyway, you are risking your recognition with us.
This article is not about if they are right to potentially withdraw recognition if fees are not adhered to.
Neither is it about whether XYZ Insurance is right to reduce the fee.
The first thing consultants will all do is be deeply unhappy about the reduction.
The second thing they will do is attempt to mitigate the loss somehow or another.
And the second point is the more relevant one.
Many times I hear from insurance companies the market is contracting and cost has to be taken out to make the private medical insurance offering more attractive.
No argument from me on that BUT why is the cost reduction, or so it appears, being continually directed at the consultants?
Yes, I am aware that certain fees have gone up but overall fees have come down.
I’m equally opposed to those consultants who insist on ignoring insurance companies fee structures for every single procedure and/or episode.
I’m also very focused on taking cost out of any business so I can see where the insurance companies are coming from.
But not at the expense of continually reducing a consultant’s fee and thereby reducing his profit continually AND the patient’s right to a choice.
Top Up or Gap invoices are a reaction to consultants continually seeing their fees being eroded.
I haven’t said I completely agree with them for they should be unnecessary.
What I am saying is that I understand why I’m being asked to produce them and when.
Consider an actual quote to me recently from a very well established consultant surgeon.
An orthopod who has been in private practice for over 10 years:
That, perhaps, sums up precisely why some MHM clients are asking me to produce Top Up or GAP invoices.
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Per normal I was checking what was happening with shortfalls and excess over the weekend. Using a single private consultant surgeon as an example:
Week ending Friday January 22nd: out of 15 consultations 4 came back with excess / shortfall deductions totalling £575. So for a total of £2,500 worth of outpatient consultations £575 or 23% came back short. Looking back to the same week last year, the number of shortfalls / excess were considerably less.
The question as to why this is happening is not the concern. The concern is what are we going to do about it for if 23% continues the downside and potential loss to the consultant is significant. What to do about it? The very first thing to do is to make sure the patient has been invoiced for the amount due immediately. If payment is not received within a week then there is only one subsequent single course of action.
Phone the patient. I do. Once I have the patient on the phone I take payment via a debit or credit card.
Sure you can write letters and even email but nothing gets a response like a ringing telephone. Most patients are unaware of the issue (yes I know when they open their policy they are made aware of excess values) but some think this is an issue between them and their insurance company. In other words, the patient thinks they need to pay the insurance company because the consultant gets paid in full by the insurance company. There are variations on this but the crucial point for the consultant is not to establish why; its to ensure he recovers the shortfall / excess efficiently.That means speaking to the patient.
But if telephoning the patient is the most efficient way to tackle the issue, it does not automatically follow its the easiest. It has to be done professionally and with due diligence. The long suffering med-sec really won’t have the time to do this as professional and caring as she undoubtedly is. The majority of medical secretaries won’t want to phone patients for money and will be thinking this is the least enjoyable part of her job.
What if the consultant doesn’t employ someone to tackle this? What if they don’t do anything?
Assume it’s not £575 or 23% a week or £27,600 a year (£575 multiplied by 48 – not 52 weeks as you will have 4 weeks off a year). Assume instead its 10% for 24 weeks (i.e. roughly half) and allows for some patients paying without being contacted.
Thats still £13,800 per annum.
What’s significant is that when speaking to a group of private consultant surgeons I asked what they considered the biggest threat to their practice(s). Most popular is the anticipated further reduction in fees paid by private medical insurance companies. There is little if anything that can be done about that.
The second concern, however, is the number of shortfalls and excess. It’s becoming a big challenge and so it should be.
At this point, empirical evidence suggests its potentially leaving the back door wide open and enduring £13,800 worth of potential losses right off the bottom line.
I’d be really interested to hear from anyone who is seeing an increase in shortfalls etc and their views on remedies.
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I’m a really, really impatient person. I like everything done yesterday.
Which is why I go incredibly slowly to start with.
When I begin to raise invoices for a consultant surgeon, for example, I’ll check I have the right provider number. I’ll check all the online systems and EDI protocol are 100% accurate. Is the consultant’s address correct?. I’ll check the insurance company has the right BACS payment details.
What I’m actually doing is reducing down to absolute zero as many reasons as I can possibly think of that will prevent the invoice being raised correctly.
What happens if I don’t take this approach?
Invoices come flying back. They don’t come back straight away of course.
It may take weeks before I’m notified there is a problem. Then I have to work out why it went wrong, get all the details to put the error right, actually put it right and then resubmit the invoice.
Then I have to wait again for the invoice to be reprocessed. Eventually, the invoice gets paid.
One absolutely true example. Recently MHM project managed a group of three surgeons in the Midlands. All three were seriously considering closing the practice as they were not making any money. They were not getting paid as they should.
The senior of the three was responsible for invoicing for all three each week.
Just under 50% of the invoices he produced came back unpaid. The insurance companies concerned requested more details or raised query against them.
The senior consultant complained he hadn’t got enough time to keep sorting these things out. He had to raise invoices as quickly as possible. He tended to view any medical invoicing problem from the “quickest fix” point of view. To use his words “I only want to be a surgeon and not a whatever-you-call-it”
My kind of guy. Don’t talk about it. Get on with it. Play to your strengths. Save that is precisely what he was not doing.
He jokingly told me his blood pressure was sky high due to the constant stream of invoice problems.
Yet it was this “quickest fix” approach that was the cause of his blood pressure. Many times his quick fix in one area (get them on the phone or treat the patient as a self-funder for example) caused a problem in another area. Then he had to fix that.
This was leading to a six /seven-week delay before invoices were accepted by insurance companies on top of the agreed payment terms.
It took me two months to re-map the process, test, amend it and bed it in. In month three we started to see the results. Invoice failure rate had dropped from roughly half to below 6%. Cash flow had doubled. The time with which the three consultants got paid decreased from around every 75 days to about 50.
All three consultants were happy. Imagine the surprise though when I told them that wasn’t good enough?
I thought we should see at least a 98% acceptance rate and to be paid every 30 days. And I wanted to achieve that as of yesterday starting with raising the invoices every single day rather than weekly. The invoice process was robust. There were very few errors. There were few reasons why we shouldn’t be paid.
Told you I was impatient.
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One of the major areas MHM is approached about is excess and shortfalls.
As at May 2015, empirical evidence indicated 26% of all claims to private medical insurance companies are subject to an excess/shortfall. This is not to imply the insurance companies are only to blame.
The reality is that patients have reduced the costs of their premiums over the last few years by agreeing to a higher excess.
But the knock-on effect of this has been an increase in excess deductions made.
So what can the private consultant surgeon do about it?
The number one rule in tacking the thorny issue of excess deductions is to identify when they happen. This is actually very easy. The remittance from the insurance company WILL confirm when an excess or shortfall deduction has been made. It most likely will also state their insured (the patient) has been notified.
But under no circumstances should the problem be left at that.
The practice must, at the very least, action all shortfalls straightaway. Under no circumstances should this be allowed to exceed 7 days. Excess or shortfall deductions made again MHM clients are actioned within 48 hours. Such action may be an invoice for the amount of the excess/shortfall immediately sent to the patient. The invoice must state how much is due, why and how it should be paid.
This must be followed by a very robust process that makes sure such invoices are followed up.
If you want a complimentary PFD of the invoice MHM uses for excess or shortfalls, email me at the address below:
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Some consultant surgeons aren’t fully familiar with the fees paid by different medical insurance companies for the same surgical episode. Consequently, they actually undercharge without even realising it.
Surgeon A is an ENT consultant surgeon. He performs an E1910 on two different patients. He bills both the patient’s insurance company £1,600 each. No problem except Patient ONE’s insurance company fee structure is £1,600 for an E1910.
Patient TWO’s insurance company fee structure is £1,945 for the same E1910 episode.
Surgeon A has therefore by invoicing Patient TWO’s insurance company £1,600 i.e. the fee he gets from Patient ONE’s insurance company undercharged by £345
Surgeon B is a gynaecologist but has the same issue.
He performs a Q0800 on two different patients who are insured by separate insurance companies. He invoices both insurance companies at £636 each. Save Patient ONE’s insurance company’s fee structure is £636 whereas Patient TWO’s insurance company’s fee structure is £800.
Surgeon B, by using the fee structure for Patient ONE only, has undercharged by £164
Both carry on billing not realising that the fee depends on whom the patient is insured with. And different private medical insurance companies publish different fees for the same surgical procedure.
To illustrate we checked four different medical insurance companies this afternoon in order to confirm the fees for an E1910. The fee were £636, £676, £775 and £800. We then turned to Surgeon B and the medical code of Q0800 and found the fees were, dependant on which medical insurance companies we checked, £636, £676, £775 and £800.
Don’t set fees at the level published by a single insurance company.
Check which fee is paid by which insurance company for the same procedure. Don’t assume they are the same because they may not be. A published medical fee for the consultant surgeon can and does alter not only between private medical insurance companies but can also alter over time. In every single case, it’s always worth checking the fee structure paid and not assuming it is the same across all private medical insurance companies.
Normally, of course, the medical secretary is assumed to know who pays what. But to expect an already overworked medical secretary to check each time before she bills is, in plain English, not really an option.
Invoice for two different codes in the same surgical episode incorrectly and it’s easy to get into even more trouble. For example Insurance Company X may allow 100% of the higher value code and 50% of the second but Insurance company Y may allow 100% of the first but only 33% of the second. Imagine what happens if all episodes are billed at 100% and 33%. Immediately you’ve lost 17% of your second fee.
It’s even more fun when careful attention is not being paid and 100% of the LOWER value fee is claimed and 50% of the HIGHER value fee, as well as both fees, being lower due to the insurance company the patient is with.
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Reality is, the question itself is incorrectly asked! A consultant surgeon or other medical professional doesn’t set his/her own fees. Instead the fees payable are designated by the private medical insurance company with whom the patient is insured.
Take ANY surgical episode (or consultation for that matter) and you’ll discover the fee payable by one insurance company will differ between that set by a second insurance company even though the same episode takes place. So it’s the insurance company that sets the fee and the fee can differ between them.
Taking the above example further using a fictitious CCSD code of XX4321, insurance company A may set the fee at £100, insurance company B set the fee at £125 and insurance company C at £150. Across them there is a difference of £50.
The problem arises when the consultant makes a mistake and bills insurance company C with the £100 set by insurance company A, and immediately looses £50.
That said, if insurance company A is billed insurance Company C’s £150, immediately the consultant is shortfalled. The suggested (and WRONG) solution is to pass the shortfall to the patient. By all means do so up to the point, insurance company A realise what is being done. Keep doing it and your recognition will be at serious risk!
Yet consistently many consultants complain that the fee is too low (which it probably is) but don’t realise it is because they are charging £100 when the insurance company concerned will happily pay £150.
How do you manage such a situation and set your fees?
You don’t. You employ an outsource company to make sure you are invoicing the right fee in the first place!
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Since private medical insurance first began, the number one route by a patient to a consultant surgeon has been the patient’s GP. Most time the patient will follow the GP recommendation but what if they don’t?
What does the private patient look for in a consultant surgeon?
Ease of access is the most often quoted reason a patient chooses a specific consultant. This is a logical progression from why the patient has private medical insurance originally – because he/she wishes immediate access to a consultant surgeon. Allied to this is the location of the consultant surgeon.
But how does the patient narrow down the search if there are many consultants to a geographic area all of whom are easily accessible?
The patient will look for recommendation from friends and colleagues who have been patients of the consultant. They almost certainly will check the internet for the consultant’s website. That said, it is not unusual for the patient to check the website AFTER making an appointment. Further still there is a gender divide with almost 90% of female patients looking at a consultant surgeon’s website but only 50% of male patients.
However, the story doesn’t end there. Empirical evidence confirms the first impression of a patient when he/she contacts a Private Medical Practitioner is a big influence on whether the consultant is actually engaged.
It is perhaps significant that one MHM client insists the telephone is answered within 3 rings and enjoys an extremely busy initial patient schedule. A second uses an answering machine service but consequently has a much lower number of initial patient consultations.
So, the patient is looking for ease of access to the consultant, a good reputation and to be managed by the Practice extremely professionally.
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Most consultants are concerned, quite rightly, with how and why a patient has chosen to see them. Before asking the question why and how does a patient choose you as a consultant an early question is asked. Why have the patients taken out private medical insurance originally?
There are three major reasons.
Empirical research on the patients of MHM clients indicates whilst most private healthcare originates via a patient’s employer, even if the insurance is paid for privately, the number one reason for holding private healthcare cover is to avoid and cut short NHS waiting lists. This is the primary reason patients have private medical insurance cover.
But whilst private health cover gives a prompt access to treatment, the second reason for having private healthcare insurance is that it offers the additional benefit of when and where the patient may be treated. Aligned to this is the ability to recover, if surgery is necessary, in a private suite, which is more convenient to both the patient and his/her family.
Thirdly, and finally, private insurance offers a choice of a consultant to the patient.
Before considering why a patient should choose to see you as a consultant, it is equally useful to consider why the patient has private medical insurance in the first place.
The major reasons patients choose to take out or receive private medical insurance are, in the main, three:
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