Additional Prompt Payment/Clean Claims Information
Prompt Payment of Health Care Claims Emergency Rules Summary(August 2003)
As allowed by the Legislature, the Texas Department of Insurance has adopted emergency rules to implement the prompt pay provisions of SB 418, 78th Regular Session. The rules are effective as of August 16th, when the legislation goes into effect for contracts written or renewed, and for certain services provided by non-contracted physicians and providers, on and after that date.
The emergency rules, as well as the proposed rules, can be accessed on TDI's web site at www.tdi.texas.gov/rules/2005/parules.html
On July 4, TDI proposed for public comment new and amended rules to implement SB 418, which apply to health maintenance organizations and insurance carriers that write preferred provider benefit plans. Commissioner Jose Montemayor conducted a public hearing about the rules on August 7th. While the department intends to adopt final rules in the near future, it decided to adopt emergency rules to cover the period between the law's effective date and final rule adoption. The emergency rules will be withdrawn when final rules go into effect.
Among other things, the emergency rules add definitions of terms, including the term "billed charges," which is defined as the charges for medical or health care services included on a claim submitted by a physician or provider. That definition provides that billed charges must comply with all applicable requirements of law, including the requirement that a provider may not submit a bill for treatment that it knows was not provided or was improper, unreasonable, or medically or clinically unnecessary.
The rules also clarify the calculation of penalties on late and underpaid claims and specify that an insurance carrier's ability to recover fraudulently billed payments is not affected.
With regard to the verification process, the emergency rules provide that an HMO or carrier must respond to a request for verification without delay but in no case longer than five days, with not later than one hour to respond to requests for verification in a life-threatening situation and not later than 24 hours for concurrent hospitalizations.
The rules also set forth 13 informational items that must be supplied by a physician or provider requesting verification, and give the carrier one day to request any necessary additional information. The rules contain other provisions that implement SB 418, including elements of a clean claim; deadlines and procedures for claims filing, processing and auditing, and recovery of overpayments; late payment penalties; disclosure of claims processing information; and reporting requirements.
In addition to the foregoing, the emergency rules contain two provisions that were not contained in the original proposal: requirements for patient ID cards issued by HMOs and preferred provider benefit plans, and a waiver of the rules' requirements for services and benefits provided under the the Medicaid and Children's Health Insurance Program, as requested by the Texas Department of Health and Human Services. These provisions will also be proposed for public comment prior to their permanent adoption.
Prompt Payment of Health Care Claims Proposed Rules Summary(June 2003)
The Texas Department of Insurance has proposed the following new and amended sections of the Texas Administrative Code: 28 TAC §§21.2801-21.2809, 21.2811-21.2819, 21.2821-21.2825, 3.3703, 11.901, 19.1703, 19.1723, and 19.1724. The proposed rules are to implement Senate Bill 418, which was enacted during the 78th session of the Texas Legislature. The bill amends Texas Insurance Code Article 3.70-3C, concerning preferred provider benefits carriers, and Texas Insurance Code Chapter 843, the Health Maintenance Organization (HMO) Act, to provide comprehensive changes to the procedures and requirements governing the processing and payment of "clean" claims submitted by physicians and providers.
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- Submission of Clean Claims
- Utilization Review Agents
- Physician and Provider Contracts
- Preferred Provider Plans
Senate Bill 418 and the associated rules apply to contracted physicians and providers in HMOs and preferred provider benefit plans. Some of the proposed rules (prompt payment and verification) also apply to non-contracted physicians and providers who provide emergency care or care on referral when services aren't reasonably available within the HMO's or preferred provider benefit plan's network. The law became effective on June 17, 2003. The rules are proposed to become effective on September 4, 2003. Because SB 418 applies to contracts between carriers and physicians and providers entered into or renewed on or after the 60th day after the statute's effective date (which is August 16), it allows the commissioner to adopt rules on an emergency basis. If necessary to promote consistency of implementation, TDI staff may recommend that the commissioner adopt emergency rules in a separate proceeding to cover the period between August 16th and the date these proposed rules go into effect.
Note: This document uses the terms "physician," "provider," and "preferred provider" throughout. HMOs and preferred provider benefit plans are referred to collectively as "carriers."
THE FOLLOWING IS A SUMMARY OF THE PROPOSED RULES. IN THE EVENT OF ANY PERCEIVED CONFLICT BETWEEN THE SUMMARY AND THE PROPOSED RULES, THE TEXT OF THE PROPOSED RULES CONTROLS. ONLY TIMELY AND APPROPRIATELY SUBMITTED COMMENTS ON THE ACTUAL TEXT OF THE PROPOSED RULES WILL BE CONSIDERED IN THE FINAL ADOPTION ORDER. THE RULES AS FINALLY ADOPTED MAY DIFFER FROM THE PROPOSED RULES.
Claims Submission Deadline
Physicians and providers must file claims within 95 days of the date the health care service was provided. Unless failure to timely file is due to a catastrophic event, physicians and providers who do not submit claims within the 95-day timeframe forfeit the right to payment. Carriers and physicians and providers can agree to longer (but not shorter) deadlines by contract.
What is a Clean Claim?
The law and rules provide for two types of claim submissions - non-electronic submissions (claims submitted by mail, hand-delivery, or fax), and those submitted electronically. For non-electronic submissions, a claim is considered "clean" if it contains all the required data elements set forth in the rules and, if applicable, the amount paid by the primary plan or other valid coverages. Claims submitted electronically are considered clean if they are submitted using the ASC X12N 837 format and are in compliance with federal Health Insurance Portability and Accountability Act (HIPAA) requirements related to electronic health care claims, including applicable implementation guidelines, companion guides, and trading partner agreements.
Clean Claim Elements
The data elements required for a claim to be considered clean are standardized by rule. For non-electronic claims, the law and rules primarily rely on data elements collected on standardized forms developed by the Centers for Medicare and Medicaid Services (CMS) - the CMS 1500 and UB-92. Required data elements are listed in Section 21.2803 of the proposed rule.
Carriers may not require physicians or providers to submit data elements other than those stipulated in the rule. Nor may carriers require attachments to establish a clean claim. Claims submitted electronically must be compliant with HIPAA.
Once a Claim is Filed
The law and rules establish various deadlines for carriers to act following submission of a claim. Carriers must take action on the claim within 45 days of receipt of a non-electronically submitted claim, within 30 days of receipt of a claim submitted electronically, and within 21 days of receipt of an affirmatively adjudicated electronically submitted pharmacy claim.
Prior to expiration of the statutory (21 days, 30 days, or 45 days) deadline, the carrier must either
- pay the entire contracted amount of a clean claim
- deny the entire claim and notify the physician or provider why the claim will not be paid
- pay part of the claim and deny or audit the remainder and pay 100 percent of the applicable contracted rate for the audited portion and notify the physician or provider
- notify the physician or provider that the claim is being audited and pay 100 percent of the applicable contracted rate
- notify the physician or provider that the claim is deficient.
Requests for Additional Information
The carrier may make one request to the treating physician or provider for additional information to process a claim. The request must be made within 30 days of the date the claim was received. The carrier must be specific about the additional information requested and may only request information that is in the patient's medical or billing records and that is relevant to the resolution of the claim. If a carrier requests additional information, the carrier's deadline for the carrier to act on the claim is suspended until the additional information, or a response that the physician or provider does not have the information, is received. Once the carrier has received the requested information, it must act within 15 days of receipt of the information or by the statutory deadline, whichever is later.
A carrier may also request additional information from a third party. If a carrier requests information from a third party, it must notify the physician or provider of the request. The carrier's deadline is not suspended for requests for information from third parties.
If the Carrier Audits a Claim
Carriers that opt to audit a claim must pay 100 percent of the applicable contracted rate and notify the physician or provider of the audit in writing within the statutory (21-, 30-, or 45-day) deadline. The explanation of payment to the physician or provider must clearly indicate that the claim is being audited. A carrier that audits a claim may request additional information within the audit period. The carrier must notify the physician or provider that the additional information must be provided within 45 days, and may recover the amount paid if the physician or provider fails to respond within the time limit. Audits must be completed within 180 days of the date the claim was received.
Physicians and providers may appeal the results of audits. Appeals of audits must be made within 30 days.
Coordination of Benefits
Carriers may not require physicians or providers to investigate coordination of benefits with other coverages. Physicians and providers are required, however, to maintain information about a patient's other coverages. In instances where multiple coverages apply, the physician or provider must file a claim with the secondary payor within 95 days of receipt of the determination of the primary payor. If a carrier that is a secondary payor overpays a claim, the carrier must recover the overpayment from the carrier that is a primary payor. However, if the primary payor has already paid the claim, the secondary payor may recover overpayment directly from the physician or provider.
Submitting Duplicate Claims
A duplicate claim is any claim for payment for the same health care service provided to a particular individual on a particular date of service that was included in a previously submitted claim. Physicians and providers may not submit duplicate claims before the expiration of the statutory (21-, 30-, or 45-day) payment deadline. A duplicate claim does not include corrected claims or additional information provided to satisfy a carrier's request. Physicians and providers are required to indicate on the claim form whether the claim is a duplicate claim or a corrected claim.
A carrier must request refunds for overpayments to physicians and providers within 180 days of the physician or provider's receipt of the payment. If the carrier does not make the request for refund within the 180-day deadline, the carrier forfeits the refund of the overpayment. A physician or provider has 45 days to appeal a notice of overpayment. A carrier may recover an overpayment if all appeal rights have been exhausted and the physician or provider has not made arrangements to refund the overpayment to the carrier on or before the 45th day from the date of receipt of the notice of overpayment.
Late Payment Penalties
Carriers are subject to penalties for late payment of claims to contracted physicians and providers based on the number of days the payment is late:
- If the carrier pays a clean claim between one and 45 days late, it must pay the full contracted rate of the services provided plus either 50 percent of the difference between the billed charges and the applicable contracted rate or $100,000, whichever is less
- If the carrier pays a clean claim between 46 and 90 days late, it must pay the full contracted rate of the services provided plus either 100 percent of the difference between the billed charges and the applicable contracted rate or $200,000, whichever is less
- If the carrier pays a clean claim 91 or more days late, it must pay the full contracted rate of the services provided plus either 100 percent of the difference between the billed charges and the applicable contracted rate or $200,000, whichever is less, plus 18 percent annual interest on the penalty amount, accruing from the date payment was originally due and through the date of actual payment.
Carriers are also subject to penalties for late underpayment of clean claims:
- If the carrier underpays a clean claim between one and 45 days late, it must pay the full contracted rate of the services provided plus either 50 percent of the underpaid amount or $100,000, whichever is less
- If the carrier underpays a clean claim between 46 and 90 days late, it must pay the full contracted rate of the services provided plus either 100 percent of the underpaid amount or $200,000, whichever is less
- If the carrier underpays a clean claim 91 or more days late, it must pay the full contracted rate of the services provided plus either 100 percent of the underpaid amount or $200,000, whichever is less, plus 18 percent annual interest on the penalty amount, accruing from the date payment was originally due and through the date of actual payment.
- The underpaid amount, for the purposes of calculating the penalty payment, is calculated on the ratio of the amount underpaid on the contracted rate to the contracted rate as applied to an amount equal to the billed charges as submitted on the claim minus the contracted rate.
The rule provides an example of how penalties for underpayments are calculated.
A physician or provider must notify the carrier within 270 days of receipt of an underpayment to obtain a penalty payment. If the notice is given after the 270th day and the carrier pays the balance within 30 days of receipt of the underpayment notice, no penalty accrues.
Penalties are not assessed for late payments or underpayments if the failure to timely pay was the result of a catastrophic event that interrupted the carrier's operations for more than two consecutive business days and the carrier filed proper notice with TDI. In such a case, the statutory claims payment period is suspended only for the period of time that the carrier's operations were interrupted.
The carrier must provide the physician or provider with an explanation of payment that clearly notes any penalties paid.
Extension of Deadlines because of a Catastrophic Event
The statutory claims submission and payment deadlines are suspended because of catastrophic events under the following conditions:
- Within five days of the event, the carrier, physician, or provider must notify TDI that it is unable to meet its statutory deadlines because of a catastrophic event that interrupted its normal business operations for at least two consecutive business days.
- Within 10 days of returning to normal operations, the carrier, physician, or provider must provide TDI with a sworn affidavit specifying the specific nature of the event and the length of time normal operations were suspended.
The statutory claims payment period is suspended only for the period of time that the carrier's operations were interrupted.
In addition to other penalties under the Insurance Code, TDI may assess administrative penalties against carriers that have more than a 2 percent noncompliance rate for either claims submitted by health care institutions or for claims submitted by non-institutional physicians and providers, as determined on a quarterly basis. Carriers that have more than a 2 percent noncompliance rate on either type of claim may be assessed penalties of up to $1,000 per day for each claim not in full compliance with the prompt pay law and rules.
Claims Payment Processing Information
A contract between a carrier and a preferred provider must require that carriers must provide claims payment information within 30 days of receipt of a request from a physician or provider. The information provided by the carrier must include payment methodologies and bundling processes. Bundling processes must be consistent with nationally recognized and generally accepted bundling edits and logic. The information provided about the bundling software must include the publisher's name, product name, and version used by the carrier.
The contract must also require carriers to provide 90 days written notice regarding changes to the claims payment information. Carriers may not apply changes retroactively to claims payment procedures.
Physicians and providers may only use the claims payment information in their practice management, billing activities and other business operations, and in their communications with governmental agencies that regulate health care and insurance.
A physician or provider may terminate their contract with a carrier within 30 days after receiving the claims payment information from the carrier. The carrier cannot penalize the physician or provider who chooses to terminate a contract. If a physician or provider terminates a contract, then the plan's enrollees/insureds must receive reasonable advance notification of the termination.
Utilization Review - Preauthorization and Verification
A preauthorization is a determination by the carrier that the services are medically necessary and appropriate.
Upon request, a carrier must provide a list of services within 10 days of receipt of the request from a physician or provider that will allow the physician or provider to determine which services require preauthorization and information concerning the preauthorization process. Deadlines for responding to requests for preauthorization are as follows:
- For post-stabilization treatment and life-threatening conditions, the carrier's response must be given within the time appropriate to the circumstances, but not more than one hour.
- For concurrent hospitalization care, the carrier's response must be given in 24 hours.
- For all other services, the carrier's response must be given within three days from the date of the request for preauthorization.
If a preauthorization is issued, a carrier may not deny or reduce payment of the claim for reasons of medical necessity or appropriateness unless the preferred provider materially misrepresented the proposed services or substantially failed to perform the preauthorized services.
A carrier must provide a notice of adverse determination to the provider, the enrollee or person acting on the enrollee's behalf. The enrollee, or person acting on the enrollee's behalf, has the right to appeal an adverse determination.
Verification is a guarantee of payment for health care or medical care services if the services are rendered within the required timeframe to the patient for whom the services are proposed. A verification may include a preauthorization.
A request for verification must contain:
- patient name
- patient ID number
- patient address
- patient date of birth
- name of enrollee or subscriber
- enrollee or subscriber ID number
- enrollee or subscriber date of birth
- patient relationship to enrollee or subscriber
- initial diagnosis
- procedure code(s)
- name and address of hospital or facility, if applicable
- proposed date of service
- name of employer, if applicable
- group number, if applicable
- name and contact information of any other carrier, if known, including the other carrier's name, address and telephone number, name of enrollee, plan or ID number, group number (if applicable), and group name (if applicable)
- name of preferred provider providing the proposed services
- preferred provider's federal tax ID number
- place of service.
The physician or provider may request verification via telephone, in writing, or any other means agreed to by the physician, provider, and carrier.
If a physician or provider requests verification, a carrier may make one request for additional information within three days of receipt of the request.
A carrier must issue either a verification or a declination without delay, but not later than 15 days after receipt of the request. For requests for verification regarding concurrent hospitalization, post-stabilization care, or a life-threatening condition, the carrier must respond without delay, but not later than 72 hours after receipt of the request. A declination is not the equivalent of a denial of the claim.
A carrier may deliver the determination in writing, or via telephone followed by a written response within three days. In both cases, the carrier's written response must include:
- enrollee name
- enrollee ID number
- requesting provider's name
- hospital or other facility name, if applicable
- a specific description, including relevant procedure codes, of the services that are verified or declined
- if the services are verified, the effective period for the verification, which shall not be less than 30 days from the date of verification
- if the services are verified, any applicable deductibles, copayments, or coinsurance for which the enrollee is responsible
- if the verification is declined, the specific reason for the declination
- if the request involved services for which preauthorization is required, a decision as to whether the proposed services are medically necessary and appropriate, as required in §19.1723 of this title (regarding Preauthorization) and
- a statement that the proposed services are being verified or declined pursuant to Title 28 Texas Administrative Code §19.1724.
A verification must be valid for at least 30 days.
Carriers must maintain a call center with qualified staff during specified hours to receive requests for preauthorization and verification. During off-hours, carriers must have a recording/answering system for these calls, and return calls within
- 24 hours for preauthorization
- two days for verification.
Carriers are required to submit quarterly and annual reports on their claims processing activities, catastrophic events, and verifications to TDI.
HB 610 Claims Payment FAQs
Q: Please explain the submission timeframes for existing contracts, new contracts, and contracts renewed after October 8, 2002.
A: The rules generally require that carriers respond to a request from a physician or provider within 30 days of receipt of the request. To initially allow carriers time to meet the requirements of the rules, the earliest date the carriers must provide the information is 90 days from the date the rules become effective, October 8, 2002. Regardless of the date the request for information is received, the earliest date the carrier must provide the information is January 7, 2003 (90 days from the October 8 effective date). This is true for contracts in existence on the effective date of the rule and contracts entered into or renewed on or after the effective date of the rule. For contracts entered into or renewed after January 7, 2003, carriers must provide the required information at the same time they provide the other contractual materials. Carriers may, of course, begin to comply with the rule and respond to requests earlier than this date.
Q: Please advise if HMOs are now obligated to disclose "copies of all applicable utilization review policies and claim processing policies and procedures, including required data elements and claims formats" contained in the contracts between a delegated entity and HMO, inclusive of fee schedules, bundling and downcoding policies, when a contracted provider makes the request in writing. It appears that HMOs must disclose and explain all methodologies used to make claim payment determinations. Does this also pertain to any entity that the HMO contracts with as a delegated entity handling Utilization Review and claims processing functions on behalf of the HMO? Further, is the IPA subject to the same rules of disclosure if the contracted provider makes the request in writing directly to the IPA?
A: While Independent Physicians Associations (IPAs) and delegated entities are not addressed in the text of the rule, TDI's response to comments in the adopted rule makes clear that an HMO must ensure that physicians providing services to the HMO's enrollees through delegation agreements receive the information required by the rule. Because an HMO is normally not aware of the specific contractual arrangements between a delegated entity and a physician or provider, this information would most likely be provided by the delegated entity. However, Texas Insurance Code Article 20A.18C(a)(4) provides that the HMO is ultimately responsible for compliance with all statutes and regulations. Additionally, the HMO's contract with the delegated entity must require the delegated entity's compliance with all applicable statutes and regulations (see Texas Insurance Code Article 20A.18C(a)(5)). Therefore, the HMO must ensure that its delegated entities are promptly and completely responding to requests for information as required by §11.901(10). To avoid potential confusion and other issues related to this subject, HMOs and their delegated entities should make physicians and providers aware of the proper party to whom a request for information under the rules should be sent. The delegated entity's failure to comply constitutes a violation of the rules by the HMO.
If the delegated entity or any other party will be responsible for responding to requests for information pursuant to the rule, physicians and providers should be advised as to the party to whom a request should be sent. Receipt by the identified party will constitute receipt by the HMO and the 30-day timeline for a response will begin upon receipt. Despite the identification of a third party as the proper party for receipt of or response to requests for information, the HMO is responsible for compliance with the rule.
This response should not be read to require an HMO to provide to physicians and providers any details regarding the contract between the HMO and the delegated entity. In the context of a physician or provider providing services to an HMO enrollee through a contract with a delegated entity, the HMO must ensure only that the physician or provider receives information sufficient to determine whether payment is being made in accordance with the physician's or provider's contract. As the physician or provider is not a party to the delegation agreement, the terms of that agreement are not available under §11.901(10).
Q: As a non-risk bearing preferred provider network, we contract with healthcare providers for discounted services and reprice claims based on contracted rates, but do not pay claims. As such, any repriced amount would be applied in accordance with the contract negotiated with the provider. Payment would actually come from a third-party payor, which could be paying claims for fully insured as well as self insured clients. To respond appropriately to requests generated by these rules, we are asking for clarification as to whom, and how, the rules apply to non-risk bearing preferred provider networks and our clients.
A: Non-risk bearing preferred provider networks are not subject to the rules. However, the insurers with whom a preferred provider network contracts are subject to the rules and must provide to a requesting physician or provider information sufficient to determine whether payment is being made in accordance with the physician or provider's contract. This information will most likely include the repricing data used by the preferred provider network. Although the physician or provider has contracted independently with the preferred provider network, the insurer must comply with the rule by providing all information necessary to allow the physician or provider to make a determination as to the proper payment to be made in accordance with the contract. Nothing in the rule prohibits the preferred provider network from providing some or all of the information required by the rule. However, the insurer is responsible for ensuring that the physician or provider receives information in compliance with the rule.
If the preferred provider network or any other party will be responsible for responding to requests for information pursuant to the rule, physicians and providers should be advised as to the party to whom a request should be sent. Receipt by the identified party will constitute receipt by the insurer and the 30-day timeline for a response will begin upon receipt. Despite the identification of a third party as the proper party for receipt of or response to requests for information, the insurer is responsible for compliance with the rule.
Q: If we make a change to allow a procedure code (service) that previously was being declined as incidental to another procedure, do we need to provide a 60-day notice before we start paying for the service? It is our normal company policy to begin providing benefits immediately in this type of situation. However, the rule as written prevents us from making immediate payment to covered persons because of the 60-day notice requirement.
A: The rules do not dictate the terms of a carrier's agreement with its insureds. As such, nothing in the rule prevents payment to covered persons for benefits allowed by an insurance contract. The language of the rule provides that the change in the claim processing policy or procedure is not effective as to the contracting or preferred physician or provider without 60 days notice. While this does prohibit an insurer from mandating that a physician adhere to new claim processing policies and procedures prior to receiving 60 days notice, nothing in the rule prevents an insurer from paying more than the contracted amount in anticipation of a forthcoming change in the insurer's payment policies or procedures.
Q: A provider is requesting all the information on fee schedules and coding and bundling methodologies in a letter dated October 17, 2002. The carrier indicates on October 25 that it does not intend to provide the information as the provider's contract terminates November 1, 2002. Is the carrier obligated to provide the information regarding fee schedules and coding and bundling if the provider or carrier has given notice of termination?
A: The obligation to provide the information required by the rule arose during the effective period of the contract between the provider and the carrier. As the basic requirement of the rule is to ensure that providers have sufficient information to determine the payment to be made in accordance with the contract, the carrier must respond to such a request. Providers will continue to submit claims and receive payments subsequent to the termination of a contract with a carrier. For this reason, the carrier must respond to a request for information made during the effective period of the physician or provider's contract with the carrier.
Q: What is the level of specificity required at a contracting level? What level of detail actually needs to be in the contract, i.e. actual codes or just a overall general summary of the type of edits they may commonly see? Can we refer to our RBRVS rate as explanation or is does this mean we need to give greater detail even in the body of the contract?
A: The rule requires that the contract contain "provisions that will entitle the preferred provider upon request to all information necessary to determine that the preferred provider is being compensated in accordance with the contract." Therefore, the rule does not require that claims processing policies or procedures be in the text of the contract. However, the rule does require a level of specificity for the information provided to the physician or provider. The information must be sufficient to enable a reasonable person with sufficient training, experience, and competence in claims processing to determine the payment to be made according to the terms of the contract for covered services rendered. This is the standard mandated by the rule.
Q: Does the notification of changes or edits require a line or CPT level detail or can we give an overall general edit summary?
A: Notification of changes or edits should maintain the same level of specificity as any other required information. That is, the level of detail must be sufficient to enable a reasonable person with sufficient training, experience, and competence in claims processing to determine the payment to be made according to the terms of the contract for covered services rendered.
Q: The rule says the HMO will provide notice of material changes to the coding guidelines and fee schedules 60 days prior to implementing the change. Please define material changes.
A: The adopted rule does not contain the term "material changes." The standard in the rule is that any amendment, revision, or substitution of the required information that could make a difference in the amount to be paid under the contract is subject to the 60-day notice requirement. However, where parties have agreed to use source information outside the control of the carrier as the basis for the carrier's fee computation, any change to that source information, such as an incremental change to a Medicare fee schedule or coding guideline, would not be a change to the carrier's claims payment policies or procedures or to the information required by this rule, and would not require 60 days notice.
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Last updated: 01/14/2013