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12 Changes That Will Affect Doctors’ Income in 2015

Get Ready for Some Big Changes in 2015

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The new year will bring several developments, some of which may be troubling to physicians, and others that may bring welcome news. These changes can affect physicians’ incomes to varying degrees and are likely to have at least some effect on many or most practices.

The following list highlights these upcoming challenges. See which ones may affect you, and what you should watch out for.

1. The Rise of High Deductibles

In 2015, physicians will have to squarely face the growing problem of high deductibles of $1000 or more and find better ways to collect them for patients. Eight out of 10 covered employees now have a deductible, and 18% have deductibles of at least $2000, according to a 2014 study[1] by the Kaiser Family Foundation.

The Affordable Care Act (ACA) requires everyone to buy insurance, and people are drawn to high-deductible plans because they mean lower premiums. Coverage in the ACA’s health insurance exchanges, or marketplaces, is pushing levels even higher. A bronze plan has an average deductible of $5000 for individuals and $10,000 for families, according to a report[2] by the consulting firm HealthPocket.

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“Deductibles are out of control,” said Brette Williams, who is in charge of provider education at Everest AR Management in Gainesville, Florida. When patients with high deductibles come in for care, doctors’ offices risk not getting paid or having to make major, repeated efforts in order to get paid. Williams said that in a growing number of cases, the patient—not the insurer—is the main source of payment. The combination of high deductibles and a weak economy mean that “patients today owe more and have less,” she said.

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Increasingly, physicians’ offices have to send delinquent bills to collection agencies, which provide a fraction of the payment owed. According a report[3] by NerdWallet, a service that reports medical costs, one in five Americans will be contacted by a collection agency about a medical bill.

Practices can fall back on several familiar methods to help ensure payment, such as asking for payment up front or putting patients on a payment plan. They can also provide cost estimates in advance, which a growing number of patients are already demanding. “There is more pressure to provide estimates of what services cost,” said Robert Wergin, MD, president of the American Academy of Family Physicians (AAFP).

Patients who are sensitive to costs are more inclined to shop around for healthcare services. New websites, such as Compared Care and Clear Health Costs, provide cost estimates for a variety of medical services in selected metropolitan areas. And in May, Aetna, Humana, United Healthcare, and the Health Care Cost Institute announced plans to start a website showing price ranges and average reimbursement for healthcare services.

2. Continued Drop in Malpractice Premiums

After years of skyrocketing increases, malpractice premiums are undergoing a prolonged drop that is expected to continue into 2015. Malpractice insurance premiums for three bellwether specialties—ob/gyns, internists, and general surgeons—decreased this year for the seventh straight year, according to an annual premium survey[4] released in October by Medical Liability Monitor. Although physicians in certain specialties or in certain states are still being socked with high premiums, the three measured specialties have seen a 13% decline in premiums nationwide since 2008.

In large part, the decline is due to the delayed effect of tort reforms, some of which were passed many years ago to no immediate effect, according to Greg Roslund, MD, an emergency physician in Cleburne, Texas, who has analyzed each state’s malpractice climate for a series[5] in the American Academy of Emergency Medicine publication. When a reform such as a $250,000 cap on noneconomic damages is enacted, he said, its effect on the number of lawsuits and ultimately premiums varies widely from state to state, depending on the malpractice climate.

“The climate trumps the law,” Dr Roslund said. For example, when Florida and Illinois enacted caps, plaintiffs and plaintiffs’ attorneys continued to file a high volume of lawsuits. (Illinois courts struck down that state’s cap, and Florida courts are in the process of doing the same, Roslund said.) Sometimes, he said, it takes a while for the cap to have an effect, as happened in California, and in other cases it has an almost immediate effect, as in Texas.

In addition to the cap on economic damages, Dr Roslund said, the most effective reform is the use of review panels made up of physicians to weed out frivolous lawsuits before they can be filed. The least effective reform, he added, has been limits on use of expert witnesses, because these provisions contain too many loopholes.

In the past, malpractice premiums have followed a cyclical pattern, and many experts believe they will eventually start rising sharply again. But Dr Roslund believes tort reforms will have a permanent effect. “The decline will flatten out,” he said, “but I don’t think the pendulum will swing the other way.”

3. Will ICD-10 Finally Happen?

There have been so many delays in implementing the International Classification of Diseases, tenth edition (ICD-10), diagnosis coding system that physicians could be excused for doubting whether it would ever happen. But many people with inside knowledge are saying the deadline—October 1, 2015—will stick. “This time, it looks like the real thing,” said Dr Wergin, the AAFP president.

The new coding system was supposed to start last year, but the Department of Health and Human Services, noting that many players weren’t ready, postponed the start-up until October 1, 2014. Then in March, Congress postponed it again. Dr Wergin said another postponement was necessary because many small practices weren’t ready yet, and there were concerns that some vendors and payers weren’t up to speed, either.

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dpc selft test 2015Proponents say the new coding system is more precise, cutting down on coding errors and allowing for fewer denials and speedier payments. They also think it will be easier to use the new codes to assemble acuity data that can be used to negotiate higher reimbursements with payers.

But many physicians are skeptical. Dr Wergin said that in his own practice, he can easily track diabetes patients using the current codes. Critics also maintain that the new system will make physicians less efficient. Doctors’ notes will have to be more specific in order to select the exact ICD-10 code.

As the new deadline looms closer, physicians’ anxiety levels are sure to rise. “There is a concern that the technology won’t work when the systems start up,” Dr Wergin said. “You might not get paid right away.” Some consultants, he said, are advising doctors to have 3 months of cash flow in reserve.

At this time next year, physicians will know whether all of their fear and loathing was justified. Perhaps the new government program will go off without a hitch. Or perhaps not.

4. ACOs Enter a Crucial Year

When Medicare accountable care organizations (ACOs) mark their third anniversary in 2015, they will be at a critical juncture. The program’s 3-year shared-savings contracts, which shielded ACOs from losing money, will start running out. ACOs that stay in the program will have to start taking on “downside risk,” facing the possibility of big financial penalties.

Two announcements this year by the Centers for Medicare & Medicaid Services (CMS) suggest this transition won’t be easy. CMS announced that only one quarter of ACOs received a shared-savings bonus, which shows how hard it is still to any make money in the program. And CMS also announced more departures from the Pioneer ACO program, where downside risk is already a reality and the stakes are much higher.

Although the number of shared-savings ACOs keeps rising, from 27 in 2012 to 337 this year, the number of Pioneer ACOs has fallen from 32 in 2012 to 19 this year. The drop in Pioneer ACOs is significant, because the shared-savings ACOs are supposed to end up looking like the Pioneer ACOs, said David Muhlestein, PhD, director of research at Leavitt Partners, a Salt Lake City healthcare intelligence firm that tracks ACOs.

“The worst that can happen to a shared-savings ACO is not getting a bonus, but Pioneer ACOs are on the hook for a penalty if they don’t meet certain targets,” Muhlestein said. He said CMS is under pressure to extend the shared savings model and may decide to do so next year. If CMS lets the current timetable stand, he said, a lot of shared-savings ACOs might drop out, and worse yet, many more organizations sitting on the sidelines might lose interest in the ACO program.

As more Medicare ACOs are created, independent physicians will have to decide whether to join them. One challenge is the added paperwork—doctors will need to report 33 mandatory quality measures—and another is the lack of shared-savings payouts. In a 2013 survey[6] of ACO physicians, only 14% reported a getting financial benefit.

journal of retail medicineBut Muhlestein said physicians deciding whether to join ACOs shouldn’t be focusing on the money. With time, he said, ACOs may start producing substantial shared savings, but not yet. “Participation wouldn’t be worthwhile for doctors solely driven by financial interests,” he said. “But it is worthwhile for physicians who believe this is a better way to practice medicine, or those who want to get some experience [in dealing with new payment method].”

5. Telemedicine Companies Cause Concern

If you haven’t yet had patients who are using telemedicine companies, you may start noticing them in 2015. These services, which offer patients web- and telephone-based consultations with doctors whom they have never met, have been growing by leaps and bounds. The three largest companies—Teladoc, MDLIVE, and American Well—more than doubled their volume from 2011 to 2013 and continue to grow, according to the American Telemedicine Association.

But as these companies emerge onto the healthcare scene, they have been raising a great many concerns. Greg Billings, executive director of the Center for Telehealth and e-Health Law, said doctors working for the telemedicine companies have no familiarity with their patients and cannot directly examine them. They try to make up for this by asking patients to take pictures of themselves and, in some cases, even palpate themselves. But even with a simple condition such as a sore throat, the only way to know whether the patient has strep throat is to take a culture of the throat, which can’t be done via video, he said.

This year, the Federation of State Medical Boards, which represents state licensing boards, issued model regulations[7] for telemedicine companies. These regulation would require telemedicine companies to establish an appropriate doctor/patient relationship and be able to confer via video rather than just telephone or email.

Telemedicine companies do seem to be taking patients away from physicians’ practices. In a 2008 survey[8] of patients using Teladoc, 53% said they would have otherwise gone to a primary care provider (PCP). Patients are attracted to telemedicine because they can get immediate service without even leaving their homes, and it costs them less. A telemedicine session costs about $40-$50, and some employers even subsidize that amount. Health insurers, such as United Healthcare, WellPoint, Aetna, and Cigna, and some Blue Cross plans are now covering telemedicine.

Consumer groups don’t seem alarmed about the trend. “It seems like a great convenience,” said Carmen Balber, executive director of California-based Consumer Watchdog, adding that her only concern is that payers should not pressure people to use telemedicine when they want to see a doctor face to face.

6. Retail Clinics Offer New Competition

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Retail clinics—housed in pharmacy chains, such as Walgreen’s, CVS, and Rite-Aid—have shown a great deal of growth but have also encountered pushback from the medical community. From 2007 to 2009, visits to retail clinics grew by 400%, according to a report[9] in Health Affairs.

Staffed mostly by nurse practitioners who closely follow clinical protocols, these clinics basically treat five symptoms or conditions: sore throats, ear infections, sinus infections, bladder infections in women, and conjunctivitis. Retail clinics are open when physicians’ practices are usually closed. According to the Health Affairs study, almost one half of patients come in off-hours. And retail clinics are less expensive: The price of a visit is about $75, compared with $150 at many urgent care clinics, according to Thomas Charland, CEO of Merchant Medicine, a Minnesota-based consultant on walk-in healthcare. Almost all retail clinics, he added, accept health insurance.

Although some physicians’ offices offer same-day appointments, Charland said that retail clinics are a step ahead, offering immediate care for walk-ins. Some physicians view the clinics as a threat and tell their patients not to use retail clinics, he said. According to a RAND Corporation analysis,[10] some doctors are concerned that retail clinics are skimming patients who are less costly to treat, but other doctors are relieved not to have to treat such simple cases. Meanwhile, the AAFP is concerned that the clinics could fragment healthcare delivery, because patients might not report their visits to their PCP.

Rather than fight retail clinics, Charland advises doctors to forge reciprocal referral relationships with them. The website for CVS’ MinuteClinic lists its affiliations with regional health networks, including the Cleveland Clinic. Charland added that some doctors’ offices are trying to mimic retail clinics by allowing walk-ins. A walk-in with a sore throat is sent directly to a nurse, he said.

7. PCPs Due to Lose Enhanced Medicaid Payments

When 2015 starts, PCPs are in for a tough beginning. Enhanced Medicaid payments for PCPs, which brought their reimbursements up to Medicare levels, are scheduled to stop, and Medicaid reimbursements for PCPs will fall back to their old levels, which are on average about 40% of Medicare.

A few states will continue to provide the enhanced payments out of their own funds, and Congress is considering a bill to extend federal funding for enhanced Medicaid payments. Dr Wergin has been campaigning on Capitol Hill for the bill on behalf of the AAFP, and he said it has a 50-50 chance of passage.

The extra money is crucial at a time when six million people have been added to the Medicaid rolls, partly as a result of the Medicaid expansion under the ACA. Dr Wergin said that PCPs couldn’t afford to see them all at the lower rates. “If parity with Medicare goes away, family physicians have to make a business decision,” he said. “Can they take as many Medicaid patients?”

Unlike PCPs, specialists never got the enhanced Medicaid funding, and many of them already strictly limit the number of Medicaid patients they see. “We’ve seen a huge increase in Medicaid patients in the past year or so,” said Pat Howery, administrator of Colorado West Otolaryngologists in Grand Junction. To financially protect itself, the practice has been limiting its four ENTs to two Medicaid patients per day.

This limit is a matter of financial survival, Howery said. Commercial insurance pays $119 and Medicare pays $73 for a basic office visit, but Medicaid pays only $52, which is below cost. “If our physicians were taking nothing but Medicaid patients, they couldn’t bring home any income at all,” he said. “In fact, they’d have to give us back some.”

8. Meaningful Use Moves From Carrot to Stick

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In 2015, Medicare’s meaningful use (MU) program for electronic health records (EHRs) moves from the carrot to the stick. Starting next year, physicians can no longer begin applying for MU bonuses, and the bonuses end in 2016. Meanwhile, penalties for not entering the MU program begin next year, starting at 1% of Medicare payments and moving to 3% by 2017.

But even as the fines kick in, some physicians are defiantly refusing to join, and even dropping out. “The MU program is interfering with the practice of medicine,” said Hayward K. Zwerling, MD, a Massachusetts endocrinologist who dropped out recently. He said he would rather pay the penalties than see his practice diverted by what he sees as a very demanding program that does little to improve patient care.

Dr Zwerling has an unusual perspective because he developed and marketed his own EHR system, called ComChart. It won a KLAS award and was certified for stage 1 MU, but he decided not to offer it for stage 2 certification. “I decided I did not want to go any further,” he said. Although he agrees that EHR can make a practice more efficient, he said studies don’t show that it reduces the overall costs of healthcare or improve quality.

To some extent, Dr Zwerling is swimming against the tide. According to a Medscape survey[11] in July 2014, more than three quarters of doctors who have an EHR are now attesting to MU, up from less than one half in 2012. However, this year’s survey also found that 16% of physicians say they will not attest to MU, up from 14% in 2012. And an additional 6%, like Dr Zwerling, said they were abandoning MU after meeting requirements in previous years.

Even though doctors are going along with MU, the Medscape survey showed substantial discontent. It found that 70% of respondents said EHR decreases their face-to-face time with patients, and 57% said it detracts from their ability to see patients. EHR demands are significant. In another recent survey,[12] internists reported that they spent 48 minutes a day on average dealing with EHRs. “The health IT community says that more IT is better,” Dr Zwerling said. “My response is, ‘Prove it!'”

9. Penalties Start Under PQRS, and the Value-Based Modifier

Just like the MU program, Medicare’s quality reporting system is moving to penalties in 2015. Through 2014, the Physician Quality Reporting System (PQRS) was a voluntary program in which physicians provided data on meeting selected quality measures. There hasn’t been any incentive payment for reporting PQRS data, but physicians who participated in the maintenance of certification (MOC) program with their specialty board received a 0.5% increase in Medicare reimbursements. But the MOC payments end this year, and a penalty for not reporting PQRS data starts at 1.5% next year, based on 2013 reporting, and rises to 2% in 2016, based on 2014 reporting.

Meanwhile, CMS has begun to analyze the data that has been reported and is beginning to reward and penalize practices based on meeting benchmarks through a process called “quality tiering.” The process involves applying a value-based modifier (VBM) to their Medicare payments; it begins in 2015 with penalties and bonuses for large physicians groups of 100 or more “eligible professionals,” and will widen out to smaller groups in succeeding years. CMS said only a minority of practices would receive either bonuses or penalties in the VBM process. In a CMS analysis[13] of 2012 physician data, just over 8% of practices would have earned a bonus and 11% would have been penalized.

“This is part of CMS’ plan to move from ‘more’ to ‘better,’ ” said Michael La Penna, a healthcare consultant in Grand Rapids, Michigan, referring to the ongoing movement away from fee for service reimbursements that reward volume to value-based reimbursements that reward outcomes. But he doubts that the VBM program will inspire physicians to make the move.

“Doctors don’t get excited about getting checks from programs they don’t understand,” he said. He recalled that back in the 1990s, when doctors were involved in risk pools for capitated payments, “I would hand the doctor a check for $11,000 for the risk pools. They’d take it, but they didn’t ask, ‘How do I get that?'” he said. “They were more interested in doing their work each day.”

10. Two New Websites Reporting Payments to Physicians

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In 2015, physicians will have to deal with two new websites that report payments made to them by Medicare and manufacturers of drugs and medical devices. The Medicare payments website, which started in April, resulted from the removal of a 33-year injunction prohibiting CMS from reporting payments. And the CMS website reporting manufacturers’ payments, known as the Open Payments site, was launched in September and is the result of a provision in the ACA.

Both websites have been plagued by technical snafus and inaccurate information. Physicians were supposed to have a chance to review their information before the sites went live, but in some cases they couldn’t get on the site. Ted Mazer, MD, an otolaryngologist who is a past president of the San Diego County Medical Society, said he tried for weeks to get onto the open payments website to review his information and could not. He recalled similar snafus when the Physician Compare website opened in 2010. “For several years, I could not find my name on the site,” he said. “Then I was listed as a urologist for a while.”

Dr Mazur said all of these problems might seem amusing, but they have serious implications for doctors. When the Medicare payment site was launched, local media pilloried physicians who seemed to be getting very large Medicare reimbursements. For example, Dr Mazur said, the site showed payments of $100,000 or more to ophthalmologists; the money was for intraocular injections, almost all of which went to the drug maker, but this was never explained on the website. Likewise, several orthopedic surgeons were listed on the Open Payments site as being paid more than $1 million, but the money was for devices they had invented.

CMS is trying to clean up some of the problems with the Open Payments site. It plans to roll out a more simplified site by December, and in October the agency clarified that it would not be lifting an exclusion on reporting payments for continuing medical education (CME), as had been reported in July. But Dr Mazur said the damage has already been done. “The amount for reporting that physicians are subjected to is now destroying the profession,” he said. “Everything we do is assumed to be wrong.”

11. Medicare Starts Paying for Chronic Care Outreach

CMS’ new chronic care management, which starts in 2015, is one of the few encouraging developments next year. The new program will pay physicians for managing Medicare patients with two or more chronic conditions, even when contacts are made by phone or email rather than face to face.

“This is a step in the right direction in a world that is still mainly fee-for-service,” Dr Wergin said. “Studies show outcomes much better when you manage patients in this way. Family physicians have already been doing this work, but they haven’t gotten paid for it.”

The program could become a significant source of income for many primary care physicians. According to the final rules, released October 31, physicians will be paid $40.39 per patient per month for providing at least 20 minutes of care. Dr Wergin estimates that he personally has about 500 patients who would fit the criteria. That would mean monthly payments of more than $20,000. He cautioned that the estimate might be a little high, because patients would have to agree to enter the program, which requires an $8 copay from them each month.

To qualify for the program, physicians need to have EHR systems and be able to exchange information on the patient with other caregivers. Also, they or their staff must be available to patients around the clock. To accommodate this, Medicare has loosened its “incident to” rule, which requires doctors to directly supervise staff. Practices can also outsource the coverage or even build it into their on-call arrangements with colleagues, Dr Wergin said.

Rick L. Hindmand, an attorney at McDonald Hopkins, a Chicago law firm, warned that with so much money at stake, practices can expect to be closely monitored by regulators looking for payment fraud. “You will need to document that you are spending at least 20 minutes a month with these patients and that you are providing 24-hour access,” he said.

Hindmand said setting up the EHR software and training staff will take a substantial amount of planning. Dr Wergin added that some details still need to be worked out. For example, his EHR system is not interoperable with the system at his local hospital. “We’ll need to work on that,” he said.

12. Four New CPT Modifiers Aim for Greater Specificity

In January, CMS will declare war on one of the most widely used—and misused—modifiers for Current Procedural Terminology (CPT) codes, which operates as a catch-all for services that cannot be adequately defined. In place of the amorphous modifier 59 in the Healthcare Common Procedure Coding System (HCPCS), physicians’ offices will be using four new subset modifiers.

“Modifier 59 gets overused,” said Susan Roehl, a healthcare manager at Eide Bailly in Fargo, North Dakota. “That is why CMS has come up with four additional clarifying modifiers. The extra modifiers give payers a better idea of what the indication was.”

The subset modifiers are XE, XS, XP and XU. Roehl gave examples for each use:

EX covers separate encounters: The patient received an outpatient infusion of antibiotics in the morning, left the facility, and returned in the evening for another infusion.

XS covers a separate structure: A skin lesion of the arm was removed with laser surgery, and then another lesion was biopsied on the leg.

XP covers a separate practitioner: A laparoscopic hernia repair was performed in the morning by one surgeon, and then later in the day another surgeon performed a laparoscopic appendectomy on the same patient.

XU covers an unusual nonoverlapping service: Two separate lesions are present that are within the same code set, and are excised separately.

“The hope is that the new modifiers will make it easier to make payments to physicians, but we’ll have to see,” Roehl said. “They provide more specificity on what the actual procedure entails.”

References

  1. 2014 employer health benefits survey. Henry J. Kaiser Family Foundation. September 10, 2014. http://kff.org/health-costs/report/2014-employer-health-benefits-survey/ Accessed November 2, 2014.
  2. Bronze plan—Affordable Care Act (Obamacare). HealthPocket. http://www.healthpocket.com/individual-health-insurance/bronze-health-plans#.VGS1i0tlznY Accessed November 3, 2014.
  3. LaMontagne C. NerdWallet health study: medical debt crisis worsening despite policy advances. NerdWallet. October 8, 2014. http://www.nerdwallet.com/blog/health/2014/10/08/medical-bills-debt-crisis/Accessed November 5, 2014.
  4. Medical Liability Monitor publishes 2014 annual survey of medical malpractice rates. Medical Liability Monitor. October 10, 2014. http://medicalliabilitymonitor.com/news/2014/10/medical-liability-monitor-publishes-2014-annual-survey-of-medical-malpractice-rates/ Accessed November 14, 2014.
  5. Roslund G. Medical liability and the emergency physician: a state by state comparison—part 2. AAEM News. Common Sense. January/February 2014. http://www.aaem.org/UserFiles/Jan-Feb14MedicalLiabilityStatebyState.pdf Accessed November 6, 2014.
  6. Filling the void. 2013 physician outlook & practice trends. Jackson Healthcare. June 2013. http://www.jacksonhealthcare.com/physiciantrends2013 Accessed November 5, 2014.
  7. Interstate compact for physician licensure moves forward with consensus principles. Federation of State Medical Boards. October 7, 2013. http://library.fsmb.org/pdf/nr_interstate_compact.pdf Accessed November 10, 2014.
  8. Fifer S. Telemedicine MD consultations: satisfaction rates and use patterns among working-age adults. Mercer. 2008. http://communications.teladoc.com/resources/mercer.pdf Accessed November 13, 2014.
  9. Mehrotra A, Lave JR. Visits to retail clinics grew fourfold from 2007 to 2009, although their share of overall outpatient visits remains low. Health Aff (Millwood). 2012;31:2123-2129. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3625662/ Accessed November 2, 2014.
  10. Weinick RM, Pollack CE, Fisher MP, Gillen EM, Mehrotra A. Policy implications of the use of retail clinics. RAND Corporation. http://www.rand.org/content/dam/rand/pubs/technical_reports/2010/RAND_TR810.pdf Accessed November 4, 2014.
  11. Kane L, Chesanow, N. Medscape EHR Report 2014. Medscape. July 15, 2014. http://www.medscape.com/features/slideshow/public/ehr2014#24 Accessed November 2, 2014.
  12. Medicare gives doctors good news and bad on electronic health records. ACP Advocate. September 25, 2014; http://www.acponline.org/advocacy/newsletter/issue.htm?ArticleID=692031 Accessed November 14, 2014.
  13. Centers for Medicare & Medicaid Services (CMS), HHS. Medicare Program: revisions to payment policies under the Physician Fee Schedule, Clinical Laboratory Fee Schedule & Other Revisions to Part B for CY 2014. Final rule with comment period. Fed Regist. 2013;78:74229-74823. http://www.gpo.gov/fdsys/pkg/FR-2013-12-10/pdf/2013-28696.pdf Accessed November 2, 2014.
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