Legislature(2009 - 2010)BUTROVICH 205

03/16/2009 01:30 PM Senate HEALTH & SOCIAL SERVICES

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01:37:53 PM Start
01:39:00 PM SB133
02:23:45 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved Out of Committee 3/13/09
                    ALASKA STATE LEGISLATURE                                                                                  
      SENATE HEALTH AND SOCIAL SERVICES STANDING COMMITTEE                                                                    
                         March 16, 2009                                                                                         
                           1:37 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Bettye Davis, Chair                                                                                                     
Senator Joe Paskvan, Vice Chair                                                                                                 
Senator Johnny Ellis                                                                                                            
Senator Fred Dyson                                                                                                              
MEMBERS ABSENT                                                                                                                
Senator Joe Thomas                                                                                                              
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 133                                                                                                             
"An  Act  creating  a  statewide  electronic  health  information                                                               
exchange system; and providing for an effective date."                                                                          
     HEARD AND HELD                                                                                                             
SENATE BILL NO. 61                                                                                                              
"An  Act establishing  an Alaska  health care  program to  ensure                                                               
insurance coverage  for essential  health services  for residents                                                               
of  the state,  the Alaska  Health Care  Board to  administer the                                                               
Alaska health care  program and the Alaska health  care fund, the                                                               
Alaska health care clearinghouse  to administer the Alaska health                                                               
care  program  under the  direction  of  the Alaska  Health  Care                                                               
Board,  and  eligibility  standards and  premium  assistance  for                                                               
health care  coverage of persons  with low incomes;  creating the                                                               
Alaska  health care  fund; providing  for review  of actions  and                                                               
reporting requirements  related to  the health care  program; and                                                               
providing for an effective date."                                                                                               
     MOVED OUT OF COMMITTEE 3/13/09                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB 133                                                                                                                  
SHORT TITLE: ELECTRONIC HEALTH INFO EXCHANGE SYSTEM                                                                             
SPONSOR(s): SENATOR(s) PASKVAN                                                                                                  
03/02/09       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/02/09       (S)       HSS, FIN                                                                                               
03/16/09       (S)       HSS AT 1:30 PM BUTROVICH 205                                                                           
WITNESS REGISTER                                                                                                              
JAKE HAMBURG                                                                                                                    
Staff to Senator Paskvan                                                                                                        
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Commented on SB 133 for the sponsor.                                                                      
PAUL SHERRY, President                                                                                                          
Alaska Electronic Health Network (AeHN)                                                                                         
Alaska Native Tribal Health Consortium                                                                                          
POSITION STATEMENT: Supported SB 133.                                                                                         
BILL STEWART, Deputy Commissioner                                                                                               
Medicaid and Health Care Policy                                                                                                 
Department of Health and Social Services (DHSS)                                                                                 
POSITION STATEMENT: Neutral position on SB 133.                                                                               
REBECCA MADISON, representing herself                                                                                           
Fairbanks, AK                                                                                                                   
POSITION STATEMENT: Supported SB 133                                                                                          
PAT LUBY, Advocacy Director                                                                                                     
Juneau, AK                                                                                                                      
POSITION STATEMENT: Supported SB 133.                                                                                         
ACTION NARRATIVE                                                                                                              
1:37:53 PM                                                                                                                  
CHAIR BETTYE DAVIS  called the Senate Health  and Social Services                                                             
Standing Committee meeting  to order at 1:37 p.m.  Present at the                                                               
call to order were Senators Dyson, Paskvan, Ellis and Davis.                                                                    
         SB 133-ELECTRONIC HEALTH INFO EXCHANGE SYSTEM                                                                      
CHAIR DAVIS announced consideration of SB 133.                                                                                  
1:39:00 PM                                                                                                                    
SENATOR  PASKVAN, sponsor  of SB  133,  said this  bill seeks  to                                                               
modernize  Alaska's health  care IT  infrastructure and  save the                                                               
state's health care system about  $250 million per year and about                                                               
$10-$12  million per  year for  Medicaid by  developing a  secure                                                               
electronic  health information  exchange  system  to improve  the                                                               
safety, cost effectiveness and quality  of health care in Alaska.                                                               
Many providers  use only paper-based systems  which contribute to                                                               
dangerous  drug  interactions,  misdiagnoses, costly  delays  and                                                               
duplicate testing and administrative overhead.                                                                                  
He said:                                                                                                                        
     This  standards-based  electronic health  network  will                                                                    
     allow individual  Alaskans to  have their  own personal                                                                    
     health  record  and  to  authorize  their  health  care                                                                    
     providers to  exchange electronic medical records  in a                                                                    
     timely  and  secure manner.  A  number  of federal  and                                                                    
     state  laws  already  provide  standards  protecting  a                                                                    
     patient's   privacy  as   to   that  personal   medical                                                                    
     information   and   that   is  the   Health   Insurance                                                                    
     Portability and Accountability  Act (HIPAA) [that] most                                                                    
     directly   and    extensively   impacts    the   health                                                                    
     information  exchange  system.  This  legislation  also                                                                    
     provides  strict standards  to secure  and protect  the                                                                    
     confidentiality   of   individual  identifying   health                                                                    
     information of the patient.                                                                                                
JAKE HAMBURG, staff to Senator  Paskvan, deferred to Paul Sherry,                                                               
who has been  working with stakeholders for a number  of years on                                                               
this topic to provide some background information on the issue.                                                                 
1:41:14 PM                                                                                                                    
PAUL  SHERRY,  President  of  Alaska  Electronic  Health  Network                                                               
(AeHN), Alaska Native Tribal Health  Consortium, said he has been                                                               
a health care  administrator in the state for about  30 years and                                                               
offered a slide presentation as follows:                                                                                        
Slide  1 -  Alaska  health care  organizations  are making  large                                                               
investments in  moving from paper to  electronic medical records.                                                               
The  Alaska Native  Medical  Center, alone,  plans  to spend  $20                                                               
million  on  it.  They  estimate   that  only  20-30  percent  of                                                               
providers  use electronic  records today,  but it's  growing. The                                                               
provider community  in Alaska  is very  much behind  supporting a                                                               
state  wide  exchange network  so  that  patient records  can  be                                                               
available any  time a patient presents  for care. The state  is a                                                               
key partner in this overall effort.                                                                                             
Slide 2 - The earliest  health information exchange (HIE) started                                                               
in  the  1990s, and  it  is  part of  an  effort  to build  these                                                               
exchanges  around the  country. There  are  now over  50 HIEs  in                                                               
various states.                                                                                                                 
Slide 3  - The  federal government envisions  a loose  network of                                                               
the various  federal health agencies  connecting to  state health                                                               
information exchanges.                                                                                                          
Slide 4 -  The main reason for doing this  is that while Alaskans                                                               
have some  great organizations,  it is  difficult for  records to                                                               
follow patients and as a result,  there is a lot of redundancy in                                                               
procedures  and possible  errors  such  as medication  conflicts.                                                               
Providers see lower  costs for data management with  this type of                                                               
system  and  public  health  organizations   have  been  able  to                                                               
expedite their response with help from these kinds of systems.                                                                  
Slide  5 -  The  concern  is patient  privacy.  This  is not  the                                                               
creation  of  a  centralized  patient record  databank;  all  the                                                               
providers  keep their  own records.  The availability  of patient                                                               
data happens  through the  exchange. HIEs  makes it  possible for                                                               
patients  to opt  out,  and  there are  high  penalties for  data                                                               
Slide 6  - The final  big reason for  moving ahead with  these is                                                               
cost savings.  A series of reports  show that once an  EMR system                                                               
is  deployed, the  industry can  save a  net 5  percent of  total                                                               
expenses  for all  providers, which  is  huge money  - a  quarter                                                               
billion  dollars for  the state,  and  north of  $10 million  for                                                               
Slide 7  - His HIE  is called  the Alaska eHealth  Network (AeHN)                                                               
and  it is  a five-year  $35-million  effort. To  date they  have                                                               
secured $12 million  from mostly federal sources.  A half million                                                               
was appropriated by this body last year.                                                                                        
Slide 8  - Shows the  stakeholders who  will be connected  to the                                                               
Slide  9 -  Picture  of  sample of  online  record (screen  shot)                                                               
integrating  pictures, lab  reports,  imaging  reports and  other                                                               
reports, vital signs, immunizations and allergies.                                                                              
Slide 10 -  AeHN incorporated with nonprofits last  fall with the                                                               
Native  Health System,  the private  hospitals, the  primary care                                                               
providers,  Primera  as  a payer,  the  department,  the  federal                                                               
agencies and  the private physician  community, and the  AARP who                                                               
is interested in this from a public sector view.                                                                                
Slide 11 - Presented Board members with their various skills.                                                                   
Slide 12 - Progress to date:  clarity at the national level about                                                               
the privacy  standards to insure  technological inter-operability                                                               
among  these  systems.  GCI  has  been  awarded  a  contract  for                                                               
technical network  design, and  AeHN has  $10 million  in federal                                                               
money available to buy the lion's  share of the technology to get                                                               
into this network. Now they need to add providers to it.                                                                        
Slide 13  - The next steps  2009 -1010: they need  to designate a                                                               
non-profit entity to be the  HIE organization for the state. They                                                               
need to get  $20 million or more from the  stimulus package (from                                                               
the $19 billion available for HIT) for software.                                                                                
Slide 14 - They have  asked the legislature for stimulus matching                                                               
funds of $1.3 million this year  and $1.0 million in. The farther                                                               
out you  go, the more  the state is  required to match.  Once the                                                               
funds are  acquired, an RFP will  be put out to  providers of the                                                               
software  and to  make sure  the systems  align with  the state's                                                               
various  data centers  it uses  for health  care. Finally,  their                                                               
vision is  that providers can  then connect with  various support                                                               
systems, like  voice over Internet and  teleconferencing, and get                                                               
reimbursement through FCC funding in the future.                                                                                
Slide 15  - Finally, they  need to insure a  sustainability plan;                                                               
they estimate that  the network will cost around  $5 million, the                                                               
majority  of which  would be  subcontracts  for maintaining  this                                                               
software. Their  draft operating  budget called  for stakeholders                                                               
to share the costs based on their use.                                                                                          
Slide 16  - SB 133 is  modeled after what some  other states have                                                               
Slide 17  - Itemized  letters of support  from state  and federal                                                               
Slide  18 -  In summary,  he urged  passage of  SB 133  with DHSS                                                               
oversight and matching funds.                                                                                                   
Slide 19  - The outcomes over  the long run are:  timelier access                                                               
to safer  health care  for the  Alaska community  and significant                                                               
savings to  the state  directly for the  health care  services it                                                               
He added  that Rebecca Madison,  Network Director,  was available                                                               
for questions. The  key question is clarity  about the respective                                                               
roles of  the department and  the AeHN;  also, a number  of minor                                                               
issues have  already been identified  that could  provide greater                                                               
clarity. What  the state's long term  recurring contribution will                                                               
be also needs addressing.                                                                                                       
1:54:38 PM                                                                                                                    
SENATOR DYSON said he wanted  to hear what the administration has                                                               
been doing on this issue.                                                                                                       
SENATOR  ELLIS said  he recently  conducted a  constituent forum,                                                               
and  found  one  sole  practitioner who  was  "completely  beside                                                               
herself with fear"  about what the federal  stimulus package will                                                               
require for  electronic medical records.  She had no  doubt about                                                               
the nationwide  efficiencies this  technology would  provide, but                                                               
from  a  sole  practitioner  standpoint   it  was  "a  pain"  and                                                               
completely counter-intuitive.  He asked if  this would be  a help                                                               
or a  hindrance to  sole practitioners, and  pointed out  that it                                                               
looks like  they will have to  "pony up" a significant  amount of                                                               
MR. SHERRY responded  that the Physicians' Alliance  has been put                                                               
together to work with the  Alaska physician provider community to                                                               
move  forward,  and  there  are challenges  to  any  practice  to                                                               
purchase and  deploy an electronic  health records  system. There                                                               
is a one-time deployment cost of  over $25,000 to buy the system,                                                               
but future participation  has been estimated at  less than $1,000                                                               
per year per  practice. The real barrier is that  first step. The                                                               
stimulus  legislation  offers  some assistance,  both  loans  and                                                               
grants, to  providers to acquire  the systems. The  stimulus bill                                                               
also  has incentives  to help  them recoup  their investment.  He                                                               
realizes that  older providers  are not  as comfortable  with the                                                               
electronic format while younger physicians expect it.                                                                           
SENATOR ELLIS asked if Mr. Sherry  would work with him to develop                                                               
an answer to this type of concern.                                                                                              
MR. SHERRY said he would be happy  to do that. He added that they                                                               
think some entity needs to  provide hands-on technical assistance                                                               
to providers  to go electronic; and  the AeHN can provide  it for                                                               
1:59:28 PM                                                                                                                    
BILL  STEWART,  Deputy  Commissioner, Medicaid  and  Health  Care                                                               
Policy,  Department of  Health and  Social Services  (DHSS), said                                                               
new  opportunities are  presenting themselves  with the  stimulus                                                               
bill including  a grant program  for states to develop  this type                                                               
of  health  information  exchange,   a  state  administered  loan                                                               
program for providers  to purchase equipment needed  for a health                                                               
system exchange,  and a  state administered  financial assistance                                                               
program for  Medicaid providers  for the same.  But like  all new                                                               
federal  opportunities, there  is considerable  uncertainty about                                                               
how these programs  will work. The Obama  administration has made                                                               
it clear  that accountability  for all  funds spent  remains with                                                               
the entity  to which they are  given; that is, the  state will be                                                               
accountable no matter to whom the funds are assigned.                                                                           
He said the department needs  adequate flexibility to oversee and                                                               
understand this  effort. It's important that  the authority given                                                               
to  the department  matches its  responsibilities.  They want  to                                                               
avoid any confusion  about who is responsible for  each aspect of                                                               
the work. They have concerns  with the alignment of the authority                                                               
given to  the nonprofit  entity and  the level  of responsibility                                                               
remaining  with  the  department.  So  for  SB  133  to  work  as                                                               
intended, some renumbering  is needed as well as  another look at                                                               
where both the responsibility and  the accountability are placed.                                                               
Also,  the  relationship between  the  nonprofit  entity and  the                                                               
state  needs  to  be  clarified;  it  can't  stand  alone  as  an                                                               
unsupervised entity.                                                                                                            
MR. STEWART  said he  is highly supportive  of the  initiative to                                                               
move  electronic  health   records  forward;  health  information                                                               
exchange and similar technologies are  the wave of the future and                                                               
will save  the state a lot  of money. However, the  department is                                                               
neutral on this bill at this point.                                                                                             
2:02:39 PM                                                                                                                    
SENATOR DYSON  said his office  and the Department of  Health and                                                               
Social Services  (DHSS) have worked  together on  a comprehensive                                                               
on-line  medical system  aimed at  the informed  medical consumer                                                               
and asked if this system is separate from that.                                                                                 
MR. STEWART replied yes.                                                                                                        
SENATOR DYSON asked what he wanted changed in SB 133.                                                                           
MR. STEWART said  the big concern is  aligning accountability and                                                               
authority more  clearly. It seems to  give a lot of  authority to                                                               
the non-profit  entity, but a  lot of the  responsibility remains                                                               
with the state.                                                                                                                 
SENATOR DYSON  asked if  he was saying  that the  department does                                                               
not have  as much control  over where this  is going as  he would                                                               
MR. STEWART replied yes.                                                                                                        
2:04:48 PM                                                                                                                    
CHAIR  DAVIS asked  if the  department has  prepared anything  in                                                               
writing regarding their concerns with this bill.                                                                                
MR. STEWART replied no; he is working on it.                                                                                    
CHAIR DAVIS asked if he considered  the department a part of this                                                               
MR. STEWART replied yes.                                                                                                        
2:06:34 PM                                                                                                                    
CHAIR  DAVIS asked  if the  stimulus package  had small  "pots of                                                               
money"  going   to  agencies  other   than  state   or  municipal                                                               
MR. STEWART  replied yes; but  ultimately the  responsibility for                                                               
all of the money lies with the state government.                                                                                
CHAIR DAVIS asked him to provide her with the guidelines.                                                                       
MR.  HAMBURG agreed  with the  department  on a  couple of  their                                                               
concerns.  He said  that  language  on page  2,  lines 23-26,  in                                                               
subsection  (i)  could  be  amended   to  include  language  that                                                               
explicitly  states  whom  from   the  state  government  will  be                                                               
included on  the advisory board  as well as more  direct language                                                               
that requires participation.                                                                                                    
A second change  could be some clarification  of the department's                                                               
responsibilities  versus  the   nonprofit  entity  in  subsection                                                               
(1)(b)-(2)(f) to  show they those responsibilities  belong to the                                                               
CHAIR  DAVIS   asked  if  they   were  working  on   a  committee                                                               
MR. HAMBURG replied yes.                                                                                                        
2:08:57 PM                                                                                                                    
MR. HAMBURG went through the bill by section:                                                                                   
Section 1  lays out intent  language that includes  insuring that                                                               
the   confidentiality   of   a   patient's   identifying   health                                                               
information  is   secure.  Improving  health  care   quality  and                                                               
reducing health  care costs  was their  main concern  in drafting                                                               
this language.                                                                                                                  
Section 2 is  the meat of the bill and  directs the department to                                                               
designate a qualified  non-profit to plan and  develop the health                                                               
information exchange  system. Part of the  reason for designating                                                               
a nonprofit  to do  it is  so that the  Department of  Health and                                                               
Social Services didn't have to reinvent the wheel when a non-                                                                   
profit may  have spent years  already doing it. Also  a nonprofit                                                               
could be  politically independent,  widely representative  of the                                                               
major stakeholders,  and operate  transparently. Which  local and                                                               
state government interests to be  included in that advisory board                                                               
could be clarified as well.                                                                                                     
MR. HAMBURG said  language on page 2, lines 23-26,  talks about a                                                               
smooth process  and a long-lasting  implementation for  the State                                                               
of  Alaska.  Those  functions   would  include  installation  and                                                               
training on the use of the system  for those who are too small to                                                               
afford  it.  All  stakeholders  need   to  have  the  ability  to                                                               
participate in the  system, which will always be in  the state of                                                               
2:12:00 PM                                                                                                                    
He continued to privacy and security aspects. Page 4, lines 7-                                                                  
30, provide  additional privacy and security  requirements beyond                                                               
those  already existing  in  state and  federal  law; lines  7-10                                                               
direct   the  department   to   establish  appropriate   security                                                               
standards to  protect the individually  identifiable information;                                                               
lines  11-13 require  controls over  the individual  confidential                                                               
information,   and  this   language  was   borrowed  from   Texas                                                               
legislation. Lines  14-15 require  an electronic audit  system to                                                               
determine access  points and where  information is  being shared;                                                               
lines  16-17  require  that  the  system  always  meet  the  most                                                               
stringent  applicable  federal  and   state  privacy  laws.  This                                                               
specific language is from Vermont  legislation. Page 4, lines 18-                                                               
21, prohibit the  release of information for  anything other than                                                               
treatment or  billing of the  patient. Line 24 requires  that the                                                               
system allow for  a patient to opt out. Lines  25-26 make consent                                                               
required to  distribute a patient's  record; lines  27-28 require                                                               
that   a  patient   be   notified  of   any   violation  of   the                                                               
confidentiality; and line  29 requires that a patient  be able to                                                               
view  an audit  report  displaying who  has  accessed or  touched                                                               
their personal records at any time.                                                                                             
MR. HAMBURG said additional privacy  records can be found on page                                                               
5, lines  5-8, that  requires that any  contract entered  into to                                                               
carry  out HIE  must require  the contractor  to meet  applicable                                                               
federal and  state privacy and security  standards. Other federal                                                               
laws are  applicable that  govern health  information technology,                                                               
he said, and he would be happy to go through some of those.                                                                     
MR. HAMBURG  said the  biggest act that  protects privacy  is the                                                               
Health Insurance Portability and  Accounting Act (HIPAA). Some of                                                               
the  privacy protections  in SB  133 describe  that a  patient is                                                               
able to  obtain a copy of  their health record at  any time; they                                                               
can  request   corrections  of  errors;   they  can   receive  an                                                               
accounting  of how  their  information is  being  used; they  can                                                               
request  limits  on  access to  and  additional  protections  for                                                               
particularly    sensitive   information;    they   can    request                                                               
confidential  communications;   and  they   can  complain   to  a                                                               
facilities' privacy  officer if there  are any problems  and they                                                               
can  pursue a  complaint with  the U.S.  Department of  Health of                                                               
Human Services.                                                                                                                 
2:15:35 PM                                                                                                                    
MR. HAMBURG said there are many other privacy protections.                                                                      
CHAIR   DAVIS  said   he  was   probably  referring   to  federal                                                               
protections  and asked  if anything  in the  bill says  the state                                                               
would have the authority to do the same.                                                                                        
MR. HAMBURG answered yes; language on page 5, line 5, says:                                                                     
     A contract to carry out  the purposes must require that                                                                    
     the  contractor  meet   applicable  federal  and  state                                                                    
     requirements   for   protecting   health   information,                                                                    
     privacy   and  security,   and  nationally   recognized                                                                    
     standards  for interoperability  of health  information                                                                    
Also language on page 4, lines 16-17, says:                                                                                     
     ...meet  the  most  stringent  applicable  federal  and                                                                    
     state  privacy laws  governing  the  protection of  the                                                                    
     information contained in the system.                                                                                       
CHAIR DAVIS called for public testimony.                                                                                        
REBECCA MADISON,  representing herself, supported SB  133 and was                                                               
available  for  questions.  She  is part  of  the  Alaska  Health                                                               
Network in Fairbanks.                                                                                                           
2:17:50 PM                                                                                                                    
PAT  LUBY, Advocacy  Director, AARP,  supported SB  133. He  said                                                               
that  health  IT  has enormous  potential  for  reducing  medical                                                               
errors,  increasing access  to  medical  records in  emergencies,                                                               
reducing duplication  of tests and redundant  paperwork, engaging                                                               
consumers   in   managing   their  own   care,   and   minimizing                                                               
inappropriate institutionalization;  and it will  ultimately help                                                               
providers to focus on patients instead of paperwork.                                                                            
CHAIR DAVIS  asked Mr. Sherry if  he knew of any  doctors already                                                               
doing something similar to this.                                                                                                
MR. SHERRY replied  that a private physicians'  group, the Alaska                                                               
eHR Alliance,  in Anchorage is  working collectively to  help get                                                               
electronic  health records  used  more broadly  in the  physician                                                               
community. They have agreed to come into this network.                                                                          
2:20:42 PM                                                                                                                    
SENATOR PASKVAN asked him to expand  on the federal match and any                                                               
dates that  may be applicable  for state's contribution  in order                                                               
to participate.                                                                                                                 
MR. SHERRY  replied that  clearly the stimulus  is trying  to get                                                               
action  in  '09,  and  he  expects the  Office  of  the  National                                                               
Coordinator that is  handling all this money  should be releasing                                                               
their scenario for distributing funds soon;  so he wants to be in                                                               
a position  to make  application for those  funds this  spring or                                                               
summer.  In early  years the  match requirement  is substantially                                                               
less  for the  state,  but  it increases  with  each year.  Their                                                               
target  is about  $20 million  in federal  stimulus money  to the                                                               
state's  revenue  stream;  $1.3   million  in  state  match  will                                                               
increase the  state's competitiveness for other  funding streams.                                                               
He  informed  them that  he  is  going  after as  many  different                                                               
sources of  local and other  contributions as possible  for this.                                                               
He expects  that the tribal  health organizations should  be able                                                               
to contribute  soon. This thing can  be moved a whole  lot faster                                                               
if all the stakeholders put in their resources.                                                                                 
MR. SHERRY  commented that  this is  a rapidly  developing front,                                                               
and  based  on discussions  with  department,  they believe  some                                                               
restructuring  in  the  bill would  provide  greater  clarity  of                                                               
responsibility and how various  stakeholders are represented; and                                                               
he is happy to continue working on that.                                                                                        
2:23:45 PM                                                                                                                    
CHAIR DAVIS  closed public testimony  and said she would  hold SB
133 until they get a CS to consider.                                                                                            
There being  no further  business to  come before  the committee,                                                               
Chair Davis adjourned the meeting at 2:24 p.m.                                                                                  

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