PROPOSED RULEMAKING
DEPARTMENT OF HEALTH
[ 28 PA. CODE CHS. 1101, 1103, 1105, 1107 and 1113 ]
Supplemental Nutrition Program for Women, Infants and Children (WIC Program)
[38 Pa.B. 4767]
[Saturday, August 30, 2008]The Department of Health (Department), Bureau of Family Health, Division of WIC (WIC Program), proposes to amend 28 Pa. Code Chapters 1101, 1103, 1105, 1107 and 1113. The chapters govern the authorization and management of stores participating in the Special Supplemental Nutrition for Women, Infants and Children (WIC) Program.
Without some of these proposed revisions, the United States Department of Agriculture, Food Nutrition Services (USDA-FNS) may withhold funding to the WIC Program. If Federal funding is interrupted, the Department would likely need to suspend or eliminate the WIC Program, having a significant negative impact on the health and welfare of WIC eligible women, infants and children. Loss or even suspension of Federal funding for the WIC Program would render it inoperable, as 100% of the WIC Program's funds are Federal funds, or would place a difficult, if not impossible, financial burden on the Commonwealth, if the Commonwealth continue to operate the WIC Program with State funds. The WIC Program serves approximately 245,000 families and individuals, and is a high profile benefits program not only in this Commonwealth, but also around the country. An interruption in the funding of the WIC Program would affect the receipt of necessary food benefits for the participants of the WIC Program, the retail grocery business and the employment of personnel at 24 local WIC agencies.
Other proposed revisions to the WIC Program State regulations include the addition of language which will allow the WIC Program to more smoothly incorporate technology advancements. These advancements will ensure that the Pennsylvania WIC Program remains at the forefront of quality and efficiency and continues to provide the best experience for WIC participants and WIC authorized stores.
A. Summary of Amendments
Section 1101.2. Definitions.
The Department proposes to revise this section to add definitions for the terms ''above-50-percent-store,'' ''competitive price,'' ''food items,'' ''food sales,'' ''Food Stamp Program,'' ''full line grocery store,'' ''peer group'' and ''store peer group system.'' These proposed terms, and their definitions, are required for the implementation of the other revisions to the regulations providing for the identification of WIC-Only stores, the term more commonly used when referring to above-50-percent stores, and for additional Federally-mandated cost containment requirements.
The Department proposes to define an ''above-50-percent-store'' as a store that derives more than 50% of its annual food sales revenue from WIC checks and any new store that is expected to derive more than 50% of its annual food sales revenue from WIC checks. Guidelines for determining if more than 50% of the store's food sales revenue is from WIC checks are set by the USDA in accordance with Federal laws.
The Department proposes to define ''competitive price'' as the price established by the Department, at or below which a store must maintain the required minimum inventory. As explained as follows, this term will replace ''maximum allowable price'' in some other existing provisions of the regulations, although ''maximum allowable price'' will remain an operative term in the regulations.
The Department proposes to define ''food items'' as items sold for human consumption that are eligible items under the Food Stamp Program. The Department also proposed to define ''food sales'' as sales of all Food Stamp Program eligible foods.
The Department proposes to define ''Food Stamp Program'' as the government benefits program operated under the authority of the Food Stamp Act of 1964, 7 U.S.C.A. Chapter 51, as amended, and 55 Pa. Code Part II, Subpart L (relating to Food Stamp Program). This program is administered by the USDA-FNS and the Department of Public Welfare.
The Department proposes to define ''full line grocery store'' as a store that, in addition to WIC authorized foods, offers for sale, food items in each of the four following food categories: 1) meat, poultry or fish; 2) bread or cereal; 3) vegetables or fruits; and, 4) dairy. A minimum of three different varieties of food items in each of the four categories must be available for sale at all times of operation and displayed in a public area of the store.
As stated previously, above-50-percent-stores are typically referred to as WIC-Only stores. WIC-Only stores generally sell only WIC foods, serve only WIC participants and charge significantly higher prices for WIC foods than typical grocery stores. In turn, these higher prices result in a higher cost for the WIC Program, which could result in a reduction in the number of WIC checks provided to WIC Program participants and ultimately a reduction in the number of participants the WIC Program can serve.
The Department proposes to define ''peer group'' as the classification of an authorized store under the store peer group system, as determined by the criteria selected by the Department. The term ''store peer group system'' is proposed to be defined as a classification of authorized stores into groups based on common characteristics or criteria that affect food prices, for the purposes of applying appropriate competitive pricing criteria to stores at authorization and reauthorization and limiting payment for foods to competitive levels. Both of these proposed terms and definitions will allow the Department to implement Federally-mandated cost containment measures.
The Department also proposes to revise the definition of ''overpayment'' to clarify that the maximum allowable price applicable to the store's peer group will be used for determining whether the WIC Program made payment to a store for an amount higher than what the store would be entitled to under program regulations.
Section 1103.1. Authorization and reauthorization process and requirements.
The Department proposes to renumber § 1103.1(b)(5) and (6) as § 1103.1(b)(6) and (7) respectively, and insert a new § 1103.1(b)(5). The Department also proposes to revise this section to renumber subsections (c)(2) and (3) as (c)(3) and (4), respectively, to insert a new subsection (c)(2).
The proposed subsections (b)(5) and (c)(2) provide that the Department may request from a store seeking authorization or reauthorization any information the Department deems necessary to determine whether the store will derive or is deriving more than 50% of its annual food items sales revenue from the sale of food items for WIC checks. This information may include, but is not limited to, official State and Federal Income Tax Filings, Official State Sales Tax records, inventory purchase records, sales records or a self-declaration, or both, from the applicant. Amendments to the Federal regulations governing the WIC Program and appropriating the funding to the WIC Program necessitate these, and other similar revisions to the Pennsylvania WIC regulations. See Child Nutrition and WIC Reauthorization Act, Pub. L. No. 108-265, § 203(e)(10), 118 Stat. 729 at 776-779 (2004) (codified at 42 U.S.C. § 1786(h)(11)); Consolidated Appropriations Act, 2005, Pub. L. No. 108-447, 118 Stat. 2809, 2833 and 2850 § 780 (2005 Appropriations Act); and, Agricultural, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2006, Pub. L. No. 109-97, 119 Stat. 2120, 2144 and 2163 § 787 (2006 Appropriations Act). The Department published a notice of its intent to implement some of these Federal mandates in the Pennsylvania Bulletin. See 35 Pa.B. 77 (January 1, 2005).
The Department also proposes to revise § 1103.1 to add a new subsection (d)(7). This proposed subsection will allow the Department to terminate authorization of a store if the store fails to provide the Department with the information necessary for the Department to determine whether the store will derive or is deriving more than 50% of its annual food items sales revenue from the sale of food items for WIC checks. The proposed subsection requires that the Department provide written notice to the store of the information requested and that the Department allow the store 20 calendar days to provide the information.
The proposed revisions to this section also include the addition of a new subsection (d)(8) which provides for the termination of authorization of a store as a WIC vendor in the event the Department, subsequent to authorizing the store, determines the store is deriving more than 50% of its annual food items sales revenue from the sale of food items for WIC checks.
The proposed subsection (d)(7) and (8) assists the Department in ensuring all above-50-percent-stores are properly identified to implement the Federally mandated cost containment measures. In conformity with Federal law, the proposed subsections (b)(5), (c)(2) and (d)(7) and (8) do not apply to stores that are solely owned and operated by nonprofit entities.
Section 1103.4. Selection criteria for authorization and reauthorization.
The Department proposes to amend paragraph (5) to require that the minimum inventory be maintained at or below the competitive price applicable to the store's peer group. The regulations currently require the minimum inventory be maintained at or below the maximum allowable price. The Department will continue to reimburse stores up to the price paid by other customers or the maximum allowable price for the food items, whichever is less.
The Department proposes to revise paragraph (8) in § 1103.4 to add language requiring the store to operate as a ''full line grocery store'' as defined in other revisions to these regulations.
The Department also proposes to add a new paragraph (14) which provides that one of the selection criteria for authorization is that the store does not, nor is expected to, derive more than 50% of its annual food items sales revenue from the sale of food items for WIC checks. In conformity with Federal law, this provision does not apply to stores that are solely owned and operated by nonprofit entities.
The Department also proposes to add a new paragraph (15) which would require stores to maintain certain minimum information technology requirements set by the Department and published annually in the Pennsylvania Bulletin. These information technology requirements, including computer, internet and telephone requirements, will allow the Department to more smoothly implement improvements in the WIC benefit and food delivery system such as automated notification of WIC transactions, updates to competitive prices and maximum allowable prices, and provide other information to stores more quickly and efficiently. Stores authorized prior to the effective date of this proposal and maintaining an uninterrupted authorized status will be exempt from the requirements of this proposed paragraph.
These proposed revisions further the Department's efforts to implement the changes in Federal law and in controlling WIC food costs. See 42 U.S.C.A. § 1786(h)(11).
Section 1103.8. Store peer group system.
The Department proposes to add this new section to establish the store peer group system, also defined in these proposed regulatory revisions. Proposed subsection (a) would provide that the Department will establish the peer group system and distinct pricing criteria and reimbursement levels for each peer group. Proposed subsection (b) would provide that a minimum of two criteria would be selected by the Department for creating peer groups, one of which would be geography. The Department would publish the peer group selection criteria in the Pennsylvania Bulletin on an annual basis. Because the Federal WIC regulations require states to maintain flexibility in the peer group criteria selection process, the Department cannot more definitively establish those criteria in these regulations.
Proposed subsection (c) would provide a means for the Department to determine which peer group a store will be classified in and how the store will receive notification of this classification. Proposed subsection (d) would require a store to adhere to competitive prices and maximum allowable prices established for the peer group in which it has been classified. Proposed subsection (e) would require stores to notify the Department of any changes which would affect its peer group classification.
Section 1105.1. Training.
The Department proposes to revise § 1105.1(b)(5) to make reference to the proper provision in these regulations, as proposed revisions in other portions of these regulations will be renumbered.
Section 1105.2. Price adjustment.
The Department proposes to revise subsection (a) to provide that the application of maximum allowable prices will be based on the store's peer group.
The Department proposes to revise subsection (e) to make reference to the proper provision in these regulations, as revisions in other portions of these regulations will be renumbered.
Section 1105.3. Terms and conditions of participation.
The Department proposes to revise this section by adding new subsection (a)(17) and (18).
Proposed subsection (a)(17) provides that WIC authorized vendors shall only purchase infant formula that is to be sold to WIC participants from Department-authorized infant formula manufacturers, wholesalers, distributors or retailers. The Department will maintain a list of authorized infant formula manufacturers, wholesalers, distributors and retailers, and make the list readily available to the stores. Information on where to obtain the list will be published simultaneously with the publishing of these regulatory revisions. This proposed subsection is required to conform to recent amendments in the Federal WIC statutes. See 42 U.S.C.A. § 1786(h)(8)(A)(ix) and (x).
Proposed subsection (a)(18) provides that as a term and condition of being an authorized WIC vendor, a store must provide the Department with all the information the Department requests for the Department to determine whether more than 50% of the store's annual food items sales revenue is derived from the sale of food items for WIC checks. This proposed provision will not apply to stores that are solely owned and operated by nonprofit entities.
The Department also proposes to revise subsection (b)(3) to provide that the application of maximum allowable prices will be based on the store's peer group.
The Department proposes to delete subsection (c)(2). This subsection provides that, with regards to WIC check processing and redemption, a WIC-authorized store can only accept a WIC check if the check is made payable to that specific store. As a result of the amendments to the Federal statutes that require states allow participants to redeem WIC checks at any authorized vendor in the state, this language must be deleted. See 42 U.S.C.A. § 1786(f)(1)(C)(i). The amendment allows WIC participants greater flexibility in the redemption of their WIC checks. To comply with Federal law, the Department has been allowing WIC participants to redeem WIC checks at any authorized store since July 1, 2006.
The Department proposes to renumber subsection (c)(3)--(18) as subsection (c)(2)--(17), respectively.
The Department proposes to add subsection (c)(18), which requires a store to transmit to the Department, records of WIC check numbers accepted by the store prior to depositing the WIC checks, through communication channels made available by the Department. This requirement will assist the Department in tracking WIC checks following state implementation of the amendments to Federal regulations that require states to allow participants to redeem WIC checks at any authorized vendor in the State, and will work in conjunction with proposed § 1103.4(15). See 42 U.S.C.A. § 1786(f)(1)(C)(i).
Stores transmit the WIC check numbers for checks accepted at the store in one of four ways by means of an electronic reporting system. First, some stores automatically transmit this data through their registers and computer systems with the addition of software provided by the Department. Second, other stores are able to install software on their computers and transmit the information with the assistance of Magnetic Ink Character Recognition (mini-MICR) readers provided by the Department. Third, stores may use a secure web site where they may log in and manually key in the WIC check numbers from WIC checks accepted by their store. Finally, those stores without computers or internet connections can call a toll-free number and input the WIC check information into a touch-tone system. The toll-free touch tone phone system is available to all stores in the event the preferred methods of electronic transmission experience any technical interruptions. As WIC participants have been permitted to redeem WIC checks at any authorized store since July 1, 2006, the Department has already implemented communication channels for the transmission of this information and stores have been complying with these proposed requirements.
The Department also proposes to revise subsection (d) to allow the Department some flexibility in determining when it will deny payment for checks which were inappropriately submitted for redemption. Because of changes in the redemption process, the Department expects stores may have some initial errors in the redemption process. This proposed change will allow the Department to reimburse stores for the foods provided to participants and not punish them for mistakes which may occur as they adjust to new redemption procedures.
Section 1105.5. Changes in availability or location of WIC authorized stores.
The Department proposes to delete § 1105.5(e) which provides for the temporary authorization of stores to accept WIC checks redeemable at other stores. As a result of other revisions, which allow for redemption of WIC checks at any WIC-authorized store, this subsection has become inoperative and unnecessary. See 42 U.S.C.A. § 1786(f)(1)(C)(i).
Section 1105.6. Monitoring of WIC authorized stores.
The Department proposes to revise subsection (a) to add language providing for an annual analysis by the Department of each WIC authorized store to determine if the store is deriving more than 50% of its annual food items sales revenue from the sale of food items for WIC checks. This proposed revision furthers the Department's efforts to implement the changes to Federal law, including restrictions pertaining to WIC-Only stores, into the State WIC Program. See, 42 U.S.C.A. § 1786(h)(11); 118 Stat. 2809, 2850, § 780; and, 119 Stat. 2120, 2163, § 787. In conformity with Federal law, the proposed language does not apply to stores that are solely owned and operated by nonprofit entities.
The Department also proposes to add a new subsection (h). This proposed subsection provides for the annual determination by the Department of food items sales revenue percentages for WIC authorized stores, and includes language stating the Department may request from the store any information the Department requires to determine if more than 50% of the store's annual food items sales revenue is derived from WIC sales. This proposed subsection does not apply to stores solely owned and operated by nonprofit entities. As with other revisions to these regulations, this revision seeks to implement changes in Federal WIC laws including restrictions pertaining to WIC-Only stores. See 2005 Appropriations Act, 118 Stat. 2809, 2850, § 780; 2006 Appropriations Act, 119 Stat. 2120, 2163, § 787; and 42 U.S.C.A. § 1786(h)(11).
Section 1107.1a. Disqualifications.
The Department proposes to amend subsection (d)(4) to provide that a 1 year disqualification will occur if a WIC authorized store fails to make the minimum inventory of foods available at or below the current competitive price applicable to the store's peer group. The regulations currently require the minimum inventory be provided at or below the maximum allowable price.
The Department proposes to revise this section to delete subsection (d)(6). Subsection (d)(6) provides for a 1-year disqualification for a WIC authorized store in the event the Department found two or more incidences of a WIC authorized store accepting, without prior Department authorization, a WIC check made payable to another store. As a result of other proposed revisions to these regulations, this is no longer a violation of the Department's WIC regulations. See 42 U.S.C.A. § 1786(f)(1)(C)(i).
Because of this proposed deletion, the Department proposes to renumber existing subsection (d)(7)--(17) as subsection (d)(6)--(16), respectively.
Section 1107.2. Civil money penalties.
The Department proposes to revise subsection (a) to make clear that the Department will not offer a civil monetary penalty in lieu of a denial of reauthorization or disqualification for stores found to be subject to a disqualification under § 1107.1a(a). Section 1107.1a(a) provides for the permanent disqualification of a store convicted of trafficking in WIC checks or selling firearms, ammunition, explosives or controlled substances for WIC checks.
The Department also proposes to revise subsection (b)(2) to make reference to the proper provision in these regulations, as proposed in other portions of these regulations will renumber some of the subsections.
Section 1113.1. Right to administrative appeal.
The Department proposes to revise this section to add subsection (b)(4). This proposed subsection provides that the validity and appropriateness of the Department's store's peer group system and the criteria used by the Department to identify above-50-percent-stores may not be challenged by the appeal process set forth in these regulations. This language is required to conform to the recent amendments in Federal WIC regulations. See 7 CFR 246.18(a)(1)(iii)(B) (relating to administrative review of state agency actions). Because of this proposed addition, the Department proposes to renumber existing subsection (b)(4) and (5) as (b)(5) and (6) respectively.
The Department also proposes to revise subsection (c) to make reference to the proper provision in these regulations, as proposed revisions in other portions of these regulations will renumber some of the subsections.
B. Fiscal Impact.
Fiscal Impact on the Department.
The PA WIC Program is 100% Federally-funded. No State dollars are involved in the operation of the WIC Program. The proposed regulatory change to § 1105.3, allowing a WIC check to be used at any authorized store, will cause the PA WIC Program to incur a one time equipment purchase fee.
The Commonwealth is one of the few states whose regulations provide for store specific WIC checks. The customary practice in states that are nonstore specific is to require their banking contractor to capture the authorized store number from the face of each check as it is processed through the bank. This service would have added approximately $.02 to the cost of each check processed. The Commonwealth processes approximately 8,000,000 WIC checks annually, which would result in an estimated direct cost increase of approximately $160,000 annually if this method were implemented. Additional costs to the Department under this method would include the issuance and maintenance of WIC authorization stamps to approximately 1,500 authorized stores. The anticipated initial cost would be $2,800 and ongoing replacement and new applicant stamp cost of approximately $300 annually.
The Commonwealth chose an alternate method to this check identification system, which is less costly and less labor intensive. The alternate method is through the use of direct data transfer from each WIC authorized store to the PA WIC Program. This is accomplished with the use of electronic cash registers, Magnetic Ink Character Recognition (mini-MICR) readers, a secure web site or touchtone telephones. Each WIC-authorized store is required to transfer check redemption data to the PA WIC Program prior to depositing the redeemed WIC checks. The data is then combined electronically with each WIC check number, before the bank will redeem the check. This process will incur an initial cost of $93,823 for the cost of the mini-MICR readers that will be supplied to stores that have the appropriate communications equipment. There will be no additional banking fees incurred. Since the Department was required by Federal law to implement these changes by July 1, 2006, before regulatory revisions could be completed, some of these costs have already been absorbed by the PA WIC Program.
Although costs to the Department initially increased, the long-term costs are greatly reduced. Additionally, savings in efficiencies at the local agency level will mitigate these initial cost increases. WIC checks previously identified the authorized store at which they were to be redeemed. However, when the store did not have the products the participant wanted or ceased operating, participants had to go back to the clinics to have the WIC checks reissued to another store. This created additional workload at the clinics, which is eased with these changes. Unfortunately, the actual cost of this additional workload cannot be quantified for accurate comparison to expected increases in costs.
Other aspects of changes in these regulations may cause some additional costs to the Department. The initial and annual determination of whether a store is, or is expected to, derive more than 50% of its annual revenue from the sale of food items from WIC sales and the establishment and maintenance of the store peer group system will require additional staff time. However, it is anticipated this task can be absorbed by the existing staff.
In addition, the list of authorized infant formula manufacturers, wholesalers, distributors or retailers required to be provided to WIC authorized stores will include approximately 11,000--12,000 entities. The Department has worked with USDA and determined that such a list can be provided or made available to WIC authorized stores in an electronic format, thereby mitigating the cost of production of an 11,000--12,000 entry list to approximately 1,400 WIC authorized stores annually.
Any cost increases as a result of these proposed changes mandated by Federal law will be covered by the Federal funding provided to the WIC Program. Additional costs saving may also be realized from the cost containment measures proposed in these regulations as required by Federal law.
Fiscal Impact on the Regulated Community
The Department does not anticipate any increased costs for the regulated community as a result of these proposed amendments.
C. Paperwork Requirements.
Paperwork Requirements for the Department
The Department's paperwork will increase in obtaining, preparing and updating the list of authorized infant formula manufacturers, wholesalers, distributors and retailers. The Department's paperwork requirements will also increase in the evaluation and documentation of the review of each store's actual or anticipated WIC sales to determine if any store is deriving more than 50% of its annual revenue from the sale of food items from WIC sales and in establishing and maintaining the store peer group system and the applicable competitive and maximum allowable prices.
Paperwork Requirements for the Regulated Community
The proposed amendments do not increase paperwork for WIC Program participants. The WIC-authorized stores are required to submit electronic data regarding the redemption of WIC checks prior to deposit. Although this task will increase the time necessary for WIC-authorized stores to prepare WIC checks for deposit, it will be somewhat offset by the fact that cashiers will no longer need to verify that the WIC check being presented for payment is payable to the store.
D. Effective Date/Sunset Date.
The proposed amendments will become effective upon publication in the Pennsylvania Bulletin as final-form rulemaking. The regulations will be monitored continuously and will be updated as required by changes in Federal laws governing the WIC Program. Therefore, no sunset date has been set.
E. Statutory Authority.
The WIC Program was authorized through an amendment to the Federal Child Nutrition Act of 1966 (42 U.S.C.A. § 1786). Congress authorized the USDA-FNS to contract with and make funds available to states to administer the WIC Program. In this Commonwealth, the WIC Program receives 100% of its funding from the USDA-FNS. Recent amendments to the Federal WIC statutes and appropriations necessitate these regulatory revisions. See Child Nutrition and WIC Reauthorization Act, Pub. L. No. 108-265, § 203(e)(10), 118 Stat. 729 at 776-779 (2004) (codified at 42 U.S.C. § 1786(h)(11)); Consolidated Appropriations Act, 2005, Pub. L. No. 108-447, 118 Stat. 2809, 2833 and 2850 § 780; and, Agricultural, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2006, Pub. L. No. 109-97, 119 Stat. 2120, 2144 and 2163 § 787.
There are no State statutes governing the operation or administration of the WIC Program. The Women's, Infants' and Children's Nutrition Improvement Act (62 P. S. §§ 2951--2955) authorizes additional State funding for the expansion of the WIC Program. The Commonwealth, however, has not provided funding for the expansion of the program since State Fiscal Year 1996.
The State regulations governing the WIC Program were published at 29 Pa.B. 3841 (July 24, 1999), following the decision of the Commonwealth Court in Giant Food Stores, Inc. v. Commonwealth of Pennsylvania, Department of Health, 713 A.2d 177 (Pa. Cmwlth. 1998). The Commonwealth Court held that the Department was required to promulgate regulations governing the selection and management of grocery stores to participate in the WIC Program. The State regulations added 28 Pa. Code Part VIII (relating to supplemental nutrition program for women, infants and children (WIC program)). The regulations also rescinded 28 Pa. Code §§ 8.41--8.74, the Department's then existing regulations pertaining to WIC Program administrative appeals.
The proposed amendments are published under section 2102(g) of The Administrative Code of 1929 (code) (71 P. S. § 532(g)), which provides the Department general power to promulgate regulations to carry out its duties. Section 2102(a) of the code gives the Department the authority and duty to protect the health of the people of this Commonwealth. (71 P. S. § 532(a))
F. Regulatory Review.
Under section 5(a) of the Regulatory Review Act (act) (71 P. S. §§ 745.1--745.12), the Department submitted a copy of these proposed rulemaking on August 15, 2008, to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House Health and Human Services and the Senate Public Health and Welfare Committees (Committees). In addition to submitting the proposed amendments, the Department has provided IRRC and the Committees with a copy of a Regulatory Analysis Form prepared by the Department in compliance with Executive Order 1996-1, ''Regulatory Review and Promulgation.'' A copy of this material is available to the public upon request.
If IRRC has any objections to any portion of the proposed amendments, it will notify the Department by October 29, 2008. The notifications shall specify the regulatory review criteria which have not been met by that portion. The act specifies detailed procedures for review, prior to final publication of the regulation by the Department, the General Assembly and the Governor, of objections raised.
G. Contact Person.
Interested persons are invited to submit written comments, suggestions or objections regarding the proposed regulation to Greg Landis, Director, WIC Program, 2150 Herr Street, 1st Floor, Harrisburg, PA 17103, (717) 783-1289, within 30 days after publication of this notice in the Pennsylvania Bulletin. Persons with a disability who wish to submit comments, suggestions or objections regarding the proposed amendments may do so by using the previous number or address or for speech or hearing, or both, impaired persons by using V/TT (717) 783-6514 or the Pennsylvania AT&T Relay Service at (800) 654-5984 (TT). Persons who require an alternative format of this document may contact Greg Landis at the previous address or telephone numbers so that necessary arrangements may be made.
CALVIN B. JOHNSON, M. D., M.P.H.,
SecretaryFiscal Note: 10-180. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 28. HEALTH AND SAFETY
PART VIII. SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN (WIC PROGRAM)
CHAPTER 1101. GENERAL PROVISIONS § 1101.2. Definitions.
The following words and terms, when used in this part, have the following meanings, unless the context clearly indicates otherwise:
Above-50-percent-store--A store that derives more than 50% of its annual food sales revenue from WIC checks, and a new store applicant expected to meet this criterion under guidelines approved by USDA-FNS.
* * * * * Competitive price--The price established by the Department, at or below which a store must maintain the required minimum inventory.
* * * * * Food items--Items sold for human consumption that are eligible for purchase under the Food Stamp Program.
* * * * * Food sales--
(i) Sales of all Food Stamp Program eligible foods intended for home preparation and consumption, including meat, fish and poultry; bread and cereal products; dairy products; fruits and vegetables.
(ii) Food items such as condiments and spices, coffee, tea, cocoa and carbonated and noncarbonated drinks may be included in food sales when offered for sale along with foods in the categories identified in subparagraph (i).
(iii) The term does not include the sale of any item that cannot be purchased with food stamp benefits, such as hot foods or food that will be eaten in the store.
Food Stamp Program--The government benefits program operated under the authority of the Food Stamp Act of 1964 (7 U.S.C.A. Chapter 51), and 55 Pa. Code Part II, Subpart L (relating to Food Stamp Program), and administered by the USDA-FNS and the Department of Public Welfare.
Full line grocery store--A store that:
(i) Offers for sale, in addition to WIC-authorized foods, food items from each of the following four food categories on a continuous basis:
(A) Meat, poultry or fish.
(B) Bread or cereal.
(C) Vegetables or fruits.
(D) Dairy.
(ii) Has available for sale at all times of operation and displays in a public area of the store, a minimum of three different varieties of food items in each of the four food categories listed subparagraph (i).
* * * * * Overpayment--Payment to a WIC-authorized store of a WIC check redeemed by the store in an amount in excess of the amount to which the store was entitled based upon the maximum allowable price [of] applicable to the store's peer group for each allowable food authorized for purchase on the WIC check.
* * * * * Peer group--The classification of an authorized store pursuant to the store peer group system, as determined by the criteria selected by the Department.
* * * * * Store peer group system--A classification of authorized stores into groups based on common characteristics or criteria that affect food prices, for the purposes of applying appropriate competitive pricing criteria to stores at authorization and reauthorization and limiting payment for foods to competitive levels.
* * * * *
CHAPTER 1103. AUTHORIZATION OF STORES § 1103.1. Authorization and reauthorization process and requirements.
* * * * * (b) Authorization process.
* * * * * (5) The Department may request from the store any information necessary for the Department to determine whether the store qualifies as an above-50-Percent-Store.
(6) The local agency shall conduct the onsite review and forward the results to the Department for a decision on the store's application.
[(6)] (7) The Department will deny the application if the selection criteria in § 1103.4 are not satisfied, unless the Department grants probationary authorization under § 1103.2 (relating to probationary authorization). The Department will notify the store in writing whether the store's application for authorization is granted or denied. If the Department denies the application for authorization, the store shall be eligible to reapply for authorization six months after the effective date of the denial.
(c) Reauthorization process.
* * * * * (2) The Department may request from the store any information necessary for the Department to determine whether the store qualifies as an above-50-Percent-Store.
(3) The local agency shall conduct the onsite review and forward the results to the Department for a decision on the store's application.
[(3)] (4) The Department will deny the application without advance warning if the selection criteria in § 1103.4 are not satisfied, unless the store requests and the Department grants temporary authorization in accordance with § 1103.3 (relating to temporary authorization) or the Department grants probationary authorization in accordance with § 1103.2. The Department will notify the store in writing whether the store's application for reauthorization is granted or denied. If the Department denies the application for reauthorization, the store shall be eligible to apply for authorization 6 months after the effective date of the denial. If the Department grants and later rescinds temporary authorization, the store shall be eligible to apply for authorization 1 year from the date of the first onsite review for reauthorization.
(d) Termination of authorization or reauthorization. The Department will terminate a store's authorization or reauthorization if:
* * * * * (7) The Department does not receive from the store, within 20 calendar days of the store's receipt of a written notice from the Department, the information the Department has requested necessary for it to determine whether the store qualifies as an above-50-percent-store.
(8) After authorization of the store, the Department determines the store qualifies as an Above-50-Percent-Store. This paragraph does not apply to stores solely owned or operated by nonprofit entities.
§ 1103.4. Selection criteria for authorization and reauthorization.
The Department will use the following selection criteria to identify stores that meet the operational criteria to serve as a WIC-authorized store:
* * * * * (5) The store shall have available on the premises at all times the minimum inventory of allowable foods as established by the Department under § 1103.5 (relating to minimum inventory) at shelf prices that are equal to or less than the [maximum allowable] competitive prices applicable to the store's peer group for those foods. The Department will publish in the Pennsylvania Bulletin and mail to all WIC-authorized stores, quarterly, the competitive prices and maximum allowable prices applicable to all peer groups for allowable foods for the next quarter.
* * * * * (8) The store shall operate as a full line grocery store in a permanent fixed location where participants may purchase allowable foods with their WIC checks.
* * * * * (14) The store does not qualify or is not expected to qualify as an above-50-percent-store. This paragraph does not apply to stores solely owned or operated by nonprofit entities.
(15) The store shall meet the minimum information technology requirements set by the Department. The Department will publish in the Pennsylvania Bulletin and mail to all WIC authorized stores, by September 15 of each year, the minimum technology requirements applicable for the following calendar year. This paragraph does not apply to stores authorized prior to _____ (Editor's Note: The blank refers to the effective date of adoption of this proposed rulemaking.) and maintaining an uninterrupted authorized status.
§ 1103.8. Store peer group system.
(a) The Department will establish a store peer group system, including distinct competitive pricing criteria and allowable reimbursement levels for each peer group.
(b) The Department will create peer groups based upon at least two criteria selected by the Department, one of which will be a measure of geography, such as metropolitan or other statistical areas that form distinct labor and product markets. The Department will annually publish the peer group selection criteria in the Pennsylvania Bulletin.
(c) The Department will place a store seeking authorization into an appropriate peer group based upon information gathered from the store's application as completed by the store and returned to the local agency in accordance with § 1103.1(b)(1) (relating to authorization and reauthorization process and requirements). The Department will notify a store of its peer group classification prior to conducting an onsite review under § 1103.1(b)(5). A WIC-authorized store seeking reauthorization shall remain in the peer group previously selected for the store unless otherwise notified by the Department.
(d) A WIC-authorized store shall adhere to the competitive prices and maximum allowable prices applicable to the store's peer group.
(e) A WIC-authorized store shall inform the Department of any store changes applicable to the peer group selection criteria in effect.
CHAPTER 1105. REQUIREMENTS OF WIC AUTHORIZED STORES § 1105.1. Training.
* * * * * (b) Annual training. The Department will provide for WIC-authorized stores annual training which is designed to prevent WIC Program errors and abuses and to improve WIC Program services. The following apply to annual training:
* * * * * (5) Failure to have at least one representative attend training shall result in the Department imposing sanctions against the WIC-authorized store under [§ 1107.1a(d)(16)] § 1107.1a(d)(15) (relating to disqualifications).
* * * * * § 1105.2. Price adjustment.
(a) Determination of overpayment. In each calendar quarter, the Department will compare the maximum amount for which a WIC-authorized store could have redeemed a WIC check based upon the maximum allowable prices applicable to the store's peer group for foods authorized for purchase on the check against the actual amount for which the WIC check was redeemed, to determine whether there was an overpayment.
* * * * * (e) Sanctions. The Department will impose a sanction against a WIC authorized store under [§ 1107.1a (d)(12)] § 1107.1a(d)(11) (relating to disqualifications) if the store fails to reimburse the Department for an overpayment within the time required under subsections (c) and (d).
§ 1105.3. Terms and conditions of participation.
(a) General terms and conditions. A WIC-authorized store shall adhere to this subsection. Failure to do so shall result in the imposition of sanctions under § 1107.1 (relating to imposition of sanctions). A WIC-authorized store shall:
* * * * * (17) Purchase infant formula for resale to WIC participants only from Department authorized infant formula manufacturers, wholesalers, distributors or retailers. Information on where to obtain the list will be published by the Department in the Pennsylvania Bulletin simultaneously with the initial publishing of this subsection. (Editor's Note: The list referred to in this paragraph will be published with this rule upon final publication.)
(18) Provide the Department, within 20-calendar days of the store's receipt of a written notice from the Department requesting the additional information, information the Department has requested necessary for the Department to determine whether the store qualifies as an above-50-percent-store. This paragraph does not apply to stores solely owned or operated by nonprofit entities.
(b) Terms and conditions of participation with regard to participants. A WIC-authorized store shall serve participants and authorized representatives as set forth in this subsection. The Department will impose sanctions against a WIC-authorized store that fails to do so, as set forth in § 1107.1. A WIC-authorized store shall:
* * * * * (3) Provide an allowable food to a participant or authorized representative at or below the current price the store charges other customers, and at or below the maximum allowable price applicable to the store's peer group.
* * * * * (c) Terms and conditions of participation with regard to WIC check processing and redemption. A WIC-authorized store shall adhere to the requirements of this subsection with regard to WIC check processing and redemption. The Department will impose sanctions against a WIC- authorized store that fails to do so, as set forth in § 1107.1. A WIC-authorized store shall:
* * * * * (2) [Accept a WIC check only if the WIC check is made payable to that specific WIC authorized store, unless the Department has provided written authorization otherwise to the store.
(3)] Accept a WIC check only if the participant or authorized representative presents the WIC check on or between the ''First Day to Use'' and the ''Last Day to Use'' designations on the WIC check.
[(4)] (3) Accept a WIC check only if a valid WIC identification card is presented at the time of the WIC transaction.
[(5)] (4) Accept a WIC check only if the signature of the participant or authorized representative is obtained on the WIC check at the time of the WIC transaction and the family identification number on the WIC check matches the family identification number on the identification card.
[(6)] (5) Accept a WIC check only if there is no visible alteration on the WIC check.
[(7)] (6) Charge the WIC Program only for the types and quantities of allowable foods specified on the WIC check and selected for purchase by the participant or authorized representative.
[(8)] (7) Record in ink, on each WIC check immediately after completion of the WIC transaction and prior to the participant or authorized representative signing the WIC check, the actual purchase amount of the transaction net of any cents-off coupons or other discounts.
[(9)] (8) Properly correct an error made in recording the ''Pay Exactly'' amount of a WIC check by drawing a single line through the incorrect amount and writing the correct amount above or below the error and having the participant or authorized representative initial next to the corrected amount. No other corrections are permissible.
[(10)] (9) Not alter any information on the WIC check as presented by the participant or authorized representative.
[(11)] (10) Not provide a substitute item, raincheck or cash reimbursement for an allowable food that is unavailable.
[(12)] (11) Not provide cash or credit for a WIC check.
[(13)] (12) Not provide change for a coupon tendered during the WIC transaction.
[(14)] (13) Not provide an exchange to replace an allowable food returned by a participant or authorized representative unless the exchange is to replace an identical product that was found to be damaged or otherwise unusable.
[(15)] (14) Not refund money for an allowable food purchased in a WIC transaction that is returned by a participant or authorized representative.
[(16)] (15) Not accept a WIC check as payment for an item other than an allowable food specified on the WIC check.
[(17)] (16) Not charge the WIC Program for an allowable food not received by the participant or authorized representative or for an allowable food in excess of the quantity prescribed on the WIC check.
[(18)] (17) Not charge the WIC Program for the sale of an amount of an allowable food which exceeds the store's documented inventory of that food item covering the period of time under review and in which the sale was made.
(18) Prior to depositing WIC checks, transmit records of WIC check numbers from WIC checks accepted by the store to the Department through transmission mechanisms made available by the Department.
* * * * * (d) When the Department determines, prior to payment of a check submitted for redemption, that the store has committed a violation of this section that affects the payment to the store, the Department [will] may deny payment. If payment already has been made, the Department [will] may establish a claim for reimbursement by sending the store a written notice of the overcharge or other improper charge. The store may dispute the Department's claim and shall submit the basis for its dispute in writing within 15 calendar days of the date of the Department's written notice. The Department will notify the store of the resolution of the claim dispute. The Department's resolution of a claim dispute is not an adverse action that may be appealed.
§ 1105.5. Changes in availability or location of WIC authorized stores.
* * * * * [(e) Temporary authorization to accept WIC checks redeemable at other stores. The Department will temporarily authorize alternate WIC authorized stores to accept WIC checks designated on the face of the check to be used at another WIC authorized store, to provide participants with access to allowable foods when a WIC authorized store has permanently or temporarily closed, the store's authorization has been terminated, or the store has been disqualified as a WIC authorized store.]
§ 1105.6. Monitoring of WIC-authorized stores.
(a) Purpose and types of monitoring of WIC authorized stores.
(1) Federal, State or local representatives will conduct announced and unannounced onsite reviews of WIC authorized stores to determine compliance with applicable Federal and State regulations, and to investigate complaints regarding a store. The types of onsite reviews that may be conducted for monitoring purposes are compliance investigations, inventory audits, routine reviews and WIC transaction reviews. The monitoring process, to determine compliance with applicable Federal and State regulations, operates independently of the authorization process and may overlap more than one authorization period.
(2) The Department will conduct an annual analysis of a WIC authorized store's sales data in order to determine whether the store qualifies as an above-50-percent-store, except that stores solely owned or operated by nonprofit entities will not be subject to this annual analysis.
* * * * * (h) Annual determination of WIC sales percentage. The Department may request from a store any information necessary for the Department to determine whether the store qualifies as an above-50-percent-store. This subsection does not apply to stores solely owned or operated by nonprofit entities.
CHAPTER 1107. SANCTIONS § 1107.1a. Disqualifications.
* * * * * (d) One-year disqualification. The Department will disqualify a WIC-authorized store for 1 year for any of the following violations:
* * * * * (4) Failing to maintain on the premises at all times minimum inventory requirements of an allowable food at or below the current [maximum allowable] competitive price applicable to the store's peer group for that food.
* * * * * (6) [Two or more incidences of accepting a WIC check made payable to another store without prior written approval from the Department.
(7)] Failing to maintain a clean and sanitary store.
[(8)] (7) Failing to properly store or refrigerate an allowable food.
[(9)] (8) Closure of the store by a city, local or county health department.
[(10)] (9) Charging or demanding that a participant or authorized representative pay for an allowable food with money or with another WIC check for purchases made with a WIC check.
[(11)] (10) Two or more incidences of securing the signature of the participant or authorized representative prior to completing the ''Pay Exactly'' box on the WIC check.
[(12)] (11) Two or more incidences of charging the WIC Program Sales Tax.
[(13)] (12) Giving monetary change to the person who tenders a WIC check.
[(14)] (13) Failing to reimburse the Department for overpayments, overcharges or other improper charges within the specified time frame.
[(15)] (14) Physically altering or changing on the face of a WIC check the store name, food type or quantity, participant information, date, or printed dollar amount.
[(16)] (15) Failing to have at least one representative of the store attend required training.
[(17)] (16) Providing false information on the application for authorization or reauthorization.
* * * * * § 1107.2. Civil money penalties.
(a) Option available in lieu of a disqualification or denial of reauthorization. The Department may offer to a WIC authorized store the option of paying a civil money penalty in lieu of a denial of reauthorization or a disqualification required under § 1107.1 (relating to imposition of sanctions), only if the Department finds inadequate participant access as set forth in § 1103.7 (relating to inadequate participant access). The Department will not provide this option for third or subsequent violations under § 1107.1a(b)--(d) (relating to disqualifications) or for any permanent disqualifications under § 1107.1a(a).
(b) Calculation of civil money penalty.
* * * * * (2) For a civil money penalty in lieu of disqualification under [§ 1107.1a(d)(3)--(16)] § 1107.1a(d)(3)--(15), the Department will calculate the civil money penalty for each violation identified by multiplying 5% of the average monthly total value of WIC checks redeemed for the most recent 6-month period by the number of months the store would be disqualified under § 1107.1. For a store to which the Department may deny reauthorization and for which this option is available, the Department will multiply 5% of the average monthly total value of WIC checks for the most recent 6-month period by 6 months to determine the civil money penalty to be paid. If 6 months of information relating to the monthly value of WIC checks redeemed is not available, the Department will calculate the monthly average based upon the number of months for which information is available.
* * * * *
CHAPTER 1113. STORE APPEALS. § 1113.1. Right to administrative appeal.
* * * * * (b) A store may not appeal the following:
* * * * * (4) The validity or appropriateness of the Department's store peer group system criteria and the criteria used by the Department to identify stores that qualify as an above-50-percent-store or that are comparable to an above-50-percent-stores.
[(4)] (5) Disqualification from the WIC Program as a result of disqualification from the Food Stamp Program.
[(5)] (6) The resolution of an overpayment dispute under § 1105.2(d) (relating to price adjustment) or the resolution of an overcharge dispute under § 1105.3(d) (relating to terms and conditions of participation).
(c) A denial of authorization under [§ 1103.1(b)(6)] § 1103.1(b)(7) and a disqualification imposed under § 1107.1a(a) (relating to disqualifications) shall be effective on the date of the store's receipt of notice of the adverse action. All other adverse actions shall be effective on the date set forth in the written notice.
[Pa.B. Doc. No. 08-1588. Filed for public inspection August 29, 2008, 9:00 a.m.]
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