PROPOSED RULEMAKING
[28 PA. CODE CHS. 1101, 1103, 1105, 1107, 1109 AND 1113]
Supplemental Nutrition Program for Women, Infants and Children
[32 Pa.B. 4585] The Department of Health (Department) proposes to amend Chapters 1101, 1103, 1105, 1107, 1109 and 1113 to read as set forth in Annex A. Those chapters govern the authorization, management and appeal rights of stores participating in the Women, Infants and Children (WIC) Program (WIC authorized stores).
A. Purpose of the Proposed Amendments
One purpose of the proposed amendments is to achieve compliance with recent amendments to the Federal regulations governing the WIC Program found in 7 CFR Part 246 (relating to supplemental nutrition program for women, infants and children), adopted by the United States Department of Agriculture, Food Nutrition Service (USDA-FNS). The Federal amendments, adopted on December 29, 2000, mandate selection criteria, training requirements, criteria to be used to identify high-risk stores and monitoring requirements, including compliance investigations.
Another purpose of the proposed amendments is to implement the Department's decision, permitted by Federal regulation, to eliminate the limitation criteria used to limit the number of stores authorized to participate in the WIC Program. Currently, a store desiring to become a WIC authorized store has to satisfy the selection and limitation criteria in § 1103.4 (relating to selection and limitation criteria; authorization process). Selection criteria include minimum inventory, product freshness, price and other requirements. Compliance is evaluated during an announced onsite store review conducted by a WIC Program representative. Limitation criteria are applied in the following manner: if the number of stores meeting selection criteria is greater than the number of store slots available in a particular geographic area, the stores with the most competitive prices are assigned to the slots.
Through the proposed amendments, the Department proposes to allow any store that meets the revised selection criteria to participate in the WIC Program. The Department proposes to retain all current selection criteria with some additions and revisions. The most significant of the revisions is to the manner in which the Department imposes price limitations on foods that may be purchased with WIC checks (allowable foods). Currently, the Department maintains limited control on prices for allowable foods by establishing the total maximum allowable cost for two defined ''food prescriptions'' consisting of food items that participants purchase most frequently. The Department proposes to establish maximum prices for all allowable foods. Those prices would be published quarterly in the Pennsylvania Bulletin. Stores would be required to have allowable foods available at or below the published prices. Payment by the WIC Program of WIC checks submitted for redemption by WIC authorized stores would be limited to no more than the sum total of the maximum prices for each of the WIC food items authorized for purchase on the check.
The Department has engaged in a thorough review of its existing WIC Program regulations under the Governor's Executive Order 1996-1. The Department has held a series of meetings for the purpose of soliciting comments from persons affected by its regulations. The discretionary changes to the Department's regulations, to a large measure, are the result of the discussions held during these meetings.
The Department's regulations are a part of the State Plan of Operations required to be submitted to the USDA-FNS under 7 CFR 246.4 (relating to state plan). Therefore, in addition to meeting the Commonwealth's statutory requirements for amending regulations, the Department must submit any changes to its WIC Program regulations to the USDA-FNS for approval. The Department has submitted the proposed regulations to the USDA-FNS, which has approved the regulations.
B. Summary of Amendments
§ 1101.1. Background and scope.
The Department proposes to revise subsection (b) to delete reference to local agencies in the context of appeal rights. The purpose of the regulations is to establish design and operational requirements for the food delivery system for the WIC Program as they apply to stores. A secondary purpose of the regulations is to provide information about the right to appeal an adverse action of the Department. Information in the regulations concerning stores' and participants' appeal rights build upon requirements set forth in Federal regulations. Because the appeal provisions in the regulations applicable to participants and stores contain information not contained in Federal regulations, and because participants and stores do not have easy access to Federal regulations, Department regulations governing appeal rights for participants and stores are essential. The same is not true with regard to local agencies. Department regulations do not expand upon appeal rights for local agencies set forth in Federal regulations. Moreover, local agencies, under their agreement with the Department, are required to be familiar with and comply with Federal regulations. For these reasons, the Department proposes to further limit the scope of the regulations to address appeal rights for participants and stores only. Local agencies may refer to Federal regulations for an explanation of their appeal rights.
§ 1101.2. Definitions.
The Department proposes to add a definition for ''authorization'' and amend the definition of ''certification.'' ''Authorization'' would be defined as the Department's grant of authority to a store to serve as a WIC authorized store. ''Certification'' would be defined as the Department's acceptance of an applicant to participate in the WIC Program as a participant. Similarly, the Department proposes to delete the definition of ''recertification'' and substitute, in its place, the definition of ''reauthorization'' which would be defined as the Department's renewal of authorization. Accordingly, all references throughout the regulations to certification and recertification, as those terms now pertain to stores, would be deleted and replaced with references to authorization and reauthorization.
The Department proposes to revise the definition of ''authorized representative'' to clarify that a ''proxy'' or ''endorser'' is considered an ''authorized representative'' of the participant. The Department also would add a sentence to the definition to provide that the person conducting a ''compliance buy'' or a ''WIC transaction review'' is also an ''authorized representative.''
The Department proposes to add the definition of ''claim'' as a demand for reimbursement of an overcharge or other improper charge to the WIC Program as a result of a store violation.
The Department proposes to add the definition of ''contract brand'' as the specific manufacturer brand of an allowable food that the Department is contractually bound to prescribe for participants.
The Department proposes to revise the definition of ''inventory audit'' to incorporate the use of defined terms and promote clarity.
The Department proposes to delete the definition of ''limitation criteria,'' as the Department proposes to cease applying limitation criteria when determining the stores that will be given permission to serve as WIC authorized stores.
The Department proposes to add the definition of ''maximum allowable price'' as the maximum price the Department will pay for an allowable food.
The Department proposes to revise the definition of ''onsite review'' by adding language to explain that an onsite review may be announced or unannounced. Within the text of the regulations, the Department uses the appropriate modifier to indicate whether the onsite review being discussed would be announced or unannounced.
The Department proposes to add definitions of ''overcharge'' and ''overpayment.'' ''Overcharge'' would be defined as a charge by a WIC authorized store to the WIC Program, through redemption of a WIC check, for an allowable food in excess of the store's shelf price for that food or in excess of the price charged a non-WIC participant for that food. ''Overpayment'' would be defined as 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 each allowable food authorized for purchase on the WIC check. The distinction between the two terms would be based upon whether the Department made the error, by making payment on a redeemed WIC check in excess of the sum total of the maximum allowable prices for the foods authorized for purchase on the check, or the store made the error, by charging the WIC Program more than the store charges its non-WIC customers. The former is an ''overpayment;'' the latter is an ''overcharge.''
The Department proposes to add the definition of ''periodic review.'' The term is used in the current version of the regulations. The Department proposes to define the term to mean contemporaneous announced onsite reviews of stores in a trade area conducted not less than once every 3 years for the purpose of selecting stores for authorization and reauthorization.
The Department proposes to add the definition of ''probationary authorization.'' The term is used in the current version of the regulations. The Department proposes to add a definition of the term to avoid potential confusion with the term ''temporary authorization.'' The Department proposes to define the term to mean the Department's probationary authorization of a WIC authorized store when inadequate participant access would occur if the store were not authorized or reauthorized or when the store is reviewed prior to opening to the public and has not yet stocked its dairy section or its frozen juice section.
The Department proposes to add the definition of ''routine review'' as an unannounced onsite review of a WIC authorized store to evaluate adherence by the store with the requirements in the regulations governing the store's participation in the WIC Program.
The Department proposes to delete the definition of ''store slot,'' as the concept of store slots is the primary component of limitation criteria and the Department is proposing to cease applying limitation criteria.
The Department proposes to add the definition of ''store violation'' as any intentional or unintentional action by the owners, officers, managers, agents or employees of a WIC authorized store that violate the requirements in the regulations governing the store's participation in the WIC Program and that may result in a claim.
The Department proposes to add the definition of ''temporary authorization'' as the Department's temporary and conditional authorization of a WIC authorized store that fails to meet specified selection criteria during the initial onsite review for purposes of reauthorization. This addition to the definitions is necessitated by the Department's proposal to change the potential consequence for a WIC authorized store that fails to meet specified selection criteria during the onsite review for reauthorization. Currently, a store that fails to meet one or more selection criteria during the onsite review is denied reauthorization unless participant access to allowable foods would be compromised by denial of the store's application for reauthorization. Otherwise, there is no opportunity to correct violations detected during the onsite review. The Department proposes to incorporate the possibility of temporary authorization in the event a store fails to meet the selection criteria, other than the minimum inventory and price criteria, during the onsite review. There is no possibility of temporary authorization if the store, during the onsite review for purposes of reauthorization, fails to meet minimum inventory and price criteria. The circumstances under which the Department would grant temporary authorization and the terms governing temporary authorization would be set forth in § 1103.3 (relating to authorization of store slots) which would be retitled ''Temporary authorization.''
Finally, the Department proposes to delete the term ''training buy'' and to substitute in its place the term ''WIC transaction review.'' The definition would remain the same. The Department also proposes to add the definition of ''WIC transaction.'' The Department proposes to define the term to mean the presentation of a WIC check by a participant to a WIC authorized store resulting in the purchase of one or more of the allowable foods authorized for purchase on the check.
§ 1101.3. Administration.
The Department proposes to add a new subsection (b). The Department proposes to form a Vendor Advisory Workgroup to function in an advisory capacity to the Department. Representatives would be chosen from the retail store community, appropriate advocacy groups or associations for retail stores and participants, and from the State and local agencies. The current subsection (b) would become subsection (c).
§ 1103.1. Certification and recertification reviews.
The Department proposes to revise the title and the text of this section to: (1) mirror proposed revisions in the use of terms to describe authorization of stores; and (2) clarify the authorization and reauthorization process and requirements as a result of the elimination of limitation criteria. Thus, the name of this section would become ''Authorization and reauthorization process and requirements.''
The Department proposes to revise the title and text of subsection (a) which would address ''duration of authorization or reauthorization.'' The Department proposes that this introductory subsection would clarify that a store wishing to serve as a WIC authorized store must be authorized or reauthorized in accordance with the requirements for authorization or reauthorization, set forth in numbered paragraphs in proposed subsections (b) and (c) respectively. Proposed subsection (a) also would state that a store's authorization or reauthorization remains in effect until the Department acts on the store's application for reauthorization when the next periodic review is conducted in the trade area in which the store is located, unless terminated earlier in accordance with subsection (d). Periodic reviews would be conducted once every 3 years, in accordance with changes in Federal regulations. Proposed subsection (a) also would clarify that failure to submit an application for reauthorization in response to the Department's notice of periodic review will result in expiration of the store's authorization or reauthorization. Stores that received a letter of authorization in the 60 days prior the start of the periodic review would be exempt from periodic review.
The text of subsection (b) would be deleted in its entirety, numbered paragraphs outlining the authorization process would be substituted in its place, and the subsection would be retitled ''authorization process.'' Similarly, the text of subsection (c) would be deleted in its entirety, numbered paragraphs outlining the reauthorization process substituted in its place, and the subsection retitled ''reauthorization process.'' The information to be listed in numbered paragraphs in proposed subsections (b) and (c) is not new information. The Department proposes to take information currently contained in each of this section's existing subsections and to reorganize the information under the headings ''authorization'' and ''reauthorization.'' The Department believes the reorganization of information is necessary in light of the Department's proposal to eliminate limitation criteria in the store selection process. If limitation criteria are eliminated, as proposed, a store would no longer need to wait until a store slot opened up, or until a periodic review, to apply for authorization. Any store would be able to apply at any time for authorization. Hence, authorization and reauthorization would assume equal significance for purposes of retail store management within the WIC Program with a concomitant heightened need to clarify, in separate subsections, the process and requirements for both.
Accordingly, both proposed subsection (b) and proposed subsection (c) would address the following: (1) how and where to obtain an application for authorization or reauthorization; (2) what to do with the application once it is completed; (3) the circumstances under which the Department will refuse to accept the application; (4) the onsite review to evaluate compliance with selection criteria; (5) the decision-making process; and (6) eligibility to apply at a later date if the application is denied.
Proposed subsection (d) would address termination of authorization and reauthorization, and would list the circumstances under which the Department could terminate authorization. Termination of authorization or reauthorization would be listed under § 1113.1 (relating to right to appeal) as an adverse action that may be appealed.
§ 1103.2. Probationary certification.
The Department proposes to amend the title of this section by substituting ''authorization'' for ''certification.'' The Department also proposes to amend the text of the section to mirror changes in the title; that is, the Department proposes to delete the terms ''certification'' and ''recertification'' and substitute in their place the terms ''authorization'' and ''reauthorization'' as appropriate. The Department further proposes to delete references to limitation criteria.
§ 1103.3. Authorization of store slots.
Because the limitation criteria and store slots would be eliminated, the Department proposes to delete the current text of this section in its entirety, and to substitute in its place the rules regarding temporary authorization. This section also would be retitled ''Temporary authorization.'' This section as proposed would provide that if a WIC authorized store that applies for reauthorization fails to meet one or more of the selection criteria in § 1103.4 the onsite review, the store may request temporary authorization. A store that failed to meet the price and minimum inventory requirements of § 1103.4(5), however, would be ineligible for temporary authorization. A store that is a high-risk store or the subject of an ongoing compliance investigation also would be ineligible for temporary authorization. Under proposed subsection (b), temporary authorization would be conditioned on the following: (1) the store would have only one more opportunity to meet selection criteria during a second announced onsite review; (2) if the Department rescinds temporary authorization for the store's failure to meet selection criteria a second time, the store would not be eligible to reapply for authorization for 1 year from the date of the initial onsite review for purposes of reauthorization; and (3) the Department would reduce by 10% the maximum allowable prices for the foods authorized for purchase on the WIC checks the store redeems for WIC transactions that occur during the first 90 days of the extended authorization period.
§ 1103.4. Selection and limitation criteria; authorization process.
The Department proposes to delete references within the title of this section to ''limitation criteria'' and ''authorization process'' in accordance with the Department's proposal to eliminate application of limitation criteria as part of the store authorization process. This section as amended would be retitled ''Selection criteria for authorization and reauthorization.'' The proposed revision to the title of the section follows the Department's proposed deletion of subsection (b), which lists limitation criteria, and subsection (c), which addresses the process in the event limitation criteria are required to be applied.
The Department proposes to retain the selection criteria in subsection (a), as revised, but since the other two subsections would be repealed, the subsection (a) designation also would be eliminated. The first paragraph within current subsection (a) that the Department proposes to revise is paragraph (2), which requires a store to serve a minimum number of participants in order to be authorized. The Department recognizes that it is impossible to impose a requirement in connection with a store seeking initial authorization; hence, the Department proposes to revise paragraph (2) to require that a store seeking reauthorization serve at least 25 participants per month. If the store is not serving at least 25 participants in the most recent month for which the Department has participant data at the time of the review, the Department may deny reauthorization. Because the Department will not have participant data for a store seeking initial authorization, participant data will not be a factor in the initial review process; however, the Department proposes to terminate authorization under § 1103.1(d) if, after 8 months following initial authorization, the store is not serving 25 participants.
The most significant revision to the selection criteria is the proposed revision to paragraph (5). The Department proposes that the prices on the store's minimum inventory items shall be equal to or less than the maximum allowable prices for those items. Currently, the Department does not impose price limitations on all WIC food items. Instead, the Department has price limits on some WIC foods and establishes a maximum allowable cost for each of two food prescriptions made up of foods currently listed in paragraph (6). The Department proposes to delete paragraph (6) in its entirety.
With the deletion of the text of paragraph (6), former paragraph (7) would become paragraph (6) and paragraph (8) would become paragraph (7). The Department proposes to add a new paragraph (9) requiring that a store that has been denied authorization or reauthorization in the last 12 months must be eligible to apply for authorization or reauthorization in accordance with § 1103.1(b) or (c) or § 1103.3(b)(2), as applicable. These provisions address eligibility to apply if authorization or reauthorization is denied or the Department rescinds temporary authorization.
The final proposed revision to the selection criteria is the addition of a paragraph (13) which, in accordance with the Federal mandate, would preclude authorization or reauthorization of a store whose owners, officers, or managers have been convicted of or had a civil judgment entered against them for conduct demonstrating a lack of business integrity.
§ 1103.5. Minimum inventory.
The Department proposes to add language to subsection (a) to emphasize, in keeping with the proposed revision to § 1103.4, that the store's prices for minimum inventory items, listed in this section, must be equal to or less than the maximum allowable prices.
The Department also proposes the following specific changes to the list of minimum inventory items in subsection (b): under proposed amendments to paragraph (1)(i), which addresses minimum inventory requirements for milk-based formula, stores would be required to carry thirty-one 13 ounce cans of liquid concentrate, and nine 14.1 ounce cans of powdered milk-based formula. Under proposed amendments to paragraph (1)(ii), which addresses minimum inventory requirements for soy-based formula, stores would be required to carry nine 14-ounce cans of powdered soy-based formula. Under proposed amendments to subsection (b)(2), addressing minimum inventory requirements for milk, stores would be required to carry 10 half gallons of fluid whole milk. Quart equivalents no longer would be permitted. The Department proposes to increase the minimum inventory requirements for nonfat dry milk to four pounds. Also under subsection (b)(2), stores would be required to carry twenty-four 12 ounce containers of evaporated milk. Under proposed amendments to subsection (b)(3), which addresses minimum inventory requirements for cheese, stores would be required to carry 4 pounds total of three varieties of cheese, prepackaged in 8 or 16 ounce packages. Under proposed amendments to subsection (b)(4), stores would be required to carry not less than three 1 dozen containers of eggs. Under proposed amendments to subsection (b)(5), which addresses minimum inventory requirements for juices, stores would be required to carry two varieties of juices, with a total of seven 46 ounce containers, and two varieties of frozen or shelf stable concentrate, with a total of seven 11.5 to 12 ounce containers. Infant juice would need to be contract brand. Under proposed amendments to subsection (b)(6), which addresses minimum inventory requirements for cereal, stores would be required to carry a total of 40 ounces of five varieties of adult cereal, and a total of 24 ounces of two varieties of contract brand infant cereal. Under proposed amendments to subsection (b)(7), which addresses minimum inventory requirements for peanut butter, stores would be required to carry one 15 to 18 ounce container of peanut butter.
The Department proposes deletion in subsection (c) of language providing for the annual publication of maximum prices established by the Department for certain allowable foods. As previously noted, the Department has proposed in § 1103.4(5) that publication of maximum prices for all allowable foods will occur on a quarterly basis.
The Department proposes to revise the text and title of subsection (d). The section would be retitled ''exceptions to minimum inventory requirements,'' and the numbered paragraphs, listing circumstances in which an exception may be granted, would be deleted. The Department proposes that the subsection would provide for the possibility of an exception to minimum inventory requirements for an allowable food when the Department's most recent check redemption information for a store shows no purchases of the allowable food for a period in excess of 90 days.
Finally, the Department proposes to revise the list of allowable foods in subsection (e) for which it may grant an exception to minimum inventory requirements by adding the following two items: contract brand milk based with iron liquid concentrate infant formula, and contract brand soy based liquid concentrate infant formula.
1103.6. Waiting list.
The Department currently maintains a waiting list to track: (1) stores unable to submit an application because of the absence of an available slot; (2) stores whose weighted prices were higher than other stores competing for one or more slots; and (3) stores located within a mile of a WIC authorized store. Elimination of limitation criteria, as is being proposed, would eliminate the need for a waiting list for stores. One other purpose for which the Department currently maintains a waiting list is to track stores unable to submit an application because the Department has imposed a moratorium on the submission of applications under § 1103.1. Since under the regulations as proposed, the Department would consider applications at any time other than during the 90-day period preceding the start date of triennial reviews, stores would be able to simply wait the 90 days and resubmit an application. No tracking mechanism would be required. Because the need for a tracking mechanism has been eliminated, the Department proposes to delete this section in its entirety.
§ 1103.7. Inadequate participant access.
The Department proposes to revise subsection (b) to eliminate consideration of participant access and the possibility of probationary authorization for a store undergoing a change of ownership. The Department would revise subsection (b) to state that the Department will consider participant access when deciding whether to impose a civil money penalty in lieu of disqualification under § 1107.1 (relating to imposition of sanctions).
Subsection (c) contains a listing of the factors used to determine whether inadequate participant access exists. Currently, in assessing whether rejection or removal of a store from the WIC Program will adversely affect participant access, the Department considers the distance to the next closest WIC authorized store as well as the numbers of participants who would be required to travel to the next closest WIC authorized store. Changes in the WIC Program's data processing system will ease the administrative burden associated with mass transfers of WIC participants from one store to another. Therefore, the Department proposes to delete from subsection (c) current paragraphs (5)--(7), which define inadequate participant access in terms of volume of a store's participants relative to the distance to the next closest WIC authorized store.
§ 1105.2. Overcharge recovery system.
The Department proposes to change the title of this section to ''Price adjustment.'' The Department also proposes to repeal the requirements in current subsections (a)--(c) and to revise the lettering of the remaining subsections accordingly. Under this section as it would be amended, WIC authorized stores would no longer be required to submit quarterly price reports for the Department's review and determination of the maximum redemption amount of each WIC check submitted by the store based upon prices provided in the store's quarterly price reports. Instead, in each calendar quarter, the Department would compare the maximum amount for which a WIC authorized store could have redeemed a WIC check based upon the maximum allowable prices for foods authorized for purchase on the check against the actual amount for which each WIC check was redeemed. This revised procedure, as proposed, is set forth in proposed subsection (a) entitled ''Determination of overpayment.'' As set forth in proposed subsection (b), the Department would seek reimbursements from a WIC authorized store when price comparisons reveal overpayments to the store in excess of $10 for a calendar quarter.
In the proposed subsections (c)--(e), the Department would delete terms appropriate for the overcharge recovery system and substitute terms appropriate for the proposed price adjustment system. Thus, the term ''overcharge billing'' would be replaced with ''overpayment determination,'' ''overcharge'' would be replaced with ''overpayment,'' and ''reported prices on the Quarterly Price Report'' would be replaced with ''prices for allowable foods.'' References to food prescription costs would be deleted and replaced with references to maximum allowable prices. Also, the Department proposes to add language to clarify that the Department's resolution of an overpayment dispute is not an adverse action that may be appealed. This information also is included in amended § 1113.1(a).
Finally, the Department would delete subsection (i), which addresses disqualification in the circumstance in which the store's reported prices on the quarterly price report exceed the maximum food prescription costs established by the Department. Under proposed revisions to the regulations, maximum food prescription costs would be eliminated and stores would no longer be required to submit quarterly price reports. Thus, the circumstance envisioned by subsection (i) would no longer be a possibility. The Department proposes to maintain control over prices charged by WIC authorized stores for allowable foods by revising § 1105.3(a) (relating to terms and conditions of participation) to require ongoing compliance with selection criteria. Ongoing compliance with selection criteria would include maintaining the minimum inventory of allowable foods required in § 1103.5 (relating to minimum inventory) at shelf prices equal to or less than the maximum allowable prices for those foods. Failure to comply with terms and conditions of participation places the store at risk of the imposition of sanctions under § 1107.1, including disqualification.
§ 1105.3. Terms and conditions of participation.
In subsection (a)(4), the Department proposes to substitute, in the place of the specific requirements currently listed in subsection (a)(4)--(8), the general requirement that the store comply with the selection criteria in § 1103.4 throughout the authorization period. Because the Department proposes to delete the text of paragraphs (5)--(8), the Department proposes to renumber the remaining paragraphs accordingly. Proposed paragraph (11), currently paragraph (15), would be revised to further define the kinds of records to which representatives of the Federal, State and local agency agencies are required to have access at any time, not just during an onsite review. Proposed paragraph (12), currently paragraph (16), would be revised to incorporate the Federal mandate that stores agree that authorization does not constitute a license or a property interest, and that the store must apply for reauthorization in accordance with proposed § 1103.1(c), relating to authorization and reauthorization process and requirements. The Department proposes to delete existing paragraph (20), as the Department proposes to address the store's reimbursement obligation in detail in subsection (d). Finally, proposed paragraph (16), currently paragraph (21), would be revised, pursuant to Federal mandates, to require stores to maintain product purchase records for allowable foods and records used for Federal tax reporting purposes, for a minimum period of 2 years.
The Department proposes to revise subsection (b) as follows. Throughout subsection (b), the Department would add ''or authorized representative'' after ''participant'' to clarify that the obligation to the participant carries over to an authorized representative, as well. The Department would revise paragraph (3) to clarify that stores are required to provide allowable foods to participants at or below the current price the store charges other customers, and at or below the maximum allowable prices for those foods. The Department would revise paragraph (5) to clarify the prohibition against seeking restitution or payment from participants. The Department would revise paragraph (7) to clarify that stores are required to offer participants the same courtesies offered other customers if no other terms or conditions of participation are violated by doing so. The Department would revise paragraph (9) to substitute more generic language in the place of references to ''trading stamps.'' Thus, the paragraph would require stores to provide a ''promotional incentive'' for a purchase made with a WIC check if that same promotional incentive is given for a cash purchase. Finally, within subsection (b), the Department has proposed, with the addition of paragraph (12), that the store provide a promotional incentive for use of a WIC check only if the same incentive is offered for a cash purchase.
Within subsection (c), the Department proposes the following revisions. The Department would revise paragraph (1) for purposes of clarifying, not changing, the requirement set forth in that paragraph. The Department would revise paragraph (5) to substitute, for the requirement that the store compare signatures on the WIC check and the WIC identification card, the requirement that the store compare the family identification number on the WIC check with the family identification number on the identification card. The Department proposes to revise paragraph (13) to delete the prohibition against providing change for the difference between the ''Not to Exceed'' and the ''Pay Exactly'' amounts on the WIC check. Under the revised redemption system, as proposed by the Department, which includes maximum allowable prices for WIC foods, WIC checks will not contain a ''Not to Exceed'' figure. The Department proposes to revise paragraph (14) to clarify that stores may not provide an exchange to replace an allowable food unless the exchange is to replace an identical product that was found to be damaged or otherwise unusable. The Department proposes to add a new paragraph (15) which would preclude the store from refunding money for an allowable food purchased in a WIC transaction that is returned by a participant or authorized representative. Finally, under subsection (c), the Department proposes to delete paragraph (22) as the Department proposes to address the reimbursement requirement in detail in subsection (d).
The Department proposes to delete existing language in subsection (d) and to substitute the following in its place: The Department will deny payment of a check submitted for redemption when the Department is aware, prior to payment of the check, that the store has committed a violation affecting the store's right to payment. If the Department makes payment on the check and later determines a violation occurred, the Department would establish a claim for reimbursement by sending the store a written notice of the overcharge or other improper charge. The store could dispute the Department's claim by giving written notice to the Department. The Department would resolve the dispute and notify the store how the dispute was resolved. The Department's resolution of a claim dispute would not be an adverse action that may be appealed.
§ 1105.4. Change of ownership of a WIC authorized store.
The Department proposes to clarify subsection (a) which would provide that a store's status as a WIC authorized store is void when a change of ownership of the store occurs. The Department proposes to delete subsection (c), thereby eliminating the possibility of probationary authorization when a change of ownership occurs. The Department proposes to add language to the final subsection, which would become subsection (c), to clarify the circumstances under which it will refuse to accept a store's application for authorization. Under this revised subsection, the Department would not accept a store's application for authorization if the Department determines that the store submitting the application, either under prior ownership or in a previous location, was disqualified and the purpose of the relocation or sale of the store was to avoid a WIC disqualification. Similar language appears in proposed changes to § 1103.1(b).
§ 1105.5. Changes in availability or location of WIC authorized stores.
Within this section, the Department proposes to provide that a store relocating within 1 mile of its current location or within the same geographical area assigned to the local agency will not lose its status as a WIC authorized store. A WIC authorized store relocating in excess of 1 mile of its current location and to a geographical area assigned to another local agency would lose its status as a WIC authorized store and would be required to apply for authorization at its new location.
Also, the Department proposes to lengthen the period of time within which the store is required to reopen at its new location. Currently, the Department requires the store to reopen within 3-calendar days. The Department proposes to require a store to reopen within 15-calendar days to continue as a WIC authorized store.
§ 1105.6. Monitoring of WIC authorized stores.
The Department proposes organizational revisions to subsections (a) and (b). Specifically, the Department proposes to relocate to subsection (a), and to clarify, information regarding the purpose and types of monitoring WIC authorized stores currently contained within subsection (b). Types of monitoring tools listed would include compliance investigations, inventory audits, routine reviews and WIC transaction reviews. The term ''compliance investigation'' would replace ''high risk review'' and the term ''WIC transaction review'' would replace ''training buy.'' The Department also proposes to clarify that the monitoring process operates independently of the authorization process and can overlap more than one authorization period. The remainder of the section would be reorganized to contain a description within distinct and successive subsections (b)--(e) of the monitoring tools listed in subsection (a). The final two subsections, except for being relabeled subsections (f) and (g), would remain substantively unchanged.
§ 1107.1. Imposition of sanctions.
The Department proposes to add a new subsection (c), which would permit the Department to disqualify a store that has been, assessed a civil money penalty in the Food Stamp Program, unless the disqualification would result in inadequate participant access for WIC participants. If the Department opts to disqualify a store under this section, the length of the disqualification would correspond to the period for which the store would have been disqualified in the Food Stamp Program if that program had not chosen to impose a civil money penalty in lieu of a disqualification. The Department also proposes to clarify that violations documented in a prior authorization period will support a disqualification, by adding language to that effect to proposed subsection (d) (currently subsection (c)). This proposed language mirrors similar proposed language in § 1105.6(a). Finally, the Department proposes to add language to proposed subsection (e), currently subsection (d), to advise the vendor community that applicable Federal regulations may prohibit administrative or judicial review of a disqualification from the Food Stamp Program based upon a disqualification from the WIC Program.
§ 1107.1a. Disqualifications.
The Department proposes to add a new paragraph (2) in subsection (d) to require a 1-year disqualification for charging for an allowable food provided in excess of the quantity authorized for purchase on the WIC check. The remainder of the numbered paragraphs, up to paragraph (11), would be renumbered. Paragraph (12) would be deleted in accordance with the Department's proposal to delete price limitations in connection with food prescriptions, and the current paragraph numbering would continue to apply for existing paragraphs (13)--(16).
The Department would revise proposed renumbered paragraph (4) to clarify that the minimum inventory of an allowable food must be priced at or below the current maximum allowable price to avoid a 1-year disqualification. The Department proposes to add to paragraph (14), language permitting a 1-year disqualification for failing to reimburse the Department for overpayments, overcharges or improper charges. Finally, the Department proposes to add a new paragraph (17), which would allow for a 1-year disqualification for providing false information on the application for authorization or reauthorization.
§ 1113.1. Right to appeal.
The Department proposes to revise the title of this section to ''Right to administrative appeal,'' to distinguish the subject matter of this section from judicial appeals. Consistent with the intent in proposing revisions to § 1101.1 to limit the scope of the regulations to prescribe appeal procedures to be used by stores and participants only, the Department proposes to revise this section and all sections within Chapter 1113 (relating to local agency and store appeals) to delete references to local agency appeals.
The Department also proposes to revise the first three subsections of this section to define adverse actions that may be appealed, list actions and WIC Program decisions that may not be appealed, and introduce the concept of an ''effective date'' for an adverse action, as required by amendments to Federal regulations. The Department proposes to delete subsections (d) and (e) as superfluous.
§ 1113.2. Appeal procedures.
The Department proposes to revise the title of this section to ''Administrative appeal procedures,'' to maintain consistency with the proposed change in the title of § 1113.1. In subsection (a), the Department proposes to describe in a more succinct manner its notification obligations in the event of an adverse action. In subsection (c), the Department proposes to clarify that the filing deadline for a store appeal shall be within 30 days of the effective date of the adverse action. Also in subsection (c), the Department proposes that the filing of an appeal shall serve to stay the Department's adverse action pending issuance of an adjudication and order by the hearing examiner. The stay would be lifted upon receipt of the hearing examiner's adjudication and order affirming the adverse action, or upon receipt of the store's written notice of withdrawal of the appeal.
§ 1113.3. Adjudication and order.
The Department proposes to add a new subsection (c) which would provide that if the hearing examiner upholds the Department's adverse action, the adverse action would be effective as of the date of the store's receipt of written notice of the hearing examiner's adjudication and order. The remaining subsections, currently subsections (c) and (d), would be renamed (d) and (e).
C. Fiscal Impact
The WIC Program is 100% Federally funded. No State dollars are involved in the operation of the WIC Program. The proposed regulatory change to § 1103.3, which deals with authorization of stores, to eliminate provisions regarding store slots and competition for those slots based upon prices, in and of itself, has the potential for increasing dramatically the number of stores that may be authorized to participate in the WIC Program. Through introduction of provisions regarding maximum allowable prices for all WIC allowable foods, however, the Department hopes to realize two objectives: (1) to keep the number of stores applying for authorization within reasonable limits; and (2) to achieve savings in foods costs that may translate into the additional administrative dollars needed to monitor the additional stores. Other aspects of these regulatory changes, such as repeal of provisions imposing limitations on the number of store slots and removal of provisions requiring store input and WIC Program collection of quarterly prices from each retail store, will generate Program savings. Overall, the Department anticipates the fiscal impact of these regulations to be neutral.
D. Paperwork Requirements
The proposed amendments will not increase paperwork for WIC Program participants or those grocery stores voluntarily participating in the WIC Program. The increase in the Department's paperwork requirements that will result from the elimination of store slots and the increase in the number of authorized stores will be offset by the decrease in paperwork associated with identifying, based on price calculations, which stores will be awarded available store slots. Paperwork requirements also will decrease as a result of the elimination of the overcharge recovery system. Moreover, the Department anticipates fewer appeals by stores denied authorization. Only stores failing to meet selection criteria will be denied authorization and reauthorization and, through extended authorization, stores may have more than one opportunity to meet selection criteria.
F. Effective Date/Sunset Date
The amendments will become effective upon publication as a final-form rulemaking. These proposed amendments will be monitored continually and will be updated as required by changes in Federal statute or Federal regulations governing the WIC Program. Therefore, no sunset date has been set.
G. Statutory Authority
The WIC Program was authorized through an amendment to the 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 program. In the Commonwealth, the WIC Program receives 100% of its funding from the USDA-FNS.
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 existing State regulations were developed and 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 (1998). The 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 Part VIII (relating to supplemental nutrition program for women, infants and children (WIC Program)). The regulations also deleted §§ 8.41--8.74, the Department's then existing regulations pertaining to WIC Program administrative appeals.
The proposed amendments contained in Annex A are submitted under the Department's general power to promulgate regulations to carry out its duties and its duty to protect the health of the people of this Commonwealth under section 2102 of The Administrative Code of 1929 (71 P. S. § 532) and the Giant decision.
H. Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on September 11, 2002, the Department submitted a copy of the proposed rulemaking to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House Committee on Health and Human Services and the Senate Committee on Public Health and Welfare. In addition to submitting the proposed rulemaking, 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 objections to any portion of the proposed rulemaking, it will notify the Department within 10 days of the close of the Committees' review period. The notification shall specify the regulatory review criteria which have not been met by that portion. The Regulatory Review Act specifies detailed procedures for review, prior to the final publication of the regulations, by the Department, the General Assembly and Governor, of objections raised.
I. Contact Person
Interested persons are invited to submit all comments, suggestions or objections regarding the proposed amendments to Greg Landis, Acting Director, WIC Program, Room 604, Health and Welfare Building, Harrisburg, PA 17108, (717)783-1289, within 30 days after publication of this notice in the Pennsylvania Bulletin. Persons with a disability may also submit comments, suggestions or objections regarding the proposed amendments to Greg Landis in alternative formats, such as by audio tape, Braille or by using V/TT: (717) 783-6514. Persons with a disability who require an alternative format of this document (that is, large print, audio tape, braille) should contact Greg Landis so that he may make necessary arrangements.
ROBERT S. ZIMMERMAN, Jr.
SecretaryFiscal Note: 10-169. 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 § 1101.1. Background and scope.
* * * * * (b) Scope. This part establishes design and operational requirements for the food delivery system for the WIC Program, and prescribes procedures to be used by applicants, participants[, local agencies] and stores to appeal actions of the Department and local agencies that may adversely impact upon them.
§ 1101.2. Definitions.
The following words and terms, when used in this part, have the following meanings, unless the context clearly indicates otherwise:
* * * * * Authorization--The grant of authority to a store to serve as a WIC authorized store.
Authorized representative--For an applicant or participant, [an adult applicant or participant,] a parent or guardian of an applicant or participant who is an infant or child, a proxy or endorser, or an individual designated [by that person] to represent the applicant or participant in administrative proceedings involving the WIC Program. For a [local agency or] store, an individual designated by the [local agency or] store to represent it in administrative proceedings involving the WIC Program. For a compliance buy or WIC transaction review, the person conducting the compliance buy or WIC transaction review.
* * * * * Certification--[For purposes of this chapter and Chapters 1103, 1105, 1107, 1109 and 1113, the term means the Department's acceptance of a store, not currently authorized to participate in the WIC Program, as a WIC authorized store. For purposes of Chapter 1111 (relating to applicant and participant appeals), the term means the] The Department's acceptance of an applicant to participate in the WIC Program as a participant.
* * * * * Claim--A demand for reimbursement of an overcharge or other improper charge to the WIC Program as a result of a store violation.
* * * * * Contract brand--The specific manufacturer brand of an allowable food that the Department is contractually bound to prescribe for participants.
* * * * * High risk store--A store identified as a possible perpetrator of fraud or abuse through analysis of redemption patterns of WIC checks or WIC sales, [through compliance violations,] or by complaints of participants or WIC Program staff.
* * * * * Inventory [audits] audit--A comparison of a WIC authorized store's inventory levels [and purchases] of a particular [WIC product] allowable food over a specific period of time, to [actual WIC] purchases of the [same product] allowable food with WIC checks during the same period of time, to determine if the store had [adequate product quantities available to satisfy claims made for WIC reimbursement of the product during the same period of time] a quantity of the allowable food available for sale during that time sufficient to support its claim for reimbursement for the sale of the allowable food.
[Limitation criteria--Criteria in § 1103.4(b) (relating to selection and limitation criteria; authorization process) which the Department has established to limit the number of WIC authorized stores in a particular area to assure that State and local officials can effectively manage, review and monitor WIC authorized stores.]
* * * * * Maximum allowable price--The maximum price the Department will pay for an allowable food.
* * * * * Onsite review--[An overt] A visit to a store by Federal, Department or local agency personnel to determine if the store meets the selection criteria necessary to be [certified or recertified as] a WIC authorized store, or a visit to a WIC authorized store [after certification or recertification,] to determine whether the store is complying with this part governing the store's participation in the WIC Program. An onsite review may be announced or unannounced.
Overcharge--A charge by a WIC authorized store to the WIC Program through redemption of a WIC check for an allowable food in excess of the store's shelf price for that food or in excess of the price charged a non-WIC participant for that food.
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 each allowable food authorized for purchase on the WIC check.
* * * * * Periodic review--Contemporaneous announced onsite reviews of stores in a trade area conducted not less than once every 3 years to select stores for reauthorization.
* * * * * Premises--The sales floor and storage areas within the building housing the WIC authorized store.
Price adjustment--The retroactive reduction in the amount paid for a redeemed check as a result of a determination of overpayment.
Probationary authorization--The Department's probationary authorization of a WIC authorized store when inadequate participant access would occur if the store were not authorized or reauthorized or when the store is reviewed prior to opening to the public and has not yet stocked its dairy section or its frozen juice section.
* * * * * [Recertification] Reauthorization--The Department's [authorization of a WIC authorized store, following a review process, to continue as a WIC authorized store] renewal of authorization.
[Redeem] Redemption--[A WIC authorized store submitting] Submission of a WIC check by a WIC authorized store to its bank for the purpose of securing a money payment for the amount appearing in the ''Pay Exactly'' box on the WIC check.
Routine review--An unannounced onsite review of a WIC authorized store to evaluate adherence by the store to the requirements in this part governing the store's participation in the WIC Program.
* * * * * Sanction--A penalty imposed by the Department upon a WIC authorized store for violation of this part governing the store's participation in the WIC Program. The term does not include a decision to deny [certification or recertification] authorization or reauthorization following [a certification or recertification] an announced onsite review [process].
Secretary--The Secretary [of Health] of the Department.
Selection criteria--Criteria in § 1103.4[(a)] (relating to selection criteria for authorization and reauthorization) which the Department has established which a store seeking to be [certified or recertified] authorized or reauthorized is required to satisfy.
* * * * * [Store slot--A slot established by the Department for a WIC authorized store in a trade area. The number of store slots the Department authorizes for a geographic area assigned to a local agency is based on the density of participant population in the county in which the trade area is located and the actual number of participants in the county.]
Store violation--Intentional or unintentional action by the owners, officers, managers, agents or employees of a WIC authorized store that violates the requirements in this part governing the store's participation in the WIC Program and that may result in a claim.
Temporary authorization--The Department's temporary and conditional authorization of a WIC authorized store that fails to meet specified selection criteria during the initial onsite review for purposes of reauthorization.
Trade area--A designated geographic area within the geographical area assigned to a local agency, which is organized to serve the participant populations in that designated area [through an assigned number of store slots].
[Training buy--The presentation of a WIC check by a Federal, Department or local agency representative to purchase foods at a WIC authorized store, which does not result in the actual tender of the WIC check or the purchase of the foods, to evaluate adherence by a WIC authorized store with this part governing the store's participation in the WIC Program.]
* * * * * WIC authorized store--A retail food store which is authorized [through certification or recertification] or reauthorized in accordance with § 1103.1 (relating to authorization and reauthorization process and requirements) to provide allowable foods to participants by accepting WIC checks.
* * * * * WIC identification card--A document issued by the Department to a participant, which is used for identification purposes[, signature verification] and [authorization] verification of eligibility to purchase allowable foods with WIC checks at a WIC authorized store.
* * * * * WIC transaction--The presentation of a WIC check by a participant or authorized representative to a WIC authorized store resulting in the purchase of one or more of the allowable foods designated on the check.
WIC transaction review--The presentation of a WIC check by a Federal, Department or local agency representative to purchase foods at a WIC authorized store, which does not result in the actual tender of the WIC check or the purchase of the foods, to evaluate adherence by a WIC authorized store with the requirements in this part governing the store's participation in the WIC Program.
§ 1101.3. Administration.
* * * * * (b) Vendor Advisory Workgroup. The Department will form a Vendor Advisory Workgroup with representation from the retail store community, appropriate advocacy groups and associations for retail stores and participants, and from the State and local agencies. The Department will schedule at least two meetings of the Vendor Advisory Workgroup annually to review and discuss retail store and food delivery issues. The Vendor Advisory Workgroup shall function in an advisory capacity only; acceptance of Workgroup recommendations shall be at the discretion of the Department.
(c) Local agency responsibilities. Local agencies shall determine whether participants meet eligibility criteria developed by the Department, develop food prescriptions for participants, provide nutrition education to participants, provide referral information regarding ongoing health services, issue WIC checks to participants to purchase allowable foods and ensure that all participants are served without discrimination. Local agencies shall function as representatives of the Department in conducting [certification and recertification] onsite reviews, and in monitoring the activities of WIC authorized stores.
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