HLT-39-15-00015-P Women Infants and Children (WIC) Program Vendor Applicant Enrollment Criteria

9/30/15 N.Y. St. Reg. HLT-39-15-00015-P

NEW YORK STATE REGISTER

VOLUME XXXVII, ISSUE 39

September 30, 2015

RULE MAKING ACTIVITIES

DEPARTMENT OF HEALTH

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. HLT-39-15-00015-P

Women Infants and Children (WIC) Program Vendor Applicant Enrollment Criteria

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:

Proposed Action:

Amendment of sections 60-1.1 and 60-1.13 of Title 10 NYCRR.

Statutory authority:

Public Health Law, section 2500

Subject:

Women Infants and Children (WIC) Program Vendor Applicant Enrollment Criteria.

Purpose:

To align NYS WIC Program operations with current federal requirements by amending the existing vendor enrollment criteria.

Text of proposed rule:

Pursuant to the authority vested in the Commissioner of Health by section 2500 of the Public Health Law, 42 United States Code section 1771 et seq. and Part 246 of Title 7 of the Code of Federal Regulations, sections 60-1.1 and 60-1.13 of the Official Compilation of Title 10 of the Codes, Rules and Regulations of the State of New York (“NYCRR”) are amended to be effective upon publication of a Notice of Adoption in the New York State Register, to read as follows:

Section 60-1.1 is amended as follows: subdivision (k) is amended to read as follows; new subdivisions (q) and (r) are added; and existing subdivisions (q) and (r) are renumbered as subdivisions (s) and (t).

(k) Food vendor means [any establishment which accepts WIC food instruments whether contracted to do so or not] a sole proprietorship, partnership, cooperative association, corporation or other business entity that operates a retail food delivery system.

(q) Vendor management agency means a Local Agency that is authorized by the Department to provide ongoing vendor management activities for a specific geographic service area.

(r) Vendor peer group means a classification of authorized vendors into groups based on common characteristics or criteria that affect food prices, for the purpose of applying appropriate competitive price criteria to vendors at authorization and limiting payments for food to competitive levels.

([q] s) WIC food vendor means a food vendor which has a contract in effect with a [local] vendor management agency to supply supplemental foods to persons receiving benefits under the WIC program.

([r] t) WIC program means the Special Supplemental Food Program for Women, Infants, and Children authorized by the Federal Child Nutrition Act of 1966, as amended.

Subdivision (a) of Section 60-1.13 is amended to read as follows:

(a) [Any] Only food [store] vendors (excluding pharmacies) [which applies] with current and valid Supplemental Nutrition Assistance Program (SNAP) authorization may apply for participation in the WIC program [shall be enrolled via a State Health Department approved one-year expirable contract] and may be approved if all of the following criteria are met. [If all the criteria are not met, the vendor may not be enrolled.] Any food vendor that is approved based on these criteria will be required to enter into contract with a Vendor Management Agency.

[(1) Current and valid food stamp authorization.

(2)(i) The vendor/participant ratio in the ZIP code area of the applicant vendor is more than 75 participants per vendor, or

(ii) There is a participating WIC vendor within a 10-block or 1/2 mile walking distance of the applicant vendor who redeems more than $3,000 in WIC checks per month, or]

(1)(i) The applicant food vendor’s physical location is within a ZIP code area that the Department has identified as an area with insufficient participant access. Insufficient participant access areas will be identified by the Department as a ZIP code area in which the ratio of eligible WIC individuals per authorized WIC food vendor cash register exceeds two hundred and fifty to one. On no less than an annual basis, the Department shall make public the list of ZIP codes where vendor applications will be accepted; or

(ii) The applicant food vendor’s physical location is within a ZIP code area where there is a demonstrated, documented cultural need (e.g., Kosher) or the Department has determined that the number of food vendors needs to be greater due to geographic access issues; or

(iii) The applicant food vendor had annual total sales in the previous calendar year of more than [three] five million dollars in New York State.

(2) The Department may consider a history of adverse actions, as defined in Section 60-1.1, or abuse of any other government sponsored program when deciding whether to authorize applications.

(3) [If the applicant vendor has assumed ownership of a store that had been participating in the WIC program within 60 days from the date the application is made, the criteria set forth in paragraph (2) of this subdivision will not apply unless the store under the previous owner redeemed fewer than 25 checks per month.] The applicant vendor must be a business or corporation as defined in subdivision (k) of Section 60-1.1 in New York State that has been operating for no less than twelve (12) consecutive months immediately preceding the application. The Department shall not authorize a vendor application if it has determined that a store has been sold by its previous owner in an attempt to circumvent a WIC sanction, by using methods that may include, but are not limited to, background checks and review of the Store Tracking and Redemption Subsystem (STARS) database. The Department shall not accept an application from a vendor that has withdrawn an application or has been non-renewed within the previous twelve months.

(4) The applicant food vendor shall stock WIC-acceptable foods, as determined by the New York State Department of Health, in the minimum quantities prescribed in the vendor application document at the time of enrollment.

(5) Applicant food vendor's prices shall be reasonable as compared to [other vendors contracted with the local agency] the vendor peer group to which the applicant vendor will be assigned. Reasonable shall be defined by calculating the applicant food vendor's average selling price of [their] the most commonly prescribed formula check type for an infant and the two most commonly prescribed check types containing multiple foods for a woman or child. [The prices that are used for these calculations should reflect the vendor's average prices for each type of item.] Calculations should not be made based solely on the highest priced item. The cost of the checks [should] must be within 10 percent of the [project] average for these check types as compared to other food vendors in the vendor peer group to which the applicant is assigned. [identified on the last project summary by vendor report. The project summary by vendor report identifies the project average for each check type by calculating the cost of each check type redeemed during the reporting month by vendors contracted with the applicant's local agency.]

Subdivision (b) of section 60-1.13 is amended to read as follows:

(b) Any pharmacy [which applies] may apply for participation in the WIC program [shall be enrolled] if all the following criteria are met. Any [vendor] pharmacy [who meets these] that is approved based on the following criteria [should be enrolled via a State Health Department approved one-year expirable contract] will be required to enter into contract with the vendor management agency.

(1) There are no other pharmacies participating in the WIC program within a [1/2] one mile [walking distance] radius of applicant pharmacy.

(2) The applicant pharmacy shall stock formula in the minimum quantities prescribed in the vendor application document at the time of enrollment.

(3) The applicant agrees to order and stock special formulas as requested by the [local] vendor management agency.

(4) The applicant's prices for formula are reasonable. Reasonable shall be defined by calculating the applicant pharmacy’s average selling price of the most commonly prescribed formula check type for an infant [calculating the applicant vendor's selling price of an ITA check (eight 13-ounce cans iron-fortified concentrated formula)]. The total cost [should] must be within 10 percent of the [project] average for this check type for the vendor peer group to which the applicant pharmacy will be assigned.

Subdivision (d) of Section 60-1.13 is amended to read as follows:

(d) The [local] vendor management agency [shall have the option of not] may not contract[ing] with any vendor who has been previously disqualified from the WIC program or who has a history of adverse actions, as defined in Section 60-1.1 (i.e., civil money penalties, suspension, or denial of participation in the WIC Program) or who has abused [the WIC program or] any other government sponsored program.

Subdivisions (e) through (g) of Section 60-1.13 are deleted.

[(e) If there are no other available participating vendors within three miles of the applicant vendor or there is a demonstrated, documented cultural need (e.g., Kosher), the local agency may, within its discretion, admit the applicant vendor into the program without first meeting the criteria set forth in paragraphs (a) (1), (2), (3) and (5) or subdivision (b) or (c) of this section.

(f) A local agency does not have to consider a vendor's reapplication for participation in the WIC program if the vendor was denied within the past year.

(g) When requested by the State or local agency, the applicant vendor has attended pre-contract training.]

Text of proposed rule and any required statements and analyses may be obtained from:

Katherine Ceroalo, DOH, Bureau of House Counsel, Reg. Affairs Unit, Room 2438, ESP Tower Building, Albany, NY 12237, [phone], email: [e-mail]

Data, views or arguments may be submitted to:

Same as above.

Public comment will be received until:

45 days after publication of this notice.

Regulatory Impact Statement

Statutory Authority:

The federal Child Nutrition Act of 1966 (42 USC Section 1771 et seq.) established the Women, Infants, and Children (WIC) Program. Section 246.3(b) of Title 7 of the Code of Federal Regulations delegates responsibility for the effective and efficient administration of the WIC program to the State agency and 7 CFR section 246.12(g)(3) requires the State agency to establish enrollment criteria for WIC authorized vendors. Section 60-1.13 of Title 10 of the Official Compilation of Codes, Rules and Regulations of the State of New York establishes WIC Vendor Applicant Enrollment Criteria. Section 60-1.1 of Title 10 establishes definition of program terms. In addition, Section 2500 of Title 1 of Article 25 of the Public Health Law authorizes the Commissioner of Health to act in an advisory and supervisory capacity in matters pertaining to maternal and child health.

Legislative Objective:

The intent of Section 2500 of Title 1 of Article 25 of the Public Health Law is to authorize the Commissioner of Health to act in a supervisory capacity related to services bearing on the health of mothers and children for which funds are or shall hereafter be made available. Establishing regulations to ensure that WIC vendors meet specific criteria is consistent with the legislative objective.

Needs and Benefits:

The WIC Program was established as a result of the Child Nutrition Act of 1966. WIC is not an entitlement program, but rather a federal grant program under which the U.S. Department of Agriculture (USDA) provides funds to states and other entities to administer the components of this supplemental food program. The WIC Program provides nutrition assessment, health education, referral to medical services, and supplemental nutritional foods to eligible women, infants and children up to five years of age.

The current NYS WIC Vendor Applicant Enrollment Criteria was instituted prior to 1990 and has not been updated to reflect significant program and administrative changes. The proposed rule is needed to align NYS WIC Program operations with current federal requirements by amending the existing vendor enrollment criteria. This will allow a more streamlined approach to administering the NYS WIC program and ensuring access to benefits for NYS WIC participants.

NYS WIC presently serves approximately 500,000 participants each month. Services are provided through 93 local agencies that operate 500 service sites throughout the State. Approximately 70% of the NYS WIC participant caseload and local agencies are located in the New York City Metropolitan Area Region. The current annual NYS WIC funding level is $580 million for food benefits and local agency program administration.

New York State has approximately 4,100 retail vendors authorized to accept WIC checks statewide. Approximately 3,200 vendors (78%) are located in the NYC Metropolitan Area Region, with the remaining 900 vendors located throughout the rest of the State. Within the NYC Metropolitan Area Region, an estimated 70% of the 3,200 vendors are categorized as small (1-2 cash registers), less than 1% are stand-alone pharmacy vendors, and the remaining vendors are categorized as large chain retail vendors (3 or more cash registers). There are five Vendor Management Agencies across the State that are directly responsible for oversight of the WIC authorized vendors. Vendor Management Agencies authorize and monitor WIC food vendors by ensuring that WIC approved foods and infant formula are adequately stocked and priced in accordance with program requirements. Vendor Management Agencies also provide training to retail vendors and conduct periodic site inspections.

The USDA has encouraged states to limit vendor authorizations and to strengthen selection criteria and accountability. The proposed rule will address USDA’s recommendations in this regard.

The proposed rule allows the Department to tighten the peer group structure so that peer groups contain smaller, more homogeneous groupings of vendors, applying current vendor selection criteria each time a vendor applies for reauthorization, and perhaps most importantly, updates New York’s current participant access criteria.

Limiting the number of vendors makes vendor oversight more manageable for Vendor Management Agencies. It also ensures adequate redemptions for enrolled vendors, thereby removing the incentive to increase volume through unapproved or fraudulent means. Also, since WIC vendors are required to stock specific foods in specific quantities, selling higher volume of those foods is more efficient than stocking only minimum required amounts.

The existing vendor ratio of 75 participants to 1 vendor (75:1) currently established in regulation is no longer an effective benchmark for determining the appropriate number of WIC vendors to authorize. Based on the existing criteria, every vendor application is accepted for consideration, the only exception being those received from two ZIP codes in the State.

The proposed rule will result in the processing of vendor applications only when limited participant access (i.e., availability of cash registers to eligible WIC participants, documented, demonstrated cultural needs, etc.) is identified in a specific ZIP code.

Finally, the proposed rule will conform State regulation to federal regulations related to the vendor selection criteria which includes, but is not limited to, the authorization to set a vendor limiting criteria (7 CFR § 246.12(g)(2)), the use of business integrity (7 CFR § 246.12(g)(3)(ii)), competitive prices (7 CFR § 246.12(G)(4)) and implementing effective peer groups (7 CFR § 246.1(g)(4)(ii)) to evaluate vendor authorization to participate in New York State’s WIC program.

COSTS:

Costs for the Implementation of, and Continuing Compliance with this Regulation to the Regulated Entity:

The proposed rule will not impact the existing WIC vendor population until reauthorization is required. WIC vendors apply for reauthorization every three years and will be subject to review at that time. The value of federally-funded WIC benefits that are issued and redeemed is not expected to decrease as a result of these changes. As a result of these changes, individual retailers who are not currently authorized to participate in NYS WIC or who are required to submit a new application will be subject to the revised enrollment criteria, including consideration as to whether the zip code in which they operate has sufficient numbers of WIC vendors and sufficient types of vendors to meet access needs, including special and cultural needs.

Costs to State and Local Government:

There will not be an impact on State or local governments as the value of federally-funded WIC benefits that are issued and redeemed is expected to remain constant.

Costs to the Department of Health:

The proposed rule will not result in additional costs to the Department.

Local Government Mandates:

The proposed amendment does not impose any new programs, services, duties or responsibilities upon any county, city, town, village, school district, fire district or other special district.

Paperwork:

The proposed amendment does not impose any additional paperwork requirements for regulated entities.

Duplication:

Title 7 of the Code of Federal Regulations, section 246.12(g)(2), allows the state agency to establish criteria to limit the number of retail vendors authorized to participate in the WIC program, providing that any limiting criteria is applied consistently throughout the State. The proposed rule is in compliance with federal requirements.

Alternatives:

No viable alternatives are available that can be applied consistently across the State to protect the integrity of the WIC program while still ensuring participant access.

Federal Standards:

The proposed regulations do not exceed any minimum federal standards.

Compliance Schedule:

The proposed amendments are to be effective upon publication of a Notice of Adoption in the New York State Register.

Regulatory Flexibility Analysis

Effect of Rule:

The proposed rule will not immediately impact the approximately 4,100 retail vendors currently authorized to accept WIC checks. Approximately 50% of currently authorized WIC vendors are 1 or 2 cash register stores. WIC vendors apply for reauthorization every three years and will be subject review at that time.

The value of federally-funded WIC benefits that are issued and redeemed is not expected to decrease. Individual retailers who are not currently authorized to participate in NYS WIC or who are required to submit new applications may not be authorized to participate in the NYS WIC program if the zip code in which they operate has sufficient numbers of WIC vendors and sufficient types of vendors to meet access needs, including special and cultural needs.

This rule will have no direct effect on Local Governments.

Compliance Requirements:

This regulation does not impose any new reporting, recordkeeping or other compliance requirements on regulated entities or local governments.

Professional Services:

No new professional services are required as a result of this regulation.

Compliance Costs:

The value of federally-funded WIC benefits that are issued and redeemed is not expected to decrease as a result of these changes.

Economic and Technological Feasibility:

This amendment does not affect operational requirements for any of the approximately 4,100 retail vendors currently enrolled in the NYS WIC Program. Therefore, there should be no technological difficulties associated with compliance with the proposed regulation for small businesses.

This rule will have no direct effect on Local Governments.

Minimizing Adverse Impact:

This rule will have no adverse impact on currently enrolled NYS WIC vendors until reauthorization review is required. WIC vendors apply for reauthorization every three years. The proposed rule includes provisions that will allow vendor enrollment if established criteria are met. The proposed rule is needed to update NYS WIC Program regulations to meet federal requirements.

Small Business and Local Government Participation:

The Department will provide notification of the rule change to affected stakeholders and will engage in discussion with WIC local agencies and vendor management agencies, as well as with relevant association trade groups such as the National Supermarket Association and the Food Industry Alliance of New York State. Stakeholders, including small businesses and local governments, will also have the opportunity to participate through the public comment period as part of the regulatory process.

Rural Area Flexibility Analysis

No rural area flexibility analysis is required pursuant to section 202-bb(4)(a) of the State Administrative Procedure Act. The proposed amendment does not impose an adverse impact on facilities in rural areas, and it does not impose reporting, recordkeeping or other compliance requirements on facilities in rural areas. The Department expects that there will be no changes to existing reporting or recordkeeping requirements and no additional compliance requirements on facilities.

Job Impact Statement

A Job Impact Statement is not required pursuant to Section 201-a(2)(a) of the State Administrative Procedure Act. It is apparent, from the nature and purpose of the proposed regulation, that there will not be a substantial adverse impact on jobs or employment opportunities.