Senate Agriculture Committee
SR-328A
US Congress

RE:  WIC Reauthorization Hearing - Electronic Benefit Transfer for WIC
 

I am Joseph Terrance Williams, of Cheyenne, Wyoming.  I serve the citizens of Wyoming as the State Electronic Benefit Transfer Program Manager.  Wyoming is now operating the first combined Electronic Benefit Transfer (EBT)  field demonstration that includes both WIC and Food Stamps.  This is also the first combined smart card application of both WIC and Food Stamps. Wyoming is currently reviewing processor bids to determine how to take our pilot experience and expand it statewide for WIC, Food Stamps and Temporary Assistance for Needy Families (TANF).

In addition our Governor,  Jim Geringer, has afforded me the privilege of appointment as the Program Manager for the Western Governor's Association Health Passport Project. Health Passport is a three state, three city field demonstration that uses the same smart card technology as an electronic service platform to put important health information at the fingertips of mothers and their children, including WIC participants.  In my testimony, I will reference the potential value of  looking at this technology to not only manage EBT benefits, but to link WIC with other Maternal and Child Health Programs and Medicaid. Prior to focusing on electronic service delivery, I was the Wyoming WIC Director for 15 years.

Congress had a far sighted vision for the WIC Program when they enacted legislation through Public Law 94-105 in 1975.  That vision established the mission of WIC as a supplemental nutrition program; by providing a specific food prescription for low income pregnant women, infants and children during critical periods of growth, who were medically determined to be at nutrition risk or health risk or both.  WIC was established  as a health program, and as such to be operated by the health agency in each state.  Within the health agency, WIC is to function as an adjunct to maternal and child health programs.  WIC is to provide nutrition education to parents of eligible preschool children to solve existing nutrition problems and to establish good eating habits that would last a lifetime.  Further, WIC's primary food delivery system was to be through food retailers who are contracted through state contracts.

I submit for WIC to gain the full spectrum of  benefits from EBT; it is essential that we establish an EBT solution that is built upon the strength of the original goals that were set for this exceptional program.

Since embarking on the first Wyoming proof of principle demonstration in the early 90's, a WIC EBT vision is taking shape.  Key points include:

 .  WIC as an integral part of a national strategy towards modernizing and streamlining
                  business practices through electronic solutions.

 .  Deliver WIC benefits and reconcile payments through a paperless EBT system.

 .  Improve client services through simplified point-of-sale transactions and greater shopping
                  convenience.

 .  Increase accountability and streamline program monitoring for states.

 .  Make WIC benefit redemption and payments more efficient for retailers.

 .  Maximize the technological advantages for WIC in line with evolving commercial sector
                  innovations.

 .  Promote federal-state Partnerships in development and implementation of EBT systems for
                 benefit delivery and health related services such as immunization and maternal and  child   health.
 
 .  Improve program fiscal management through electronic tracking of daily EBT obligations and
                  settlement of those obligations

With this as our vision, the Wyoming EBT experience presented three challanges:

1.  The WIC Program benefit, rather than a dollar amount, is a prescription for specific quantities of specific types of foods.  Authorizing WIC purchases is therefore much more complicated than authorizing a purchase using food stamp or welfare benefit because each item in the WIC purchase must be determined to be in accord with the individual's perscription.

2.  Most EBT systems use an on-line approach, which requires a telephone link to a central computer to authorize each purchase or cash withdrawal using EBT benefits.  On-line systems typically use a magnetic stripe card, which stores only enough information to identify the cardholder and relevant account.  In contrast, the smart card system in Wyoming places the benefit account balance on the card itself.  This permits off-line transactions, which occur without concurrent communication with a central datebase.

3.  Finally, the Wyoming system represents the first time that a single card has been used to simultaneously perform EBT functions and to support the sharing of health data to improve health related services.  The use of multifunction, multiprogram cards is being considered widely as a means for integrating government services to low income populations.

What Have We Learned ?

Beginning in the early 90's Wyoming worked with our food retailer partners, to test the feasibility of smart cards as the electronic medium for use to deliver the WIC food prescription. (1)  It was determined that magnetic stripe technology was insufficient to manage what is identified as the most complex and expensive food transaction retailers are requested to conduct for any food benefit program. By using a smart card for the WIC transaction additional  memory capacity to manage the complexity of the WIC food prescription is provided.  (Smart cards have the "on board" memory capacity to store and debit approved and authorized  WIC food, by food category, as the foods are scanned across the point-of-sale retailer equipment).

1.  Participants Prefer WIC EBT
System testing demonstrated that WIC participants would successfully use this new technology and over 90% preferred smart cards over the store specific, paper warrants.

2.  Shopping by Food Category and UPC Codes Improve WIC Transaction Integrity
By tying the smart card to an approved,  state authorized, electronic WIC Universal Product Code (UPC) listing of authorized foods we are assured that the prescribed WIC food package is purchased by the participant and no foods are forfeited or improperly substituted.

This approached also removed the judgement of the retailer checkout clerks, who may be unaware of exactly what items meet the prescription.  EBT applied to WIC at a UPC level, also provides an electronic fingerprint of  every transaction.  With this level of documentation, unless there is colusion between the cashier and participant, fraud/abuse within the retail store is eliminated

3.  EBT Provides Emergency Flexability.

WIC participants who are normally required to visit the clinic every second month to have their EBT benefits authorized, in emergencies such as childbirth, or severe weather can have benefits "remotely replenished" by the benefits being downloaded to the retail store.  Further, EBT cards that are lost or stolen can be replaced, with the remaining benefit balance, once the central EBT computer issues a message preventing the use of a lost card.

4.  EBT Documents Program Rebates.

The EBT system limits the participants' purchase of infant formula to exactly the type of formula prescribed.  The system also provides program management with exact purchase data for submiting claims to infant formula manufacturers.  (Consequently WIC EBT transactions managed at the UPC level potentially afford the opportunity to pursue additional WIC food prescription savings).

Further, when product manufacturers produce new WIC approved foods, change packaging or UPC,  or when a store changes suppliers of proprietary brands of WIC products,  (for example, changing dairy suppliers), the State WIC office can review and approve the product one day and make it available in the approved food category, the following day.

5. EBT Improves Convenience and Comparision Shopping.

Smart cards provided increased shopping flexibility, and access to more stores.  If a store was short on infant formula, the participant could make a partial purchase of what was available and return tomorrow.  Alternately, the card, with the remaining balance, affords the participant the opportunity to shop at another store.  If the participant is homeless or has limited refrigeration, and needed to shop everyday or every other day, they could do so.  If one retailer provided a weekly promotion on WIC products, the participant could shop for the advertised specials at that particular store, and the state WIC program would receive the benefit of lower costs.  In this way, WIC participants are able to apply WIC nutrition education skills as smart shoppers.

6.  Retailers Prefer WIC EBT to Paper System.

Retailers have publicly stated that they prefer this open delivery system, because, the retailer has to treat the WIC participant like everyone else.  The participant can now shop wherever they want , and consequently,  the store with the best price and service gets the WIC participant business.

In the initial "proof of principle" demonstration we learned a great deal.  With our retail partners we came up with a list of lessons learned and issues to be overcome, before we could head into a full fledged pilot demonstration from which we could launch a statewide roll-out.  Issues included:  using more robust in- lane equipment,  using a balance inquiry terminal at customer service to download the monthly food prescription, learning how to interface with the stores existing POS equipment to pick up the UPC code and shelf price in real time, and making the payment settlement system fully electronic.

In 1995, Wyoming having rigorously completed functional design and acceptance tests  with our retailer partners and  program participants, began the current pilot demonstration of smart card EBT for both WIC and Food Stamps.  This demonstration included 75 food retailers, 5,500 WIC participants and 2,200 Food Stamp housholds. (It is estimated that 40 to 60 percent of WIC participants also receive food stamps. By using one card, featuring a smartcard or a hybrid card (with both a microchip and magnetic stripe features), efficiencies are provided because of the program overlap.  The common card also provides the opportunity to improve referral of information, cost sharing, and nutrition education to participants in both WIC and the FSP)  The pilot has been evaluated through a contract from the Food and Nutrition Sercice. (2)

The current application is working as designed. (See exhibit)  Participants, retailers, and the state are pleased with the system, but as our learning curve has continued through the demonstration, we do expect to modify the design prior to statewide roll-out.

1.  Immediate Issuance of Benefits.

WIC participants need to receive the authorized supplemental food prescription as soon as they are certified.  We are making provision in the design to provide benefits on the day they are certified.  This will require enhancements to maintain the system security.

2.  The Initial Cost of the EBT System Cost More Than The Relatively Inexpensive Paper System that is Being Replaced.

This was to be expected because of the small size of the demonstration, and the upfront costs of design and development.  Several factors, such as expending the system to a much larger scale, could reduce off-line smart card EBT operating costs and substantially narrow the gap between EBT and the paper systems.  Other price reducing factors include falling prices of smart cards, and sharing  more of the system costs with food retailers as they develop the business case for this new technology.

3.  State WIC Programs Need to Partner or Form EBT Coalitions.

Project size will drive down prices.  Through Health Passport,  the Wyoming Model, is being transferred to Nevada WIC as a pilot in Reno.  This is important because the transfer will begin to demonstrate the first components of system interoperability.  The transfer will also demonstrate how these states can use a multistate UPC Code data base.  The Wyoming EBT Request for Proposal, also affords New Mexico WIC and Washington WIC to work off the same price schedule, if these states choose to take their option.  As the major food retailers are regional or national in scope, they need to see the WIC community address the WIC EBT transaction with a common protocol.

4.  Health Passport Links WIC to Maternal and Child Health Programs.

There is a significant program overlap between WIC and Immunization, Maternal and Child Health, Head Start, and Medicaid Child Health Services.  A common electronic service platform can be used by parents to share timely and relevant administrative, demographic and health data between both public and private providers.  (In the Western Governor's Association Health Passport, we have identified a data map of over 500 elements that the parent could share between service provider's).  This would enhance health care coordination, access, and efficiency.  Further, within the concept of welfare reform, true access should be the engagement of parents so they are a partner in the delivery of health care for their children. (See exhibit).
 

5.  National WIC EBT Specifications.

Through a Partnership, the Food and Nutrition Service, General Services Administration, the National Association of WIC Directors, states, food retailers (and their processors, software companies and equipment manufacturers) must work together to develop the WIC EBT Messaging Format so there is one National Standard.  This work has begun through a plan and meetings sponored by the Texas WIC Program and the Western Governors' Association Health Passport Project earlier this month.

6.  Congressional Support.

I respectfully recommend that Congress make the investment in WIC EBT and MIS System program integrity and move WIC into the twenty-first century.  As Congress directed States to apply EBT to Programs such as Food Stamps by 2002, a similiar investment will protect the WIC Program and enable it to acheive the bright promise for our Nations Children it was commissioned to do, some 25 years ago.

Thank you for the privilage of working with you today.