Pennsylvania WIC Any Authorized Vendor (AAV) Project Executive Summary

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1 Pennsylvania WIC Any Authorized Vendor (AAV) Project Executive Summary The Pennsylvania Women, Infants and Children (WIC) program has created an automated system for grocery stores to report WIC check acceptance information that will save the Commonwealth in excess of $160,000 annually. All WIC programs nationally were mandated by the USDA to modify their procedures to allow participants to use their WIC food vouchers at any WIC authorized grocery stores within the state. When a family enrolls in the PA WIC program, the current system requires them to choose which WIC approved grocery store they will shop at for WIC allowed foods. That store name is then printed on each voucher and can only be used at the specified store. The option used in almost all of the WIC states, involves requiring vendors to rubber stamp their identification number on each voucher before deposit. Once the financial institution receives the stamped WIC voucher they scan the number through optical character recognition (OCR) and if that fails, hand key the vendor identification number into a custom data entry system. For Pennsylvania to use this approach, their WIC bank would have to purchase entirely new OCR scanning equipment, create new data entry systems, and obtain dedicated staff to manually key the non-ocr recognized vendor numbers. The WIC bank estimated that it would increase banking fees by two cents per check amounting to over $160,000 annually. Pennsylvania s automated solution is tailored to three major categories of grocery stores; large chain stores, medium to small stores that have PCs and internet access, and small stores without internet access. Large chain stores already employ electronic cash register (ECR) systems capable of capturing the required check information at the point of sale. These ECR vendors adhere to a set of specifications created by Pennsylvania WIC Program that specify the file layout, naming convention, recommended edits, and data transmission methods. ECR vendors were provided with communications software developed by Pennsylvania WIC to reduce their development requirements and time. For the medium to small stores that have PCs and internet access, Pennsylvania WIC created custom software, called CheckScan that operates with a stand alone scanner (supplied by WIC) to capture WIC check information and transmit it to a secure server. This software also provides extensive event logging for speedy troubleshooting of problems and allows for the hand keying of voucher data should there be a physical problem or other condition preventing the scanning of the MICR line. For the smallest stores without internet access, Pennsylvania WIC created an interactive voice response (IVR) system that allows the store representative to dial up and key the check numbers via telephone. The IVR system is secured by the vendor identification number and vendor specified person identification number (PIN), and features a toll free number, 24 inbound lines, and voice prompts in both English and Spanish. In addition to providing a data input method for non-automated vendors, it also serves as a backup for other vendors should their automated systems fail. Once data is transmitted to Pennsylvania s secure communications site or entered into their IVR system, it is matched by check number to issue records previously generated by QuickWIC, Pennsylvania s web based automated WIC system. The matched records are then sent to the WIC bank on the daily issuance file authorizing payment.

2 Project Name: Pennsylvania Department of Health - WIC - Any Authorized Vendor (AAV) Project Description: The Pennsylvania Women, Infants and Children (WIC) program has created an automated system for grocery stores to report WIC check acceptance information that will save the Commonwealth in excess of $160,000 annually. This new method will also save grocery stores significant labor cost compared to alternate methods employed by surrounding states. Background All WIC programs nationally were mandated by the USDA to modify their procedures to allow participants to use their WIC food vouchers at any WIC authorized grocery stores within the state. A WIC food voucher is essentially a check that lists specific nutritional food items prescribed to a participant. Only those nutritional items on the voucher are allowed to be purchased by a participant. When a family enrolls in the PA WIC program, the current system requires them to choose which WIC approved grocery store they will shop at for WIC allowed foods. That store name is then printed on each voucher and can only be used at the specified store. If the participant moves to another area within the state, a store closes, or is otherwise unavailable, the participant must report to a WIC clinic to specify an alternate grocery store and have any remaining vouchers reprinted. Compliance In order to comply with the mandate, Pennsylvania WIC considered three possibilities; electronic benefit transfer (EBT) using smart cards, rubber stamping of vendor number on the voucher, and automated vendor reporting of voucher data. The first option, EBT using smart cards, is being piloted in Texas and New Mexico but is not economically feasible at this time since Pennsylvania WIC would need to equip most of its 1,500 grocery stores with card readers and stand alone back office servers. The second option, used in almost all of the WIC states, involves requiring vendors to rubber stamp their identification number on each voucher before deposit. Once the Pennsylvania WIC bank received this stamped voucher, they would attempt to scan the number through optical character recognition (OCR) and if that failed, hand key the vendor identification number into a custom data entry system. For Pennsylvania to use this approach, their WIC bank would have to purchase entirely new OCR scanning equipment, create new data entry systems, and obtain dedicated staff to manually key the non-ocr recognized vendor numbers. The WIC bank estimated that it would increase banking fees by two cents per check amounting to over $160,000 annually. While this approach is used by most states, there are many issues associated with this approach; primarily additional banking cost, but also vendor fraud potential, vendor stamp inventory management, stamp accuracy, and the additional vendor time spent manually stamping each WIC check. The third option, referred to as automated vendor reporting, automates the grocery store reporting of WIC check acceptance information. Current, readily available, technology allows us to automatically capture the magnetic check information, or MICR line at the point of check acceptance, or shortly thereafter, by reading it directly from built-in scanners or stand alone scanning devices within the vendor location. The MICR line contains the Federal Reserve bank

3 routing information, check number, and amount in a special magnetic ink that is captured by the scanning devices. This solution also move us closer to the ultimate goal of EBT in that more stores will connect to our program via the internet and obtain more of the equipment required to support an EBT system. Solution Overview This automated vendor reporting solution is tailored to the various store types participating in our program. The following diagram shows a high level overview of how the solution is tailored to the three major categories of grocery stores or vendors and collected by the Pennsylvania WIC program. Large Chain Stores Pennsylvania WIC Scanner equipped ECR system Medium/Small Stores Internet ` FTP Server Stand alone scanner system Small Stores w/o Internet Access Interactive Voice Response System QuickWIC AAV Solution by Store Type Large chain stores already employ electronic cash register (ECR) systems capable of capturing the required check information at the point of sale. These ECR vendors adhere to a set of specifications created by Pennsylvania WIC Program that specify the file layout, naming convention, recommended edits, and data transmission methods. ECR vendors were provided with communications software developed by Pennsylvania WIC to reduce their development requirements and time. For the medium to small stores that have PCs and internet access, Pennsylvania WIC created custom software, called CheckScan (screen below), that operates with a stand alone scanner

4 (supplied by WIC) to capture WIC check information and transmit it to our secure server. This software also provide extensive event logging for speedy troubleshooting of problems and allows for the hand keying of voucher data should there be a physical problem or other condition preventing the scanning of the MICR line. CheckScan Application For the smallest stores without internet access, Pennsylvania WIC created an interactive voice response (IVR) system that allows the store representative to dial up and key the check numbers via telephone. The IVR system is secured by the vendor identification number and vendor specified person identification number (PIN), and features a toll free number, 24 inbound lines, and voice prompts in both English and Spanish. In addition to providing a data input method for non-automated vendors, it also serves as a backup for other vendors should their automated systems fail. Once data is transmitted to our secure communications site, or entered into our IVR system, it is matched by check number to issue records previously generated by QuickWIC, our web based automated WIC system. The matched records are then sent to the WIC bank on the daily issuance file authorizing payment. Project Preparation and Communications Prior to deciding on the best approach for Pennsylvania WIC, extensive research was conducted with other WIC programs, our contract bank, and with the vendors themselves. After obtaining cost estimates and feedback, we formulated a solution and then set about determining if it was feasible and if the vendor community would embrace it. Several surveys of the vendor community were conducted to determine if an ECR and internet solution would work. The

5 results indicated that the vast majority of stores could support the ECR and internet based solutions. Once the initial feasibility studies were concluded, a communications plan was devised to inform and involve the vendor community of the plan and solution. Twelve regional vendor forums were conducted throughout the state to provide an overview of the solution, to answer any questions or concerns, and to make sure that vendors would have the necessary equipment in place for the installation time frame. Following the vendor forums was an ECR Developer Forum where developers and managers from the large chain stores attended to receive an overview of the ECR solution, detailed specifications, and demonstrations of our communications application. Then in March and April, a final series of detailed vendor trainings were conducted regionally around the state to issue the mini-micr scanners, communication credentials, train store representatives on the new web site, and demonstrate the installation and usage of the standalone scanning and communication application, CheckScan. To further facilitate communication, Pennsylvania WIC created a new vendor web site, named WIC Vendor Assistant (screen below) that contains all vendor memorandums, information on the project, timeframes, supporting software, training information, and other reporting specific to individual stores as well as large chains. WIC Vendor Assistant Web Site In addition to the above communication channels, the Pennsylvania WIC Program employs a network of Retail Store Coordinator staff across the state to answer and follow-up on vendors directly, distributes paper Retail Store Alerts to vendors without internet access, and has

6 established two toll free Help Desk support lines to answer questions about the AAV project or CheckScan application installation. Benefits To the Commonwealth of Pennsylvania: Our contracted bank has estimated that to modify their system and purchase equipment to capture a stamped vendor number would cost Pennsylvania WIC an additional two cents per check. Since our check volume is roughly eight million checks per year, resulting in an annual savings in excess of $160,000. To WIC Authorized Vendors: Stores will achieve reduced labor cost due to using a completely automated solution versus a manual hand stamping process. This can be quite significant for a large chain but harder to quantify for a smaller store. In our studies, hand stamping took approximately three times as long and was much less accurate than both the CheckScan and telephone methods. So the savings would be variable depending on the store s check volume. To the USDA and other WIC states: At this year s National WIC Association (NWA), Pennsylvania WIC presented their unified solution to an audience consisting of many national WIC Directors and USDA WIC national and regional managers. The USDA has become an advocate for our solution as they see the potential to save the nation conservatively five or six million annually as more states adopt our automated vendor reporting model. The response from the WIC Directors in attendance was also overwhelmingly positive. Many of them commented that this solution was perfect for them and they would begin pursuing the conversion from rubber vendor stamps as their individual banking contracts were renewed and renegotiated. Summary The AAV automated vendor reporting solution is a win for all parties. Vendors are freed from the tedious and antiquated rubber stamping solution used predominantly in the industry. Pennsylvania WIC saves substantial banking fees, maintains reporting accuracy, and moves closer to EBT. And the USDA is able to provide other states with an example of how to successfully automate manual practices while saving significant taxpayer dollars.