Title of Regulation: 12VAC5-195. Virginia WIC Program (amending 12VAC5-195-20, 12VAC5-195-30, 12VAC5-195-70, 12VAC5-195-140, 12VAC5-195-180, 12VAC5-195-190, 12VAC5-195-280 through 12VAC5-195-340, 12VAC5-195-360, 12VAC5-195-370, 12VAC5-195-390, 12VAC5-195-400, 12VAC5-195-410, 12VAC5-195-420, 12VAC5-195-450, 12VAC5-195-460, 12VAC5-195-480 through 12VAC5-195-550, 12VAC5-195-580, 12VAC5-195-590, 12VAC5-195-600, 12VAC5-195-610, 12VAC5-195-630, 12VAC5-195-640, 12VAC5-195-660, 12VAC5-195-670; repealing 12VAC5-195-380).

Statutory Authority: § 32.1-12 of the Code of Virginia; 7 CFR Part 246.

Effective Date: July 6, 2009.

Agency Contact: Anne Massey, Policy Analyst, Department of Health, 109 Governor Street, Richmond, VA 23219, telephone (804) 864-7800 ext. 7797, or email anne.massey@vdh.virginia.gov.

Summary:

The majority of the amendments made to the Virginia WIC Program are made to Part III of the regulations, which focuses on vendor requirements. The amendments are the result of significant edits to the Vendor Manual for the Virginia WIC Program. The amendments expand the current regulations and provide added detail to enrollment procedures, general requirements and conditions for retail authorization and policies regarding conflict of interest, solicitation, high-risk designation, and sanctions and administrative actions.

Substantive changes regarding vendor requirements include the following:

1. The ranking criteria for selecting retailers and applicants competing for available slots is amended in situations when multiple stores have equal rankings and there are not enough slots to authorize all stores. Two additional criteria for breaking ties when equal ranking exists include: (i) having the corporate representative decide on which store receives the slot if both stores in a tie are owned by the same corporate entity; and (ii) offering the slot to the store with the highest food stamp sales for the previous six months if both stores are not owned by the same corporate entity. The existing criterion to give preference to retailers certified by the Department of Minority Business Enterprise is eliminated.

2. Previously authorized stores may be given a one-year extension of their authorization if they compete with a newly opened, better qualified store for a slot.

3. The low volume performance standard, which requires authorized retail stores to serve at least an average of 60 unique WIC participants a month, has been eliminated.

4. Additional detail has been added regarding specific, mandatory requirements that stores must meet in order to be reimbursed, including entry of mandatory and optional food and formula prices and submission of a direct deposit form to the state agency.

5. The informal settlement meetings provision is significantly changed to reflect a shift in the purpose of informal settlement meetings. Instead of the informal settlement meetings being part of the appeals process, the state agency will use these meetings as a precursor to administrative action to be held before action is taken.

Substantive changes regarding participant requirements include (i) clarifying that WIC food instruments will be mailed for a one-month period unless otherwise approved by the state agency; (ii) expanding the justification for mailing of WIC food instruments to include "difficulty obtaining a complete prescription for special formula as approved by a local WIC coordinator"; and (iii) conforming to federal regulations by changing the timeframe for requesting a fair hearing to within 15 days of the written notification date of program denial, termination of benefits, or claim against an individual for improperly issued benefits.

12VAC5-195-20. Purpose.

A. The Virginia WIC Program serves women who are breastfeeding, pregnant, or have just given birth; infants less than one year old; and children less than five years old. WIC participants must be Virginia residents and meet the financial and nutritional requirements.

B. The Virginia WIC Program provides special supplemental foods to eligible participants through a retailer delivery system (7 CFR 246.12). Food benefits are issued by local agencies to eligible participants using food instruments (7 CFR 246.10). Participants redeem their food instruments at any authorized retailer or entity. The state agency enters into an agreement with authorized stores (7 CFR 246.12(h)) (7 CFR 246.12). This agreement identifies the obligations, rights and responsibilities of both the authorized retail store and the state agency. Retailers deposit these food instruments into their bank account. The state agency pays authorized retailers a reasonable dollar amount for the foods purchased, as listed on the deposited food instruments (7 CFR 246.12(h)(2)(3)) (7 CFR 246.12).

C. The state agency shall promulgate policies, guidelines, manuals and training resources to facilitate operations of the Virginia WIC Program in accordance with its contractual agreement with Food Nutrition Service (FNS) (7 CFR 246.3); the guidelines and instructions issued by FNS in policy letters; and management evaluations and audits and the WIC Program State Plan of Operations.

12VAC5-195-30. Definitions.

The following words and terms when used in this chapter shall have the following meanings, unless the context clearly indicates otherwise:

"Administrative appeal" means the procedure through which applicants and/or retail stores may appeal a state agency's administrative action, including program disqualification, denied authorization and other termination reasons.

"Annualized income" means income amount covering a 12-month period used to determine financial eligibility for the WIC Program.

"Applicant" or "retail store applicant" means a sole proprietorship, a partnership, cooperative association or a corporation that is not currently authorized to accept WIC food instruments.

"Approved food list" means a brochure or method used by the WIC Program to communicate to eligible participants, retailers, local agencies and other interested parties which authorized supplemental foods may be purchased using WIC food instruments. The approved food list is a guide and must be used with the printed food instrument, which may identify specific brands or additional products not stated on the approved food list that may be purchased by participants.

"Authorization" means the process by which the state agency assesses, selects and enters into an agreement with stores that apply or subsequently reapply to be authorized.

"Automated clearinghouse" or "ACH credit" or "direct deposit" means a method used to reimburse stores for certain types of processed food instruments (i.e., "Over FI Max."). A credit is made to the store's designated bank account and routing number using the automated clearinghouse process.

"Business economic areas" or "BEAs" mean a categorization method established by the United States Department of Commerce – Bureau of Economic Analysis and used by the state agency to identify geographically similar trade and economic communities. Some more populated BEAs are further broken down into smaller subsets or peer groupings, based upon number of unique participants served by authorized stores.

"Caretaker" means a person designated by a parent or legal guardian to certify an infant/child, obtain and redeem food instruments and attend nutrition education. A caretaker may be any person who has detailed knowledge of the nutritional needs and eating habits of the infant/child. A parent or legal guardian may designate one caretaker per family ID nmber number.

"Caseload" means the number of WIC participants assigned to a local agency by the state agency.

"Cash value food benefits" means a special food instrument that has been issued to eligible participants for a specific dollar amount that must be used to purchase fruits and vegetables. Unless stated otherwise, all references to food instruments include cash value food benefits, as well as food and formula food instruments.

"Enrollment" means the process all applicants and authorized stores must complete in order for a store to be eligible to accept WIC food instruments.

"Food instrument type" or "FI type" means a grouping of certain foods and formula together that is used for reimbursement purposes in a paper-based system.

"Image replacement document" or "IRD" means a legal copy of a deposited food instrument that is created and transmitted by a store's depository bank to the WIC Program's backend processor for payment consideration.

"Informal settlement meeting" means a meeting held with an authorized store or applicant representative and the state WIC director whose purpose is to review and clarify outstanding WIC Program administrative issues.

"Leave and earnings statement" or "LES" means the earnings statement for a member of the uniformed service.

"Legal guardian" means an individual who has been appointed by a court of law or the Department of Social Services, or other legal means, to have primary, physical custody of a minor. A legal guardian shall be authorized to provide eligibility information for an applicant, consent to medical treatment of the applicant, and shall be held legally bound if sanctions are imposed.

"Low volume retailer" means authorized stores that service on average a fewer number of participants than the performance standard, as established by the state agency.

"Peer group" means a classification of applicants and authorized stores into groups based on common characteristics or criteria that affect food prices for the purpose of applying appropriate competitive price criteria to stores at authorization and limiting payments for foods at competitive pricing levels.

"Postpayment review" means an analysis of paid food instruments redeemed by authorized retailers in order to determine if pricing and redemption discrepancies exist. Based upon this analysis, a vendor claim against the retail store may be established by the state agency.

"Prepayment edit" means a price adjustment made to the reimbursement level given to retailers. This editing process can be either automated or a manual screening of deposited food instruments done by an independent banking contractor, prior to releasing payment to authorized retail stores.

"Retailer" means a vendor, retail store, commissary, or entity authorized by the Virginia WIC Program to accept WIC food instruments for the various types of foods listed on food instruments.

"Retailer agreement" means a written agreement that establishes the respective roles and responsibilities of the program and authorized retailers in complying with federal and state requirements.

"Sanctions" mean a penalty imposed by the state agency upon an authorized retailer for a specific violation outlined in the vendor manual or retailer agreement.

"State agency" means the Division of WIC and Community Nutrition Services that has the administrative responsibility for managing the Virginia WIC Program.

"Termination" means the act of ending a retail store's WIC Program authorization for administrative reasons that include but are not limited to a change of ownership, closed store, voluntary withdrawal, and noncompetitive prices.

"Unique participant" means the number of unduplicated individuals who have redeemed one or more food instruments at a retail store during a specific period.

"United States Department of Agriculture" or "USDA" means the federal agency that provides funding for the WIC Program on behalf of Congress.

"Vendor claim" means the state agency has determined an authorized store committed a violation of the retailer agreement that affects the payment status of one or several food instruments. The state agency may delay payment or establish a claim in the amount of the full purchase price of each food instrument that contained the overcharge or other error. The state agency will bill and recoup the funds paid against these improperly redeemed food instruments.

"Vendor manual" means a series of written documents that communicate administrative policies and procedures for the Virginia WIC Program that affect both authorized retailers and applicants. The Vendor Manual is part of the WIC Program State Plan that must be submitted and approved by USDA.

"Virginia Department of Health" or "VDH" means the state agency that oversees the Virginia WIC Program.

"Waiting list" means a list implemented by the state agency when the maximum caseload is reached.

"Warning" means one or more incidents of noncompliance with program requirements were documented. The state agency sends a written warning letter to the owner or store manager to advise him of any documented violations. A warning letter is not sent to the owner or store manager for selective documented violations that affect the integrity of the investigative process, including but not limited to overcharges, fraud, and forgery.

Part II
Participant Requirements

12VAC5-195-70. Eligibility requirements.

A. Adjunctive financial eligibility requirements. Adjunctive, or automatic income eligibility is determined pursuant to 7 CFR 246.7(d)(2)(vi)(A) 7 CFR 246.7. Documentation is required as proof of participation in programs that qualify an applicant for adjunctive financial eligibility. The state agency also allows the following state-administered programs to be used in determining adjunctive income eligibility:

1. Family Access to Medical Insurance Security Plan (FAMIS) and a $2.00 co-pay level; and

2. FAMIS MOMS program.

B. Local agencies shall serve institutionalized applicants if they meet all eligibility requirements.

C. For determining income eligibility, local agency personnel shall use the applicant's current or annualized income, whichever is the best indication of circumstances.

D. In determining income eligibility, the state agency utilizes all income exclusions listed in 7 CFR 246.7.

E. Applicants who are not adjunctively financially eligible shall have financial eligibility determined using income guidelines equaling the income guidelines established under § 9 of the National School Lunch Act for reduced price school meals per 7 CFR 246.7(d)(1) 7 CFR 246.7.

F. An applicant claiming multiple fetuses shall have the stated number used at the time of certification, but is required to provide written verification by a physician or nurse practitioner working under the supervision of a physician within 90 days of certification.

12VAC5-195-140. Food instruments.

A. Food instrument issuance. All food instruments shall be issued through the automated system after eligibility has been documented and only when the participant, parent or legal guardian, caretaker, or proxy is physically present at the local agency to pick up their food instrument. Failure by the participant, parent, legal guardian, caretaker, or proxy to attend the initial nutrition education appointment may result in reduced WIC benefits for that month.

B. Lost food instruments. Replacement of lost, valid, not redeemed food instruments shall only occur once within the entire duration of the participant, parent, caretaker, or legal guardian's receipt of WIC services, unless approval is obtained from the state agency. Lost food instruments shall only be replaced for one of the following situations:

1. A participant leaving home because of family violence;

2. A change in full legal custody, including when infants/children are removed from home and placed in foster care or parental custody is changed; or

3. An event out of the control of participant, such as a fire or natural disaster that is publicly documented.

C. Stolen food instruments. Food instruments reported as stolen shall only be replaced when a police report is provided that states that the valid, not redeemed, WIC food instruments were the stolen items. Stolen food instruments shall not be replaced without a police report, unless costs are associated with the police report and a waiver is granted by the state agency. Stolen food instruments shall only be replaced once within the entire duration of the participant, parent, caretaker, or legal guardian's receipt of WIC services, unless approval is obtained from the state agency.

D. Mailing WIC food instruments. Food instruments shall only be mailed with prior approval from the competent professional authority for individual participants if the participant has already received the required secondary nutrition education contact or if the participant will be able to receive nutrition education at the next visit within the certification period. Justification for mailing food instruments to individuals, families and groups includes:

1. Illness or disability as documented by medical records and meeting the Americans with Disabilities Act criteria (28 CFR Part 35) for physically unable to be present;

2. Imminent childbirth as documented by medical records;

3. Distance to travel, especially in rural areas with a minimum 60-mile roundtrip travel distance between home and the local WIC clinic, as approved by local WIC coordinator;

4. Other travel distance for participants with unique transportation challenges;

5. Computer failure at the local agency site;

6. Natural disasters; and

7. Complete systemwide failure of automated system.; and

8. Difficulty obtaining complete prescription for special formula as approved by a local WIC coordinator.

Food instruments shall only be mailed for a one-month period. Requests beyond the one-month period shall require approval by the state agency.

12VAC5-195-180. Fair hearing.

A. The Virginia WIC Program is a federally administered program. The following fair hearing procedures are a federal process with which the state agency must comply. Pursuant to 7 CFR 246.9(a) 7 CFR 246.9, the state agency shall provide a hearing procedure through which any individual may appeal a state or local agency action that results in a claim against the individual for repayment of the cash value of improperly issued benefits or results in the individual's denial of participation or disqualification from the program.

B. The local agency shall inform each individual in writing of the right to a fair hearing at the time of a claim against an individual for improperly issued benefits or at the time of participation denial or of disqualification from the program.

C. A fair hearing shall be requested within 60 days of the written notification date of program denial, termination of benefits or claim against an individual for improperly issued benefits. The request shall be made in any clear expression to present the case to a higher authority.

D. Participants who appeal the termination of benefits within 60 15 days must continue to receive WIC benefits until the hearing officer reaches a decision, the participant becomes categorically ineligible, or the certification period expires, whichever comes first.

E. Applicants who are denied WIC benefits at the initial certification or because of the expiration of their certification may appeal the denial but shall not receive benefits while awaiting the hearing decision.

F. The local agency shall:

1. Accept a fair hearing request verbally or in writing;

2. Contact the applicant or participant to schedule a preliminary conference within 10 calendar days of the fair hearing request; and

3. Inform the applicant or participant that a fair hearing will be conducted if the issue is not resolved at a preliminary conference.

If the issue is resolved at the conference, the applicant or participant shall sign a statement indicating that a formal fair hearing is no longer requested. If the issue is not resolved at the conference, the local agency shall contact the state agency to schedule a fair hearing.

G. A fair hearing will be held within 21 days of the request, unless delayed pursuant to subsection I or J, or by mutual agreement of the parties.

H. The state agency shall provide 10 days advanced written notice of the date, time and place of the hearing, which shall be held in the local agency at which the participant or applicant receives WIC Program services.

I. The participant or applicant must appear at the fair hearing in person, but may be accompanied by a representative such as a relative, friend, legal counsel, or other spokesperson. The applicant or participant must indicate whether or not they will be represented by an attorney when the fair hearing request is made. The applicant or participant must also provide the state agency with copies of any written information to be used during the hearing and names of witnesses that will be called at least five days prior to the scheduled fair hearing. Failure to notify the state agency of these items may result in a rescheduled date and time for the fair hearing or the exclusion of documents and witnesses from the fair hearing.

J. The participant or applicant will have one opportunity to reschedule the fair hearing's date or time. All requests to reschedule the meeting date or time must be submitted in writing at least 24 hours before the scheduled meeting date unless an emergency occurs, as determined at the discretion of the state WIC director or designee.

K. If the participant or applicant is more than 45 minutes late from the agreed upon hearing start time, then this will be considered a "no show" unless they can provide documentation the state WIC director determines justifies the participant's or applicant's tardiness or failure to appear. This outcome means that the participant or applicant has forfeited his rights to a fair hearing.

L. Pursuant to 7 CFR 246.9(j) 7 CFR 246.9, the state or local agency shall provide the participant, applicant, or representative an opportunity to:

1. Examine, prior to and during the hearing, the documents and records presented to support the decision under appeal, which will be sent to the applicant or participant 10 days prior to the fair hearing;

2. Be assisted or represented by an attorney or other persons;

3. Bring witnesses;

4. Advance arguments without undue interference;

5. Question or refute any testimony or evidence, including an opportunity to confront and cross examine adverse witnesses; and

6. Submit evidence to establish all pertinent facts and circumstances in the case.

M. The hearing officer shall hear evidence and testimony and reach a decision. The hearing officer shall notify the applicant or participant, the state WIC director, and the district health director of the decision in writing state WIC director shall provide written notification of the hearing officer's decision to the applicant or participant and the district health director within 45 days of the date of the fair hearing request.

1. Applicants denied benefits may be enrolled upon receipt of a favorable decision.

2. Participants whose benefits were previously denied or discontinued may receive or reapply for WIC benefits upon receipt of a favorable decision by the hearing officer.

N. The local agency and state agency shall keep the results of the hearing on file for five years.

12VAC5-195-190. Fair hearing request denial or dismissal.

Per 7 CFR 246.9(f) 7 CFR 246.9, the state and local agencies shall not deny or dismiss a request for a hearing unless:

1. The request is not received within the time limit set by the state agency;

2. The request is withdrawn in writing by the appellant or a representative of the appellant;

3. The appellant or representative fails, without good cause, to appear at the scheduled hearing; or

4. The appellant has been denied participation by a previous hearing and cannot provide evidence that circumstances relevant to program eligibility have changed in such a way as to justify a hearing.

Part III
Vendor Requirements

12VAC5-195-280. Enrollment procedures.

A. The state agency accepts applications from new store applicants year round.

B. Stores seeking authorization shall sell a range and variety of staple foods and WIC-approved formulas at a permanent fixed location, as specified in the retailer agreement and application package. Only one authorization approval will be granted by the state agency to each eligible location selected for program authorization. Stand-alone pharmacies and any other types of entities that cannot meet all of the general requirements outlined in this section will be denied WIC Program authorization.

C. Store applicants shall complete the following requirements to become authorized for WIC Program participation:

1. Submit all applications, including pricing updates, using an electronic, Internet-based method that has been approved by the WIC Program;

2. Submit prices for all mandatory food and formula items, a signed retailer agreement, supplemental informational form, direct deposit ACH form, and other required forms as deemed necessary to evaluate a retailer's or applicant's qualifications;

3. Pass a competitiveness price assessment completed by the WIC Program. The state agency shall determine that the prices submitted as part of the new store application process are price competitive when compared to other stores located in the store's assigned peer group;

4. Provide documentation to the state agency, upon request, that a satisfactory business integrity record exists. None of the store's current owners, officers, or managers shall have been convicted of or had a civil judgment entered against them for conduct demonstrating a lack of business integrity, within the past six years;

5. Pass an unannounced onsite visit to determine if the store has the minimum stocking requirement, has available for sale the variety and selection of foods as stated on the supplemental informational form, and has posted prices that are not higher than prices submitted as part of the application process. The visit shall also verify that the store's hours of operation were accurately reported;

6. Pass an onsite visit to determine if the type and variety of foods sold would qualify the store to earn more than 50% of its annual sales solely from the WIC Program. If the store is likely to be an above 50% vendor, then it shall be denied authorization;

7. Attend a mandatory new store training session conducted by either state agency staff or a certified corporate trainer within 30 calendar days after the retail store passes a stocking and price verification visit. Provide documentation to the state agency that this mandatory training has been completed. Store applicants shall provide to the state agency this documentation within 30 calendar days after meeting all other enrollment requirements;

8. Provide training to store personnel and cashiers on proper WIC food instrument handling procedures; and

9. Return to the state agency all required paperwork within 14 days after receipt including, but not limited to, a signed retailer agreement, if applicable; supplemental informational form; direct deposit ACH form; and other information deemed necessary to evaluate a retailer's or applicant's qualifications; and

9. 10. Receive from the state agency an authorization acknowledgement letter granting WIC Program authorization, a Vendor Manual for the Virginia WIC Program, a WIC window decal, and an authorization stamp.

D. Newly authorized stores shall begin accepting WIC food instruments within 15 calendar days after receiving their program authorization stamp and final acknowledgment letter. Authorized stores are required to contact the state agency in writing if the store will be unable to meet this program requirement. Failure to begin accepting WIC food instruments within the established time frame may lead to the state agency's agency withdrawing its authorization decision.

E. Store applicants that fail to meet any of the enrollment requirements outlined in this section will be denied authorization unless inadequate participant access would exist.

12VAC5-195-290. Communications.

A. Authorized stores shall contact the state agency or their assigned agency representative rather than local WIC agency staff for all questions related to WIC Program participation including, but not limited to, retail store selection and authorization requirements and decisions, reimbursement questions, participant's food instrument prescriptions, and complaints.

B. Authorized stores shall provide at least 15 calendar days written notice if the retailer desires to terminate its participation in the WIC Program or when the retailer ceases operation, changes ownership, or for any other circumstances that impacts service delivery including, but not limited to, relocations, renovations, permanent or temporary closures.

C. The state agency regularly communicates policy and procedural changes, training issues, WIC food instrument processing tips, cashier reminders and alerts affecting retail stores in an informational newsletter. Annually, a newsletter is published and sent to all authorized retail stores to update store personnel on major program changes. The program posts, if applicable, approved policy changes on its external webpage. Authorized stores shall be held accountable for complying with all policy changes communicated in writing by the state agency.

D. Written correspondence retained in the state agency's centralized files located in Richmond, Virginia, pertaining to, but not limited to, a store's authorization status, application documentation, or WIC and food stamps compliance history is confidential and is protected under federal regulations (7 CFR 246.26(e)) (7 CFR 246.26). The state agency shall maintain stores' compliance history and background information for at least a three-year period or the contract period, whichever is longer. For civil judgments and food stamp administrative documentation issued against a specific authorized retailer, the state agency will retain this documentation for six years.

E. In order to utilize the WIC-approved, Internet-based application for submission of prices, stores shall give consent to be monitored by the state agency to ensure this application is being used for its intended purpose. If such monitoring reveals possible evidence of unauthorized or criminal activity, this evidence may be provided to appropriate authorities for disciplinary action and prosecution.

12VAC5-195-300. General requirements and conditions for authorization.

A. Once enrolled, a store or applicant shall obtain authorization to operate as a WIC-authorized store from the state agency before accepting or redeeming food instruments.

B. To obtain authorization and remain authorized, retailers shall:

1. Be food stamp authorized at the time of application or reauthorization and remain in good standing;

2. Be currently WIC-authorized or eligible for authorization after meeting a WIC disqualification requirement, if applicable;

3. Be in operation as a business at the time of application or within 45 calendar days of application;

4. Meet all local, state and federal requirements, including sanitation and building code regulations;

5. Be necessary as determined by the state agency to ensure adequate participant access;

6. Submit prices to the WIC Program using an electronic, Internet-based method at least twice a year or as requested by the state agency;

7. Remain price competitive when compared to other authorized stores that are located in the same peer group;

8. Maintain a minimum number of unique participants served after one year of continuous program authorization;

9. 8. Meet the mandatory minimum stocking requirement at all times and keep such stock in the customer shopping area or immediately available onsite;

10. 9. Be located at the store address indicated in the state agency's application or authorization record; this address shall be the sole location at which WIC customers purchase supplemental foods and formulas;

11. 10. Be open for business at least 50 hours per week;

12. 11. Meet all business integrity criteria as defined in Policy 14.1, effective August 1, 2003, of the Vendor Manual for the Virginia WIC Program 7 CFR 246.12;

13. 12. Provide supporting documentation to the state agency including, but not limited to, annual food sales information or tax records that will be used to ensure that not more than 50% of the store's total food sales were derived from WIC sales;

14. 13. Comply with all financial and corrective actions identified from prior WIC authorization, if applicable;

15. 14. Purchase contract and special formula from a distributor, supplier, wholesaler, or retail store whose name is listed by the Virginia WIC Program as approved to sell formula; and

16. 15. Participate in the WIC Program's direct deposit (ACH) process used for reimbursement purposes.

C. Stores shall not offer drive-through window or home delivery services for making WIC purchases. The participant must take physical possession of purchased food and formula items at the time of transaction when the WIC food instrument is signed.

12VAC5-195-310. Above 50% vendor screening.

A. The state agency shall not authorize any applicant or retail store that is likely to derive 50% or more of its annual food sales from the sale of supplemental foods to WIC participants. Stores already authorized by the program whose annual WIC food sales rise to 50% or more of their total food sales will have their authorization status terminated. Stores must submit documentation that permits the state agency to complete its evaluation and identification of above 50% vendors. Failure to submit the requested documentation may lead to the store's authorization being terminated.

B. Newly authorized stores with six months of redemption history shall have their status reviewed to determine if they qualify as an above 50% vendor (7 CFR 246.12(g)(4)(i)(B)) (7 CFR 246.12). If the state agency's assessment determines the store qualifies as an above 50% vendor, the store's WIC Program authorization status shall be terminated.

12VAC5-195-320. Retailer agreement.

A. The retailer agreement does not constitute a license or a property right. If an authorized store wishes to continue to be authorized beyond the current agreement period, the store must reapply for authorization. All stores must be selected under the current selection and authorization criteria being used by the state agency (7 CFR 246.12(h)(xxi)) (7 CFR 246.12).

B. Authorized retail stores and military commissaries shall use a single uniform retailer agreement. The maximum duration of the retailer agreement shall not exceed three years. The duration of the retailer agreement may be for a period that is less than three years, depending upon when a county or location is selected to undergo the regional authorization and selection process.

C. A fully executed retailer agreement shall be signed by both an authorized store representative and state agency representative to be enforceable. The state agency shall provide the store or designated contact person a copy of its signed retailer agreement or authorization acknowledgement letter once all selection and authorization requirements have been met.

D. A signed retailer agreement must be on file for any store to be paid for a redeemed WIC food instrument.

E. Revisions, amendments or modifications to the provisions of the retailer agreement shall be made in writing. The retailer agreement shall be automatically amended upon notice from the state agency should federal, state laws, or regulations require amendments.

F. Authorized stores shall keep a copy of the updated Vendor Manual, including a copy of the Approved Food list and Cashier Training Guide, at the store location authorized to accept WIC food instruments.

G. The state agency reserves the right to extend the current retailer agreement up to six months during the reauthorization evaluation process. If the state agency uses this option, it shall provide written notice to authorized stores affected by this administrative decision.

H. If the state agency takes administrative action against a retailer and the retailer appeals, then the state agency shall grant an extension of that store's retailer agreement during the pendency of the appeal process if the retailer agreement would otherwise expire during that time. Once an appeal decision has been made, the state agency will proceed with either terminating the existing agreement or issuing a new agreement.

12VAC5-195-330. Adequate participant access.

A. The state agency shall ensure that adequate participant access exists so that eligible participants may redeem the food instruments issued to them. The state agency uses a retailer limiting criteria to determine adequate participant access (7 CFR 246.12(g)(2)) (7 CFR 246.12). The state agency has the sole authority to define adequate participant access criteria.

B. The number of authorized stores or retailer slots available is based on two factors:

1. Number of WIC participants living in a specific city or county in which the retail store is physically located; and

2. Population density of the community where the store is physically located.

C. Population density is calculated by identifying the population that resides in a specific city or county. Population density serves as a proxy indicator used by the program to project how close together retailers and participants are located next to each other. Thus densely populated areas where stores are located closer together require fewer stores to provide adequate participant access.

D. In sparsely populated areas, both population and stores are dispersed over a wider geographical area that directly impacts participant access. More sparsely populated areas require more authorized stores to adequately serve eligible participants.

E. Participation is managed and monitored by the WIC Program on a monthly basis. For this reason the number of available slots for authorized stores may change frequently. This change will not impact stores already authorized, but may impact a new store applying for authorization in a given area.

F. The number of authorized retailers or retailer slots available is calculated by a store to participant ratio, which is higher for densely populated communities, and lower for sparsely populated counties. Population density data is updated annually by the state agency and is obtained from the United States Census Bureau. The WIC Program uses a single population density indicator to identify which communities have the higher retailer to participant ratio.

G. A specific number of retailer slots will be allocated to each city/county. A listing of retailer slots available and allocated to each city and county will not be published and distributed to authorized stores, since this figure may change frequently.

12VAC5-195-340. Competitive pricing.

A. Authorized stores and applicants shall submit pricing information to the state agency. Item pricing data is obtained from authorized stores and applicants from prices that have been entered into a WIC-approved Internet-based application.

B. The state agency collects pricing information for specific food items at least twice a year (7 CFR 246.12(g)(4)(ii)(B)) (7 CFR 246.12). Prices may be collected more frequently from authorized stores including, but not limited to, the following reasons:

1. A store's prices are determined to be noncompetitive;

2. A store is designated a high risk retailer;

3. A competitive pricing analysis is needed in order to consider an applicant's qualifications;

4. An administrative review is being conducted as part of a compliance investigation, participant access analysis, inventory audit, or post payment analysis; or

5. Other operational considerations that may occur including, but not limited to, a change in contract formula company, a change in infant food company, food industry price fluctuations, manufacturer's price increases for "rebateable" selected WIC-approved products, such as baby foods, contract formula, and infant cereal.

C. Stores and applicants must submit the highest shelf price for all mandatory foods and formula brands, unless stated otherwise, that are available and eligible to be sold to participants. For milk items only, stores must submit the price for their store brand or least expensive brand available. Prices for optional foods approved for purchase submitted via the Internet-based application shall be used for calculating reimbursement maximums. Retailers must use the approved food list and the minimum stocking requirement to identify all eligible brands and foods.

D. Stores failing to submit their prices within 14 days of the stated due date in the Vendor Manual will receive one warning letter. After receiving this letter, stores that fail to respond within the time period stated in the letter may have their WIC Program authorization terminated unless inadequate participant access would exist.

C. E. Applicants whose prices are determined to be noncompetitive when compared with other authorized stores assigned to the same peer group shall be denied WIC Program authorization. These applicants shall not be given a second opportunity to resubmit their prices, unless the state agency determines that inadequate participant access would exist.

F. Authorized stores whose prices are determined to be noncompetitive when compared with other stores assigned to the same peer group shall be given one opportunity to resubmit their prices. After analyzing the prices submitted from this second submission, the state agency shall determine if the store qualifies to remain authorized. The state agency shall terminate the store's authorization if its prices are noncompetitive unless inadequate participant access would exist.

D. G. The state agency uses nine business economic areas (BEAs) to initially define peer groups based on location and economic variations. For more densely populated BEAs, a second criterion used to further define peer groups is the number of unique participants served (7 CFR 246.12(g)(4)(ii)(A)) (7 CFR 246.12). Each authorized store or applicant is assigned to a single peer group.

Business Economic Areas (ID) (# of Unique Participants Served, if applicable)	Peer Group	Cities & Counties Located in each BEA
49	10	Accomack & Northampton Counties
66	11	Cities: Danville, Galax City, & Martinsville and Counties: Carroll, Grayson, Henry, Patrick & Pittsylvania
71	12	Cities: Buena Vista, Harrisonburg, Lexington, Staunton & Waynesboro and Counties: Augusta, Bath, Highland, Page, Rockbridge & Rockingham
81	13	Cities: Bristol & Norton and Counties: Buchanan, Dickerson, Lee, Russell, Scott, Smyth, Tazewell, Washington & Wise
133	14	Halifax County
137 (0 – 100 participants)	15	Cities: Charlottesville, Colonial Heights, Emporia, Hopewell, Petersburg, & Richmond and Counties: Albemarle, Amelia, Brunswick, Buckingham, Caroline, Charles City, Charlotte, Chesterfield, Cumberland, Dinwiddie, Essex, Fluvanna, Goochland, Greene, Greensville, Hanover, Henrico, King and Queen, King William, Lancaster, Louisa, Lunenburg, Mecklenburg, Middlesex, Nelson, New Kent, Northumberland, Nottoway, Powhatan, Prince Edward, Prince George, Richmond & Sussex
137 (101 – 250 participants)	16
137 (251 and up participants)	17
138 (0 – 100 participants)	25	Cities: Bedford, Clifton Forge, Covington, Lynchburg, Radford, Roanoke & Salem and Counties: Alleghany, Amherst, Appomattox, Bedford, Bland, Botetourt, Campbell, Craig, Floyd, Franklin, Giles, Montgomery, Pulaski, Roanoke & Wythe
138 (101 – 250 participants)	26
138 (251 and up participants)	27
173 (0 – 100 participants)	35	Cities: Chesapeake, Franklin, Hampton, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach & Williamsburg and Counties: Gloucester, Isle of Wight, James City, Mathews, Southampton, Surry & York
173 (101 – 250 participants)	36
173 (251 and up participants)	37
174 (0 – 100 participants)	45	Cities: Alexandria, Fairfax, Falls Church, Fredericksburg, Manassas, Manassas Park & Winchester and Counties: Arlington, Clarke, Culpeper, Fairfax, Fauquier, Frederick, King George, Loudoun, Madison, Orange, Prince William, Rappahannock, Shenandoah, Spotsylvania, Stafford, Warren & Westmoreland
174 (101 – 250 participants)	46
174 (251 and up participants)	47

E. H. For newly authorized stores the peer group designation assigned during the first three months is determined by the first criterion only; specifically the store's BEA default location. This default location, if applicable, is the peer group that services 0-100 unique participants. Authorized stores' peer group designation may change, based upon increases or decreases in the monthly average number of unique WIC participants being served by the store.

12VAC5-195-360. Selection decisions.

A. All retailers and applicants will compete equally for available slots located within a specific city/county or zip code, if applicable. The state agency reviews the qualifications of authorized stores and applicants located in a specific BEA or city/county within a BEA to make authorization selection decisions. Retail stores' and applicants' mandatory women and infant food and formula items used for pricing analysis purposes must qualify under the price competitive category of 40 or higher in order to be selected for authorization (7 CFR 246.12(g)(4)) (7 CFR 246.12).

Low volume retailers will not be considered for reauthorization unless slots remain available after all qualified applicants and stores are selected for authorization and the low volume retailers have a competitive price score of 100. Low volume retailers will not be included in the ranking of the applicants and stores.

The state agency shall rank all stores that have a pricing point value of 40 or higher in ascending order, or lowest price to highest price. The stores that have the lowest total prices are considered the best qualified stores. Applicant's and store's ranking will be used to select applicants and stores for all available slots located within a specific BEA or city/county within a BEA.

B. When multiple stores have equal rankings and there are not enough slots to authorize all such stores, rankings will be further differentiated based on the following criteria in order of their application:

1. Five bonus points are given for retailers that are certified by the Department of Minority Business Enterprise as a minority or women-owned business or have met their annual federally mandated training requirement by completing all modules of an agency-sponsored online (E-Learning) WIC Program training course.

2. 1. When equal rankings still occur, stores with the lowest prices for selective special formulas that are eligible to be sold to WIC participants will be offered any available slots.

3. 2. If rankings continue to be equal, the state agency shall offer available slots to the authorized store or applicant with the highest number of unique participants who reside in the zip code where the store is located.

4. 3. If rankings continue to be equal, the state agency shall offer available slots to the authorized store or applicant with the highest square footage, excluding storage space, will be used to determine which stores will be offered available slots.

4. If rankings continue to be equal and the stores or applicants are owned by the same corporate entity, then the corporate representative will be allowed to decide which corporate-sponsored store shall be offered the available slot.

5. If rankings continue to be equal and the stores or applicants are not owned by the same corporate entity, then the store or applicant that has the highest food stamp sales for the previous six months will be offered the available slot.

After selecting all of the best qualified stores and applicants, if slots are still available, then low volume retailers whose total pricing score is 100 – Best Pricing will be offered any available slots.

C. If a retail store or applicant is not competitively selected for program authorization, then the store may apply again no sooner than six months after being denied authorization. Any exception to the six-month requirement shall be determined at the discretion of the state WIC director.

D. If a newly opened store is considered to be a best qualified store and is offered a slot, then the previously authorized store in that slot will be offered an extension to its retailer agreement to remain authorized for one year from the start of the new authorization period.

D. E. The state agency shall send all authorized stores and applicants a written notice pertaining to their selection status. All stores and applicants being denied WIC Program authorization shall also receive information that explains their right to appeal the state agency's administrative decision.

E. F. The state agency does not maintain an applicant waiting list.

12VAC5-195-370. Authorization exception decisions.

The state agency may adjust the number of retail stores authorized to ensure that adequate participant access exists. Only the state agency shall determine what constitutes adequate participant access. The state agency may make authorization exceptions to ensure that adequate access exists based on one or several of the following criteria:

1. Provide reasonable access;

2. Provide safe access due to a physical barrier or impediment including, but not limited to, a multilane highway, river, bridge; physical terrain (i.e., mountains);

3. Provide a best pricing or highly competitive alternative store location to eligible participants to purchase WIC-approved food, when compared to other available stores located within a given city and/or county;

4. Promote competition in a trade area previously identified as not having a price competitive authorized retail store location available;

5. Improve customer service or remove an existing service barrier, i.e., language, cultural;

6. Improve WIC customer access due to the fact that the store is within a safe and reasonable walking distance and is located in close proximity to one or several low income housing units where WIC participants reside; or

7. Provide supporting documentation that the store's draw area is broader than the store's immediate trade area. The store's draw area includes cities and counties that cross geographical boundaries.; or

8. Provide supporting documentation that the specific BEA or city/county within a BEA in which the store is located is experiencing, or based on recognized projected economic indicators, is likely to experience disproportionate economic hardship.

12VAC5-195-380. Low volume performance standard. (Repealed.)

A. After six months of continuous authorization, authorized retailers shall serve a monthly average of at least 60 unique participants. Retail stores that fail to meet this low volume performance standard will be notified annually. An authorized store that has an average number of unique participants served that is lower than the standard will be considered a low volume retailer.

B. Authorized stores that demonstrate a consistent pattern of failing to meet the low volume performance standard shall be denied WIC Program authorization when their selection status is evaluated for future program authorization, unless inadequate participant access would exist. Previously authorized stores that are not selected due to low volume will receive a written letter of this administrative decision, which will provide a termination effective date.

C. Store applicants that were denied WIC Program authorization due to being designated a low volume retailer from a previous authorization period shall not be approved for authorization in a city/county that has slots available unless objective data is available that qualifies the store under one of the authorization exception criteria.

12VAC5-195-390. Approved food list.

A. A copy of the current Virginia WIC Program's Approved Food List (effective January 1, 2007) must be stored at each cash register where WIC transactions are handled. A copy of the Approved Food List approved food list must also be stored in the Vendor Manual that shall be kept onsite at the authorized store location.

B. The Approved Food List approved food list is used in conjunction with the WIC food instrument to identify foods that are eligible for purchase by WIC participants. The food instrument may state specific manufacturers or brands that must be purchased by program participants that are not covered by the general description used in the Approved Food List approved food list.

12VAC5-195-400. Authorization stamp – assignment and usage.

A. The state agency assigns a unique stamp number to stores that are authorized and eligible to receive reimbursement for deposited food instruments. The store's authorization number is imprinted on a rubber stamp, which shall be used on every food instrument deposited by the authorized store location. Failure by the retail store to use the issued authorization stamp may result in denied payment for redeemed WIC food instruments or a store's disqualification if a pattern of noncompliance is documented.

B. Authorized stores must obtain any needed replacement stamps from the stamp supplier approved by the state agency. The state agency will provide a maximum of three stamps to an authorized store per contract period at no charge. Failure to purchase an approved stamp from the designated stamp supplier may lead to deposited food instruments being rejected and returned unpaid by the state agency.

12VAC5-195-410. Change of ownership.

A. Authorized retail stores shall provide the state agency with advance written notice of at least 15 calendar days prior to any change of ownership as outlined in 7 CFR 246.12(h)(3)(xvii) 7 CFR 246.12.

B. A change of ownership occurs for reasons including, but not limited to, the principal owner or owners, corporate officers of the business or corporation have legally or permanently changed.

C. A store's authorization will become null and void upon a change of ownership. The rights and obligations established under a signed retailer's agreement with the WIC Program may not be transferred or assigned by the retail store or corporate owner to any other third party.

D. The new owner or store manager of the business/corporation shall apply for WIC Program authorization and submit their qualifications and a new application for evaluation based on the most current retailer selection and authorization criteria.

E. The state agency shall terminate the authorization status of any store that has undergone a change of ownership and failed to notify the state agency in accordance with the requirements outlined in the signed Retailer Agreement, effective July 1, 2008.

12VAC5-195-420. Change of location.

A. Authorized WIC retail stores shall provide the state agency written notice of a store's relocation plans within 15 calendar days prior to scheduled move date. Failure to notify the state agency in writing of such actions may result in the state agency taking administrative action including terminating for cause the store's program authorization unless inadequate participant access would exist.

B. Relocation of a retail store is defined as:

1. The store's physical location changes within the same geographical area or county/city and there is no change in ownership or pricing structure. The store meets one of the following criteria:

a. New store location is two miles or less from the former location; or

b. Majority of management and store personnel will move to the new location. If the new location is greater than two miles, the WIC Program will evaluate on a case-by-case basis to determine whether the new location is an alternative location and qualifies as a relocation versus a new store authorization;

2. The store will be open for business within 15 calendar days or less after moving to a different physical location; and

3. The former store location will be permanently closed for business.

C. The state agency shall ensure that the new location still meets the selection criteria as outlined in the Retailer Selection and Authorization Policy (Policy 14.0 of the Virginia WIC Program Retailer Manual, effective April 1, 2008) 12VAC5-195-340 and 12VAC5-195-360 including being price competitive. Failure to meet all selection criteria may lead to the store's authorization being terminated, unless inadequate participant access exists. Authorized stores that meet all selection criteria will be permitted by the state agency to continue their authorization without experiencing any disruption in their authorization status. The state agency must assign a new WIC authorization ID to the new store location if a new food stamp ID has been issued to the store.

12VAC5-195-450. Complaints.

A. The state agency shall maintain a system of receiving, documenting and investigating all complaints submitted by retail stores, participants, proxies, caretakers, parents, and the general public. From submitted complaints, the state agency may sanction or issue a written warning to participants and retail stores that abuse or misuse program benefits as outlined in the State Plan and Vendor Manual (Attachment to Policy 15.0, Sanction Classification System - Violation Schedule, effective May 26, 2008) (effective August 1, 2008).

B. The state agency shall forward complaints of both alleged discrimination and civil rights violations to the Secretary of Agriculture as required by federal regulations.

12VAC5-195-460. Conflict of interest.

A. Authorized retail store management shall ensure that no conflict of interest exists between any store personnel employed by the retailer and any local, state, or federal WIC agency. This includes, but may not be limited to, store employees or spouses of store owners who are also employees of a local, state, or federal WIC agency.

B. Retail stores shall identify and report any member of the store's ownership, management, or operations staff who are directly associated with the WIC Program to the state agency. To ensure that all potential conflicts of interest are identified and reported, the retail store must complete and submit a potential conflict of interest reporting form to the state agency upon request or as deemed necessary by the state agency. Failure by the store to submit this form in the time frame designated by the state agency may result in the store's authorization status being terminated unless inadequate participant access would exist.

C. WIC participants, caretakers, or proxies who are employed at an authorized retail store may not accept or transact food instruments issued to themselves or a member of their immediate family as a function of their duties at the retail location. Authorized retail store management shall ensure all store employees adhere to this integrity requirement.

12VAC5-195-480. Participant confidentiality.

A. Participant information shall remain confidential to ensure compliance with federal regulations and to protect the right to privacy of WIC participants (7 CFR 246.26(a)) (7 CFR 246.26).

B. Confidentiality requirements apply to information provided by a participant and that is based on direct observation by store personnel. Confidentiality requirements include, but are not limited to:

1. The prohibition of retailers from collecting personal information from WIC participants;

2. Making personal contacts with WIC participants after the WIC transaction has occurred; or

3. Sharing information on participant identification with third parties. Third parties do not include WIC Program state, local and federal agency representatives who have a legitimate business interest in the services provided to participants.

12VAC5-195-490. Retailer confidentiality.

A. Background and pricing information collected by the state agency related to evaluating the authorization status of a store or collected from food instruments redeemed by an authorized store is confidential (7 CFR 246.26(e)) (7 CFR 246.26) and can be released only to:

1. The store itself;

2. The parent corporation; or

3. Other governmental agencies responsible for ensuring program integrity, i.e., Food Stamp Program, Office of Inspector General, United States Department of Agriculture.

B. In accordance with federal regulations, 7 CFR 246.26, confidential vendor information is any information about a vendor, whether it is obtained from the vendor or another source, that individually identifies the vendor, except for the following: store name, physical mailing address, telephone number, website, email address, store type, or authorization status. All other vendor specific information is restricted from disclosure to the public by the state agency.

B. C. Upon receiving a written request from a store or their parent corporation, the state agency shall only release background and pricing information that has been provided by or pertains to the requestor. Under no circumstances will the state agency release confidential information about the authorization status or redemption revenue paid to stores owned by other corporations.

C. D. Authorized stores' peer group designation is confidential and is restricted from disclosure to persons and entities not directly associated with the authorized store location.

D. E. The state agency's inadequate participant access results completed for administrative purposes are considered confidential and not subject to review by the retail store or its agent, since this profile contains information protected by WIC Program regulations. Upon request, a copy of this work document can be released with any confidential information removed. This document in its entirety will be made available to appropriate governmental bodies that are responsible to ensure that the state agency has fully complied with any mandated WIC Program requirements.

12VAC5-195-500. Sales tax and coupons.

A. Authorized retail stores shall ensure that no sales tax is charged to the WIC Program. Store coupons, manufacturer coupons and loyalty card discounts may be used for WIC-approved purchases. When a WIC participant uses a coupon or discount card in conjunction with a food instrument and an item is provided free, then sales tax shall be collected directly from the participant.

B. No sales tax can be applied to the printed value of cash value food benefits. Any tax associated with the dollar amount purchased above the printed value of the cash value food benefit must be collected directly from the participant.

12VAC5-195-510. Solicitation.

A. Authorized stores shall not:

1. Initiate behavior that may be deemed aggressive or intimidating by a reasonable person in approaching potential WIC participants in order to promote that participant's shop at a specific store location; or

2. Use any state or local agency facilities and property to post or distribute materials advertising their store location.

B. If the state agency documents that an authorized store violates either of these prohibitions, then the store's authorization may be subject to termination by the program.

C. Authorized stores shall not use any advertisement practices or procedures that may give the public or participants the impression that a special or exclusive business relationship exists between the state agency and any authorized store.

D. It is the store owner's or designated agent's responsibility to ensure all employees understand and adhere to all prohibitions and restrictions related to solicitation.

12VAC5-195-520. Training and education.

A. Training of applicants or authorized stores may be conducted by state agency staff. The state agency may also delegate full authority to individuals who have been certified as corporate trainers. Certified trainers shall attend at least one mandatory training class annually in order to remain certified.

B. The state agency shall provide mandatory annual training for previously authorized stores. The annual training requirement may be met by:

1. Submitting a newsletter training acknowledgement form;

2. Successfully completing an agency-sponsored Internet training course offered by the WIC Program; or

3. Attending an instructor-led, interactive training class.

C. Reauthorization training shall be required for previously authorized stores that have been selected under a new contract period.

D. Authorized stores can request remedial training at any time by contacting the state agency.

E. All authorized stores are required to have at least one store representative participate in annual training provided by either the state agency or a certified corporate trainer (7 CFR 246.12(h)(xi)) (7 CFR 246.12).

F. Failure of an authorized store to meet any mandatory training requirement shall result in sanctions being imposed and the possible termination of the store's program authorization, unless inadequate participant access would exist.

12VAC5-195-530. Use of acronym and logo.

A. Authorized stores shall post a state-issued "WIC Accepted Here" window decal in the store's front entrance or in a conspicuously visible location that identifies to the general public that the store location participates in the WIC Program. Authorized stores may use alternative signage if approved by the state agency prior to being used.

B. Retail stores, food manufacturers, distributors and suppliers shall receive written approval from the state agency prior to producing or distributing window decals, channel strips or, shelf talkers, or other promotional items that use either the WIC acronym or logo. Stores that elect to use point-of-sale channel strips, shelf labels, or other promotional materials for a specific food category must ensure that all eligible items are consistently promoted as WIC approved. Stores are prohibited from promoting a specific manufacturer's product over another eligible WIC-approved product within the same food category (USDA Memo SFP 09-020).

C. Retail stores or applicants shall not use either the acronym "WIC," "W.I.C." or the WIC logo, including close facsimiles thereof, in total or in part, either in their official name in which the store is registered or in the name under which it does business, if different (USDA Memo SFP 09-020).

D. Retail stores, food manufacturers, distributors and suppliers shall not use the WIC acronym or logo in the packaging of their products. Retail stores, food manufacturers, distributors and suppliers shall receive written approval from the state agency before using either the WIC acronym or logo for any business or public relations purpose (USDA Memo SFP 09-020).

12VAC5-195-540. Vendor manual for the Virginia WIC Program.

All authorized stores must keep a current copy of the Vendor Manual for the Virginia WIC Program, Cashier Training Guide, and an Approved Food List at the store location authorized to participate in the program. A current copy of the Virginia Approved Food List must be kept at each cash register used to process WIC transactions. Periodically, individual sections of the Vendor Manual may be updated to reflect federally mandated regulatory changes and other WIC Program requirements. The most current version of the Vendor Manual is located on the state agency's website, which stores must access to obtain updated copies of procedures and forms.

12VAC5-195-550. High risk stores.

A. The state agency classifies each authorized store as either high risk, probationary, or nonhigh risk. In accordance with federal regulations (7 CFR 246.12(j)(3)) (7 CFR 246.12), high risk stores have demonstrated from prior authorization history a pattern of noncompliance with documented vendor management policies or violations documented from covert, undercover buys. The state agency may also change a store's designation to high risk based upon noncompliance documented from onsite monitoring visits.

The state agency may select stores for compliance monitoring based on statistical trends documented from a retail store's redemption pattern. A store's designation being changed to high risk will only occur as result of documented violations identified from compliance investigations or other types of objective monitoring practices used by the state agency. Stores shall also be changed to high risk if:

1. The store has been the subject of a compliance investigation by the state agency and has been cited for five or more chargeable violations within 12 consecutive months;

2. The store has received a Food Stamp Program civil monetary penalty or WIC program civil monetary penalty and is being retained in lieu of disqualification; or

3. The store's authorization status is under consideration for possible disqualification during the administrative review or appeal process.

All stores classified as high risk will receive written notification from the state WIC Program to advise them of the store's status change prior to the change becoming effective. Stores shall be designated high risk for a minimum one-year period and will have their status periodically evaluated by the state agency.

B. If a retailer is retained in lieu of disqualification or its status is changed to high risk, a written assurance letter must be submitted to the state agency within 30 calendar days after being notified of this requirement. The retailer's assurance letter must identify specific steps detailing the actions the store will take to improve its performance.

B. C. Authorized stores designated as high risk will be selected for more frequent onsite and covert monitoring investigations.

12VAC5-195-580. Performance and administrative monitoring.

A. All applicants must successfully pass an unannounced stocking visit prior to being authorized. Applicants will receive a written letter from the state agency advising them the store has been selected for further authorization consideration. The applicant will receive a copy of the minimum stocking requirement and the letter sent to the store will identify the consequences associated with failing to meet this program standard.

B. The state agency monitors authorized store's performance throughout the contract period in order to ensure the best qualified stores are authorized. The type and level of monitoring conducted by the state agency depends upon the store's authorization status. Stores designated as high volume retailers, high risk retailers, and probationary stores are more likely to be selected for unannounced monitoring visits by the WIC Program.

C. Authorized stores that fail to consistently meet any of the general requirements and conditions for authorization may be terminated. Specific areas the state agency monitors include, but are not limited to:

1. Number of unique participants served;

2. 1. Number of paid and rejected food instruments;

3. 2. Prices charged for WIC-approved foods and formula;

4. 3. Level of compliance in following program requirements; and

5. 4. Use of approved wholesalers and suppliers in purchasing WIC-approved foods and formulas.

D. The state agency shall establish and communicate to all authorized stores and applicants the minimum stocking requirement.

E. Each federal fiscal year, a sample of authorized stores shall be selected for one or more unannounced onsite monitoring visits.

F. State agency personnel may conduct an unannounced monitoring visit to ensure that authorized stores or applicants meet all program requirements. Authorized stores and applicants shall have available onsite the minimum stocking requirement at all times as established by the state agency. The specific foods, contract formulas and administrative procedures associated with meeting this requirement are outlined in Policy 10, the Minimum Stocking Requirement, effective May 1, 2007, of which is included in the Vendor Manual.

G. Authorized stores with more than one year of continuous participation in the program may request in writing to the state agency that an exception a waiver be granted for one or more items that are part of the minimum stocking requirement. The state agency shall provide a written decision to the store's exception waiver request within 30 calendar days after receipt. The exception waiver to the minimum stocking requirement for a required item shall expire upon the presentation to the store, on behalf of a participant, of a WIC food instrument for the purchase of that required food item. The authorized store shall provide the food item within 48 hours, excluding weekends and holidays, after presentation of the WIC food instrument.

H. The state agency may conduct other types of unannounced onsite monitoring visits to a retail store's location including, but not limited to, random, price verification, high volume, formula audits, and high risk.

I. During the unannounced onsite monitoring visit, the state agency representative may perform, but not be limited, to the following:

1. Observe and document the level of compliance with general program requirements;

2. Validate if the minimum stocking requirement has been met;

3. Collect and confirm prices submitted by retail stores;

4. Confirm prices are posted on or in close proximity to WIC-approved foods;

5. Review purchase or invoice records;

6. Conduct formula inventory analysis;

7. Educate the retailer about program changes;

8. Provide educational materials and supplies; and

9. Provide technical consultation.

J. During the unannounced onsite monitoring visits, store management may receive the following:

1. Answers to technical or procedural questions;

2. Updated program information;

3. Additional training materials and supplies;

4. Opportunity to correct documented deficiencies, if needed;

5. Opportunity to provide shelf prices of WIC-approved items, if applicable; and

6. Opportunity to confirm results documented by the state agency representative during the monitoring visit.

K. The results from these onsite visits are documented and kept on file at the Richmond, Virginia, state agency office.

L. Each federal fiscal year, a sample of authorized stores shall be selected for one or more announced onsite formula monitoring visits. The state agency shall ensure that authorized stores purchase and sell WIC-approved formulas from a legitimate source. The state agency shall ensure that authorized stores sell formulas that have been purchased from a WIC-approved supplier, distributor, wholesaler, or an authorized resource. A listing of WIC-approved suppliers, distributors, wholesalers, and authorized resources is located on the state agency's website. This outcome is accomplished by state agency personnel reviewing formula purchasing records and invoices, comparing formula redemption data from WIC sales and completing a pre- and postphysical inventory of formula available at the store location during a specific analysis period. Stores whose purchase records do not support the quantity of WIC sales volume for a selective formula item based upon redeemed food instruments may be issued sanctions, fined, or disqualified from the WIC Program. The results from a formula monitoring visit are documented and a written assessment is sent to the store once the state agency has completed its analysis.

M. Authorized stores that do not remain price competitive, fail to maintain the minimum stocking requirement or fail to adhere to the retailer agreement may be fined or have their authorization terminated, unless inadequate participant access exists. Depending upon the service delivery impact, the state agency may waive terminating a store that fails to comply with any of these requirements until an alternative store located in the same area can be authorized. The state agency will evaluate and document the reasons for making any authorization exception decisions.

12VAC5-195-590. Reimbursement and payments.

A. The state agency shall use a prepayment edit process to screen all deposited food instruments. For each processed food instrument, the state agency shall either:

1. Pay as submitted;

2. Make a price adjustment, if applicable; or

3. Deny payment of the deposited food instrument.

B. The state agency's reimbursement responsibilities in making payments against deposited and undeposited food instruments include, but are not limited to:

1. Ensuring payments are made to authorized stores that have a signed retailer agreement with the Virginia WIC Program. Unauthorized stores will not be paid for any mistakenly accepted and deposited food instruments;

2. Ensuring the maximum reimbursement levels used by its banking contractor, based upon peer groups, are reasonable for the food and formula items prescribed for purchase by participants;

3. Reconsidering for payment WIC food instruments not paid or partially paid provided the food instruments are submitted to the state agency within 50 calendar days of the first date printed on the food instrument;

4. Making price adjustments to the reimbursement amount paid to retail stores in order to ensure individual store's reimbursement levels remain eligible for authorization, based upon competitive prices charged by similar stores;

5. Collecting bank account and routing numbers from applicants and authorized stores in order to process direct deposit payments using an Automated Clearinghouse (ACH);

6. Ensuring prompt ACH credits are made to the retailer's bank account when appropriate;

7. Collecting retailer's prices using an electronic, Internet-based application;

8. Identifying retailers whose prices are noncompetitive and take administrative actions including possible termination of the retailer's authorization;

9. Complying with all federal regulations and guidelines that require administrative approval by USDA prior to making payments, as applicable;

10. Providing written communications to all authorized stores containing the procedures used by the program to pay or deny payments for all deposited food instruments; and

11. Recouping overpayments due to banking or procedural errors, if applicable, from authorized stores.

C. Authorized stores must deposit food instruments within 14 calendar days of the last date printed on the food instrument.

D. Food instruments or image replacement documents (IRDs) rejected for payment due to "unreadable vendor stamp" or "no vendor stamp" error messages must be corrected and redeposited within 30 calendar days of the last date printed on the food instrument.

E. Food instruments or IRDs rejected for payment or undeposited FIs that require WIC Program review and exception payment consideration must be submitted by the authorized store to the state agency within 30 calendar days of the last date printed on the food instrument. All food instruments or IRDs rejected for payment or undeposited FIs require WIC Program review for exception payment consideration and must be submitted by the authorized store to the state agency. A store must also simultaneously submit a written request and justification for payments on undeposited or rejected FIs or IRDs. The state agency reserves the right to deny a submitted request for payment depending on the explanation provided by the store.

1. Stores must submit their undeposited or rejected FIs or IRDs and justifications to the state agency within 30 calendar days of the last date printed on the food instrument.

2. Undeposited or rejected FIs or IRDs sent to the state agency that are greater than 30 calendar days from the last date printed on the food instrument may not be eligible for payment and may require USDA approval.

F. A maximum allowable reimbursement amount for each peer group and food item combination is established using pricing data (7 CFR 246.12(h)(3)(viii)) (7 CFR 246.12). Each food item combination is identified by a unique food instrument type identifier. More than 4,000 unique food combinations exist with different reimbursement maximum amounts. Authorized stores that submit prices determined to be noncompetitive will not have their prices used when the state agency computes the maximum allowable reimbursement amount used for making price adjustments.

G. Stores may only get reimbursed for mandatory and optional foods and formula products they have submitted prices for prior to redeeming FIs for those products. Redeemed FIs may be subject to repayment as a vendor claim if they include optional items for which a store has failed to submit prices. Stores must ensure that the most current shelf prices have been submitted to the WIC Program for all mandatory items. Failure to submit prices or providing inaccurate prices for any mandatory food items may lead to a store's authorization being terminated unless inadequate participant access would exist.

H. Contract and special formulas where pricing information is collected via the Internet-based application by the state agency are eligible for payment to authorized stores. Prices are purposely not collected by the state agency for formulas that should not be redeemed at retail stores. Food instruments redeemed for these types of special formulas are subject to repayment by the store.

G. I. A maximum reimbursement amount will be established for cash value food instruments benefits used by participants to purchase fruits and vegetables. The retailer must allow participants to spend up to the maximum payable amount printed on each of these types of food instruments. If the total dollar value being purchased exceeds the cash value, then the participant must be allowed to pay up to $.99 per food instrument above the printed value. For cash value food benefits only, if the total dollar amount being purchased by the participant exceeds the printed cash value then the participant shall be allowed to pay the amount over the printed value. The amount written on the food instrument must not exceed the maximum reimbursement amount printed on it.

H. J. The food instrument type/peer group pricing maximum amount may be adjusted monthly by the state agency, depending upon external factors including, but not limited to, wholesale price increases. The reimbursement maximum used for the various food instrument types peer group combinations are not distributed to authorized stores prior to being used by the banking contractor.

I. K. Food instruments or IRDs that are ineligible for payment and are rejected will be returned to the store's depository bank by the state agency's banking contractor. These returned food instruments will be stamped with a descriptive error message.

J. L. The state agency may make payment exceptions for food instruments that would normally be denied payment by its banking services contractor. The authorized store shall submit all such requests in writing, including a justification, within 30 calendar days from the last date printed on the food instrument. The state agency will send a payment disposition decision to the requestor within 30 calendar days, after receipt.

K. M. The state agency shall use a postpayment review process to prospectively evaluate the reimbursement amount paid against redeemed food instruments in order to identify excessive or improperly redeemed food instruments in accordance with federal regulations (7 CFR 246.12(k)(1)-(3)) (7 CFR 246.12). From the postpayment review process, the state agency may determine that one or more payments already made to a retail store were noncompliant with the vendor management policies and procedures (Policy 9.0, Reimbursement of Paid and Returned WIC Food Instruments, effective May 26, 2008, of the Vendor Manual), including the signed retailer agreement ineligible for payment as a result of a store failing to submit pricing data for the purchased item or items. The state agency reserves the right to bill and recoup payments of these ineligible payments, which will be referred to as a vendor claim (7 CFR 246.12(h)(3)(ix)) (7 CFR 246.12). The state agency shall not bill an authorized store if the vendor claim amount is less than $10.

L. N. A retail store that is not authorized to participate in the Virginia WIC Program that accepts a food instrument will not be reimbursed for any food instruments redeemed by a WIC participant.

O. A store must submit a direct deposit ACH form to the state agency that identifies any bank changes to its routing or account number. A direct deposit ACH form must be submitted at least 14 days prior to the change effective date. If the state agency's banking contractor identifies that the store's bank account or routing number is not valid, then the store will receive one written notice from the state agency. Failure by the store to resolve any reported discrepancies within 30 days after a written notice has been sent by the state agency may lead to the store being ineligible to receive payments for rejected FIs.

P. Retail stores are responsible for all bank handling fees and charges associated with doing business with the WIC Program.

12VAC5-195-600. Sanctions and administrative actions.

A. Each federal fiscal year, the state agency shall conduct compliance investigations on a minimum of 5.0% of authorized stores (7 CFR 246.12(j)(4)) (7 CFR 246.12), including completing investigations of all high risk stores, all probationary stores and selective nonhigh risk stores. The state agency will conduct at least two compliance buys at each store selected for an investigation.

B. The state agency will provide written notification to the authorized store of the investigation results, including the store's violation of any statutes or regulations governing its participation in the WIC Program unless fraudulent activities, such as overcharging the program, have been documented. Once an investigation has been closed, stores with documented violations will receive a final written report of the agency's findings. The final report will identify what administrative action will be taken by the state agency against the authorized store.

C. Violations are categorized as either state agency or federally mandated. For federally mandated violations, a pattern consisting of four documented incidents of the same violation must occur during a single investigation. State agency violations do not require a pattern of noncompliance before administrative action is taken (7 CFR 246.12(l)).

D. For federally mandated violations that include, but are not limited to, fraud, trafficking, sale of alcohol or alcoholic beverages or tobacco products, sale of detergent, kitchen items, and overcharging the WIC Program, the state agency will not provide the store with prior written notice that a violation or violations were documented before imposing administrative sanctions.

E. For selective state agency violations that include, but are not limited to, forgery or overcharge discrepancies, the state agency shall not provide prior written notice that the violation has occurred, in order to ensure the integrity of the investigative process.

F. The type of documented violation dictates the administrative action taken including, but not limited to:

1. Provision of a written warning;

2. Imposition of a technical penalty fine;

3. Assessment of a civil monetary penalty (CMP) in lieu of disqualification; or

4. Disqualification of an authorized store.

The total period of disqualification imposed for state agency violations identified as part of a single investigation may not exceed one year. The state agency reserves the right to waive a disqualification requirement if inadequate participant access would exist.