TITLE 12. HEALTH

STATE BOARD OF HEALTH

Final Regulation

Title of Regulation: 12VAC5-195. Virginia WIC Program (amending 12VAC5-195-20, 12VAC5-195-30, 12VAC5-195-70, 12VAC5-195-80, 12VAC5-195-90, 12VAC5-195-110, 12VAC5-195-140, 12VAC5-195-180, 12VAC5-195-200, 12VAC5-195-210, 12VAC5-195-230, 12VAC5-195-240, 12VAC5-195-280, 12VAC5-195-300, 12VAC5-195-310, 12VAC5-195-320, 12VAC5-195-340, 12VAC5-195-350, 12VAC5-195-370, 12VAC5-195-390, 12VAC5-195-410, 12VAC5-195-450, 12VAC5-195-520, 12VAC5-195-540, 12VAC5-195-550, 12VAC5-195-560, 12VAC5-195-570, 12VAC5-195-580, 12VAC5-195-590, 12VAC5-195-600, 12VAC5-195-640, 12VAC5-195-670, 12VAC5-195-680; repealing 12VAC5-195-400).

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

Effective Date: July 24, 2019.

Agency Contact: Robin Buskey, Policy Analyst, Office of Family Health Services, Virginia Department of Health, 109 Governor Street, Richmond, VA 23219, telephone (804) 864-7253, or email robin.buskey@vdh.virginia.gov.

Small Business Impact Review Report of Findings: This final regulatory action serves as the report of the findings of the regulatory review pursuant to § 2.2-4007.1 of the Code of Virginia.

Summary:

The majority of amendments resulting from a periodic review of 12VAC5-195, Virginia WIC Program, update text because of the program's transition from paper food instruments to the electronic benefits transfer (EBT) cards. Other amendments update the regulation to reflect current WIC Program policies and guidelines, including that (i) lost food instruments, which are currently in the form of EBT cards, can be replaced more than once; (ii) the local agency has no involvement in the appeal process, which is completed at the state office; (iii) the records retention requirement is reduced to three years; (iv) the minimum two-year requirement for submitting prices is removed; (v) new retailers will be reassessed within six months after authorization; (vi) the duration period for use of a single uniform retailer agreement is changed; (vii) mandatory training is no longer required once annually but instead on an as required basis; and (viii) the process for identifying and analyzing high-risk retailers is conformed to federal regulation. Finally, technical and stylistic amendments improve consistency and clarity of the regulation.

12VAC5-195-20. Purpose.

A. The Virginia WIC Women, Infants and Children (WIC) Program serves women who are breastfeeding, pregnant, or have just given birth; infants less younger than one year old; and children less younger 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 retailers (7 CFR 246.12). This agreement identifies the obligations, rights, and responsibilities of both the authorized retailers 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 approved food instruments list (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 review" means the procedure through which applicants and/or or retailers may appeal a state agency's administrative action, including program disqualification, denied authorization and other adverse actions.

"Agency representative" means staff from the state agency, a local agency, a contractor, or other designated individuals trained to conduct WIC functions and monitor retailers.

"Approved food list" or "WIC Approved Food List, April 1, 2018, Virginia Department of Health" 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 retailers that apply or subsequently reapply to be authorized.

"CAPP Manual" or "CAPP Manual, Volume No. 1 – Policies & Procedures, Section No. 20500 – Accounts Receivable, Cardinal, August 2018, Office of the Comptroller, Commonwealth of Virginia" means the Commonwealth's Accounting Policies and Procedures (CAPP) Manual, which provides guidelines, policies, procedures, and regulations to assist and govern state agencies to develop procedures to properly account for, report, manage, and collect receivables.

"Caretaker" means a person 18 years of age or older, unless approved at the discretion of a competent professional authority, designated by a parent or legal guardian to certify an infant/child infant or 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 infant or child. A parent or legal guardian may designate one caretaker per family ID number.

"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.

"Civil monetary penalty" or "CMP" means an administrative fine offered to a retailer in lieu of disqualification if inadequate participant access exists as determined by the state agency.

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

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

"FNS" means the U.S. Department of Agriculture Food and Nutrition Services.

"Food instrument" means a voucher, check, electronic benefits transfer card (EBT), coupon, or other document that is used by a participant to obtain supplemental foods.

"Formula flyer" or "Virginia WIC Program, Infant Formula Flyer, February 2018, Virginia Department of Health" means a handout or method used by the state agency to communicate to eligible participants, retailers, local agencies, and other interested parties that formulas may be purchased at authorized retailers.

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

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

"Legal guardian" means an individual who has been appointed by a court of law or the Department of Social Services, or by 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.

"NTE" means not to exceed.

"Peer group" means a classification of applicants and authorized retailers into groups based on common characteristics or criteria that affect food prices for the purpose of applying appropriate competitive price criteria to retailers at authorization and limiting payments for foods at competitive pricing levels. A retailer's peer group is used to determine competitive pricing levels at initial authorization and establish the reimbursement maximums paid by the state agency.

"Post payment "Post-payment 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 retailer claim against the retailer 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 retailers.

"Relatives" means spouses, parents, children, brothers, sisters, aunts, uncles, nephews, nieces, grandparents, and grandchildren.

"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 the approved food instruments list. The term "retailer" is equivalent to the term "vendor" used in federal regulations (7 CFR 246.12).

"Retailer agreement" or "Virginia WIC Program's Retailer Agreement, January 2019, Virginia Department of Health" means a written agreement that establishes the respective roles and responsibilities of the state agency and authorized retailers in complying with federal and state requirements.

"Retailer claim" means the state agency has determined an authorized retailer committed a violation of the retailer agreement that affects the payment status of one or several food instruments.

"Retailer manual" or "Retailer Manual for the Virginia WIC Program, April 1, 2018, Virginia Department of Health" means a series of written documents that communicate administrative procedures for the Virginia WIC Program that regulate both authorized retailers and applicants. The Retailer Manual retailer manual is part of the WIC Program State Plan that must be submitted and approved by USDA.

"Sanctions" mean a penalty or "Virginia WIC Program – Sanction Violation Schedule, May 1, 2017, Virginia Department of Health" means the schedule of penalties imposed by the state agency upon an authorized retailer for a specific violation outlined in the retailer manual or retailer agreement.

"State agency" means the Virginia Department of Health and the delegated authority to the Division of Community Nutrition, which has the administrative responsibility for managing the Virginia WIC Program.

"Termination" means the act of ending a retailer's WIC Program authorization for administrative reasons that include a change of ownership, closed retailer location, voluntary withdrawal, and noncompetitive prices.

"UPC" means Universal Product Code.

"USDA memo" or "USDA Memo – SFP 09-020 Clarification on Use of the WIC Acronym and Logo, January 9, 2009, United States Department of Agriculture, Food and Nutrition Service" means a memo drafted by the federal government to provide guidance to states on the use of the WIC program's acronym and logo.

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

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

"WIC sales" means annual sales based on WIC redemption paid by the state agency to an authorized retailer.

Part II
Participant Requirements

12VAC5-195-70. Eligibility requirements.

A. Adjunctive financial eligibility requirements. Adjunctive, or automatic financial eligibility is determined pursuant to 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 Family Access to Medical Insurance Security Plan (FAMIS) and a $2.00 co-pay level to be used in determining adjunctive financial eligibility.

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 shall utilize 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.

F. An applicant claiming multiple fetuses shall have the stated number used at the time of certification, but shall be required to provide written verification by a physician or nurse practitioner working under the supervision of a physician within 90 60 days of certification.

12VAC5-195-80. Proof of identification.

Applicants shall present proof of identification to obtain all WIC services and benefits. This includes but is not limited to certification and subsequent certification visits, food instrument issuance, special formula issuance, nutrition education, and VOC verification of certification transfers. The local agency shall only accept the following as proof of identification:

1. Valid Medicaid card/letter card or letter;

2. Social Security card;

3. Driver's license;

4. Birth certificate;

5. Marriage license;

6. Crib card for newborns;

7. Hospital card for newborns;

8. Military identification card or discharge papers (DD214);

9. Clinic/hospital Clinic or hospital record or ID;

10. TANF/welfare TANF or welfare photo ID;

11. Refugee settlement papers;

12. Immigration or Naturalization Record (e.g., green card);

13. Passport/visa; Passport or visa; and

14. School records (ID or report card, enrollment or health record); and

15. WIC ID folder for infants of WIC participants at initial certification only.

12VAC5-195-90. Proof of residency.

A. Applicants shall present proof of residency at initial certification and subsequent certification visits. Proof of residency shall be current and include the applicant's name. The local agency shall accept the following as proof of residency:

1. Utility bills;

2. Other business mail with a Virginia address;

3. Deed, mortgage, monthly mortgage statement, or residential rental/lease rental or lease agreement;

4. Valid Virginia drivers driver's license;

5. Valid Medicaid Card or positive, official Medicaid Verification; or

6. TANF/Welfare Photo TANF or welfare photo ID.

B. Proof of residency for military personnel shall be current and include the applicant's name. The local agency shall accept the following as proof of residency for military personnel:

1. A letter from the company commander on official letterhead;

2. Copy A copy of official Department of Defense orders with Virginia installation assignment; or

3. Leave A leave and earning statement (LES) listing Virginia as the service member's home of record.

12VAC5-195-110. Caretaker.

A. A parent or legal guardian may have the privilege, but not the right, to designate one caretaker per family ID number to certify an infant or child who may obtain and redeem food instruments and attend nutrition education. The caretaker assumes all of the rights and responsibilities of the parent or legal guardian who designates him. A caretaker shall be designated only when the local agency cannot accommodate the needs of the parent to attend the local agency to obtain WIC benefits. In the absence of a parent or legal guardian, a caregiver caretaker shall provide reasonable documentation of his status as a primary caregiver caretaker. Reasons supporting the designation of a caretaker shall be documented and become part of the participant's record. The authority to implement the caretaker policy will be granted individually to local agencies by the state WIC director. The parent is always encouraged to be the primary recipient of all WIC benefits.

B. A caretaker may be designated in two situations:

1. A parent or legal guardian's declaration of hardship; or

2. The caretaker providing reasonable documentation of his role in the absence of a parent or legal guardian.

C. Local agency personnel shall discuss the option of designating a caretaker if the participant, parent, or legal guardian declares hardship that prevents him from coming to the local agency during established regular and alternative hours due to:

1. Conflict of schedules due to work, school, or some other valid reason;

2. Lack of transportation; or

3. An infant or child residing with a family member or caretaker; or

4. The parent or legal guardian being sanctioned from the program.

D. The caretaker shall provide reasonable documentation to substantiate his relationship with the infant or child and his role as primary caretaker. Reasonable documentation may include:

1. Signed caretaker designation form, WIC-311, indicating the designation of caretaker that may be obtained prior to the first local agency visit;

2. Signed and witnessed letter from the legal guardian or parent designating a caretaker and reason for the legal guardian's or parent's inability to certify an infant or child, obtain and redeem food instruments, and attend nutrition education.; or

3. Documentation of the parent or legal guardian's enrollment, residence, or confinement in a hospital treatment program, shelter, penal institution, or other institution.

12VAC5-195-140. Food instruments.

A. Food instrument issuance. All food instruments shall be issued through the automated system only after eligibility has been documented and when the participant, parent or legal guardian, caretaker, or proxy is physically present at the local agency to pick up the food instrument have their food benefits loaded, except when there is a system outage or system failure. 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 domestic violence;

2. A change in full legal custody, including when infants/children infants or 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 stolen. 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 resulting in the participant being physically unable to be present as documented by medical records;

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 confirmed by the local WIC coordinator;

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

5. Computer failure at the local agency site;

6. Natural disasters;

7. Complete systemwide failure of automated system; and

8. Difficulty obtaining complete prescription for a special formula that has been approved by a local WIC coordinator.

Food instruments shall only be mailed for a three-month period. Requests beyond the three-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, 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 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. F. 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. G. 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. H. Pursuant to 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. I. The hearing officer shall hear evidence and testimony and reach a decision. The 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. 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.

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

12VAC5-195-200. Program abuse and sanctions.

A. The state agency determines program abuse and sanctions that may be issued to applicants and participants. When more than one abuse is involved at a time, the sanction shall be based on the more serious abuse.

B. If an abuse occurs more than 12 months after the last abuse, the local agency shall process the abuse as a first offense.

C. When more than three abuses in a 12-month period occur, the local agency shall issue a three-month temporary disqualification.

D. Program abuses and assigned sanctions are as follows:

12VAC5-195-210. Collection of improperly issued instruments/claims instruments or claims against participants.

The state agency shall establish a claim against a participant for the full value of benefits improperly obtained or disposed of as a result of a participant violation. Participant violations include:

1. Inaccurate certification information;

2. Dual participation violations;

3. Violation of the WIC guidelines or rules by the proxy or caretaker; or

4. Retention Redemption of future food instruments after disqualification.

12VAC5-195-230. Conflict of interest.

A. Individuals involved in administering the WIC Program may not, without prior written approval from the WIC Director or his designee or the director of the local health district: Local agency personnel involved in the WIC eligibility, certification, and food benefits process shall not:

1. Act as a proxy for a participant;

2. Have a direct financial interest in an authorized WIC retailer; or

3. Complete an onsite stocking visit of an authorized retailer at which they or a relative is employed.

B. Individuals involved in administering the WIC Program shall not certify or issue food instruments to themselves or relatives.

C. Additional conflict of interest regulation may be found in 12VAC5-195-460.

D. This section is not meant to replace or abrogate the Virginia State and Local Government Conflict of Interests Act, Chapter 31 (§ 2.2-3100 et seq.) of Title 2.2 of the Code of Virginia.

12VAC5-195-240. Emergency situations.

Local agencies shall follow emergency procedures in the event of an emergency situation. Procedures to continue WIC benefits shall be incorporated by the local agency into the district Office Emergency and Business Recovery Plan office's emergency and business recovery plan.

Part III
Retailer Requirements

12VAC5-195-280. Enrollment procedures.

A. The state agency shall accept applications from new retailer applicants year round.

B. Retailers seeking authorization shall comply with 7 CFR 246.12 and 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 shall be denied WIC Program authorization.

C. Retailer 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 automated clearinghouse (ACH) form, and other required forms as deemed necessary to evaluate an applicant's qualifications;

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

4. Provide documentation to the state agency, upon request, that a satisfactory business integrity record exists. None of the retailer'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 retailer has met 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 retailer's hours of operation and number of cash registers were accurately reported;

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

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

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

9. Return to the state agency all required paperwork within 14 days after receipt including 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

10. Receive from the state agency a packet containing an authorization acknowledgement letter granting WIC Program authorization, a Retailer Manual retailer manual for the Virginia WIC Program, and a WIC window decal, and an authorization stamp.

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

E. Retailer applicants that fail to meet any of the enrollment requirements outlined in this section shall be denied authorization unless the state agency determines that inadequate participant access would exist if the authorization were terminated.

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

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

B. To obtain and retain authorization, retailers shall:

1. Be Supplemental Nutrition Assistance Program authorized at the time of application or reauthorization and remain in good standing;

2. If applicable, fulfill the WIC disqualification requirement;

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

4. Comply with all local, state and federal statutes, regulations, and rules, including sanitation and building code regulations;

5. Submit prices using an electronic, Internet-based method at least twice a year and when requested by the state agency;

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

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

8. Operate at the retailer 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;

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

10. Meet all business integrity criteria as defined in 7 CFR 246.12;

11. Provide supporting documentation to the state agency including annual food sales information or tax records that will be used to ensure that no more than 50% of the retailer's total food sales were derived from WIC sales;

12. Comply with all corrective actions identified during prior WIC authorizations and pay all civil monetary penalties, if applicable;

13. Purchase contract and special formula from a distributor, supplier, wholesaler, or retailer who is approved by the Virginia WIC Program to sell formula; and

14. Participate in the WIC Program's direct deposit ACH process used for reimbursement and collection purposes.

C. Retailers shall not offer drive-through window or home delivery services for 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 redeemed.

12VAC5-195-310. Above Retailer screening for food sales above 50% retailer screening.

A. The state agency shall not authorize any applicant or retailer that is likely to derive 50% or more of its annual food sales from the sale of supplemental foods to WIC participants. Retailers 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. Retailers must submit documentation that permits the state agency to complete its evaluation and identification of above 50% retailers. Failure to submit the requested documentation may lead to the retailer's authorization being terminated.

B. Newly authorized retailers with six months of redemption history shall have their status reviewed to determine if they qualify as an above 50% retailer The state agency shall reassess the status of new retailers within six months after authorization to determine whether or not the retailer is above 50% (7 CFR 246.12). If the state agency's assessment determines the retailer qualifies as an above 50% retailer, the retailer'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 retailer wishes to continue to be authorized beyond the current agreement period, the retailer must reapply for authorization. All retailers must be selected under the current selection and authorization criteria being used by the state agency (7 CFR 246.12).

B. Authorized retailers 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 whether a county or location is selected to undergo the regional authorization and selection process as all agreements expire at the same time; therefore, prorated dates will be used.

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

D. An authorized retailer must have a signed copy of the retailer agreement for any retailer 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 written notice from the state agency if federal or state laws or regulations require amendments.

F. Authorized retailers shall keep a copy of the updated Retailer Manual retailer manual, including a copy of the WIC Approved food list, formula flyer, and Cashier Training Guide, at the authorized retailer location.

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

12VAC5-195-340. Competitive pricing.

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

B. The state agency shall collect pricing information for specific food items at least twice a year (7 CFR 246.12). Prices may be collected more frequently from authorized retailers for reasons including:

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

2. A retailer is designated as a high risk high-risk retailer;

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

4. Other operational considerations that may occur including a change of contract formula company, a change of infant food company, food industry price fluctuations, and manufacturer's price increases for selected WIC-approved products, such as baby foods, contract formula, and infant cereal.

C. Retailers 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, retailers must submit the price for their WIC designated brand. All prices submitted via the Internet-based application shall be used for calculating the reimbursement maximums. Retailers must use the approved food list and the minimum stocking requirement to identify all eligible brands and foods.

D. Retailers failing to submit their prices within 14 days of the due date stated in the Retailer Manual retailer manual shall receive one warning letter. After receiving this the letter, retailers that fail to respond within the time period stated in the letter may have their WIC Program authorization terminated unless the state agency determines that inadequate participant access would exist if the retailer's authorization were terminated.

E. Applicants whose prices are determined to be noncompetitive when compared with other authorized retailers in 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 if the application was not considered.

F. Authorized retailers whose prices are determined to be noncompetitive when compared with other retailers 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 retailer qualifies to remain authorized. The state agency shall terminate the retailer's authorization if its prices are noncompetitive unless the state agency determines that inadequate participant access would exist if the retailer's authorization were terminated.

G. The applicant's physical retailer address shall be classified as being located either in an urban or rural location based on the county or city where the retailer is located. Retailer applicants located outside of Virginia shall be assigned to the rural category.

Authorized retailers are assigned to a peer group based on their designation of rural or urban and the number of cash registers located in the retailer. Peer groups are defined as follows:

H. For newly authorized retailers and applicants, the peer group designation assigned during the first three months shall be determined by the retailer's location and number of cash registers. For the peer group designation of newly authorized retailers that have five to nine cash registers, the state agency shall assume the retailer had less than $100,000 in annual WIC sales.

I. All retailers that have five to nine cash registers shall have their WIC sales data calculated by the state agency every six months to determine if the retailer's annual WIC sales are projected to be under or over $100,000. If the retailer's WIC sales have changed, then the retailer's assigned peer group shall change to reflect its redemption status.

J. Retailers that increase or decrease their the number of cash registers must notify the state agency in writing within 15 calendar days. An onsite visit may be conducted by the state agency to confirm the number of operational cash registers. Retailers that knowingly misrepresent their the number of cash registers may have their authorization status terminated unless the state agency determines that inadequate participant access would exist if the retailer's authorization were terminated.

12VAC5-195-350. Price verification.

A. Authorized retailers and applicants must submit prices for all mandatory foods and formulas as defined by the state agency. Once prices have been submitted to the WIC Program, they must remain in effect for at least a 30-day period and are subject to random onsite verification by the state agency. Posted prices that are significantly higher than the prices submitted to the state agency may affect the retailer's or applicant's authorization selection status.

B. A retailer or applicant's submitted price shall be compared by the state agency to other authorized retailer in the same peer group to determine if the prices submitted are competitive. Prices shall be submitted and validated as competitive for specific food items and formulas as specified in the Retailer Manual retailer manual.

C. Authorized retailers and applicants shall have a pricing point value that is 40 or higher in order to remain eligible for program authorization.

D. Authorized retailers whose prices are identified as noncompetitive when compared with other authorized retailers in the same peer group may have their WIC Program authorization terminated unless the state agency determines that inadequate participant access would exist if the retailer's authorization were terminated.

E. Authorized retailers that fail to submit a price for optional food and formula items may have redeemed food instruments selected as ineligible for payment as part of the postpayment post-payment review process. These The improperly redeemed food instruments may be identified as a retailer claim and may be subject to repayment of the full amount paid for all of the items prescribed on the food instrument.

12VAC5-195-370. Authorization exception decisions.

The state agency may make authorization exceptions to ensure that adequate access exists based on at least one of the following criteria:

1. Provide reasonable access;

2. Provide safe access due to a physical barrier or impediment including a multilane highway, river, bridge;, or physical terrain (i.e., mountains);

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

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

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

6. Improve WIC customer access because the retailer 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;

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

8. Expand access to WIC eligible foods that are purchased by a specific ethnic population.

12VAC5-195-390. Approved food list.

A. A copy of the current Virginia WIC Program's Approved Food List approved food list and formula flyer must be stored at each cash register where WIC transactions are handled. A copy of the approved food list and formula flyer must also be stored in the Retailer Manual retailer manual kept onsite at the authorized retailer location.

B. The approved food list shall be used in conjunction with the WIC food instrument to identify foods that are eligible for purchase using WIC food instruments. The food instrument may state a specific manufacturers or brands that are not covered by the general description used in the approved food list that must be purchased by program participants food category and quantity available for purchase by program participants at authorized retailers.

C. The formula flyer shall be used in conjunction with the WIC food instrument to identify formula and medical foods that are eligible for purchase using WIC food instruments. The food instrument shall state the specific manufacturer, type, and quantity of formula that must be purchased by program participants.

D. Authorized retailers shall sell WIC-designated brands for food categories identified in the approved food list. Authorized retailers shall use shelf labels approved by the state agency to identify the WIC-designated brands that are declared using the state agency's Internet-based application in accordance with the state's shelf label requirement guidelines.

12VAC5-195-400. Authorization stamp - assignment and usage. (Repealed.)

A. The state agency shall assign a unique stamp number to each authorized retailer. The retailer's authorization number shall be imprinted on a rubber stamp, which shall be used on every food instrument deposited by the authorized retailer location. Failure by the retailer to use the issued authorization stamp may result in payment being denied for redeemed WIC food instruments or, if a pattern of noncompliance is documented, the termination of a retailer's authorization unless the state agency determines that inadequate participant access would exist if the authorization were terminated.

B. Authorized retailers must obtain any needed replacement stamps from the stamp supplier approved by the state agency. The state agency shall provide a maximum of three stamps to an authorized retailer 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.

C. If a stamp overlay process is requested by an authorized retailer, the state agency may waive the requirement to use a rubber stamp on deposited food instruments. The stamp overlay process shall result in the assignment of a unique identification number that must be tested and approved by all affected parties. Retailers must submit a written request to the state agency at least 60 days prior to implementing the stamp overlay. If the request is approved, the state agency shall send written approval to the corporate office of the retailer requesting the stamp overlay. Failure to obtain written approval may lead to food instruments being returned unpaid by the banking contractor.

12VAC5-195-410. Change of ownership.

A. Authorized retailers shall provide the state agency with advance written notice at least 15 calendar days prior to any change of ownership as outlined in 7 CFR 246.12.

B. A change of ownership occurs when the principal owner, owners, or corporate officers of the business or corporation are legally or permanently changed.

C. A retailer's authorization shall be terminated by the state agency 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 reassigned by the retailer or corporate owner to any other third party.

D. The new owner or retailer manager of the business or corporation shall apply for WIC Program authorization and submit his 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 retailer 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 retailer agreement.

12VAC5-195-450. Complaints.

A. The state agency shall maintain a system of receiving, documenting and investigating all complaints submitted by retailers, participants, proxies, caretakers, parents, and the general public. On the basis of a written complaint, the state agency may take action against participants and retailers that abuse or misuse program benefits as outlined in the State Plan and Retailer Manual retailer manual.

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 7 CFR Part 246.

12VAC5-195-520. Training and education.

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

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

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 approved instructor-led, interactive training class.

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

D. Authorized retailers may request remedial training at any time by contacting the state agency.

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

F. Failure of an authorized retailer to meet the mandatory training requirements shall result in sanctions being imposed and the possible termination of the retailer's program authorization, unless the state agency determines that inadequate participant access would exist if the authorization were terminated.

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

Periodically, individual sections of the Retailer Manual retailer manual may be updated to reflect federally mandated regulatory changes and other WIC Program requirements. The most current version of the Retailer Manual retailer manual is located on the state agency's website, which retailers must access to obtain updated copies of procedures and forms.

12VAC5-195-550. High risk High-risk retailers.

A. A high-risk retailer is a retailer who has a high probability of committing a vendor violation due to meeting specific high-risk indicators. The state agency shall classify each authorized retailer as either high risk high-risk, probationary, or nonhigh risk non-high-risk. In accordance with federal regulations (7 CFR 246.12), high risk retailers have demonstrated from prior authorization history a pattern of noncompliance with documented retailer management policies or violations documented from covert, undercover buys. The state agency may also change a retailer's designation to high risk based upon noncompliance documented from onsite monitoring visits or inventory audits. All of these overt and covert visits shall be conducted during hours the retailer is open to the general public, including weekdays, weekends, and holidays.

The state agency may select retailers for compliance monitoring based on statistical trends documented from retailers' redemption patterns. A retailer's designation will only be changed to high risk as result of documented violations identified by compliance investigations or other types of objective monitoring practices used by the state agency. Retailers shall also be changed to high risk if:

1. The retailer 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 retailer has received a Supplemental Nutrition Assistance Program civil monetary penalty or WIC program civil monetary penalty and is being retained in lieu of disqualification;

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

4. The retailer has been the subject of an inventory audit and the documented results identify a significant discrepancy between the retailer's inventory, purchasing records, and WIC redemption sales.

All retailers classified as high risk shall receive written notification from the state WIC Program to advise them of the retailer's status change prior to the change becoming effective. Retailers 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 detail the actions the retailer will take to improve its performance The state agency will identify high-risk retailers at least once a year using criteria developed by FNS or other FNS-approved, statistically-based criteria developed by the state agency.

C. Authorized retailers designated as high risk shall be selected for more frequent onsite and covert monitoring investigations. Any retailer receiving a WIC program civil monetary penalty and that is being retained in lieu of disqualification may be designated as high-risk.

D. Retailers are designated high-risk for a minimum one-year period and will have their status periodically evaluated by the state agency. Retailers found to meet high-risk indicators during the course of a year after the state conducts its annual high-risk vendor analysis may be identified as high-risk at the discretion of the state agency. Authorized retailers designated as high-risk may be selected for more frequent onsite and covert monitoring investigations.

E. If a retailer is retained in lieu of disqualification, a written assurance letter must be submitted to the state agency within 30 calendar days after being notified of this requirement or another mutually agreed upon timeframe made in writing. The retailer's assurance letter must detail the actions the retailer will take to improve performance.

12VAC5-195-560. Nonhigh risk Non-high-risk retailers.

Authorized retailers that have participated in the WIC Program for more than one continuous year and have demonstrated an acceptable level of compliance in meeting program requirements are considered nonhigh risk non-high-risk retailers.

12VAC5-195-570. Probationary retailers.

Newly authorized retailers with less than one year of continuous program authorization shall be designated as a probationary retailer. During a probationary retailer's first year it, the retailer will be more frequently monitored through both unannounced and onsite monitoring visits, as well as being selected for at least one compliance investigation.

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

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

B. The state agency shall monitor authorized retailers' performance throughout the contract period in order to ensure the best qualified retailers are authorized. The type and level of monitoring conducted by the state agency shall depend upon the retailer's authorization status. Trained local agency staff, state agency staff, and other specially trained contractors may conduct onsite visits to ensure compliance with basic minimum stocking requirements and administrative program requirements. Retailers designated as high risk high-risk retailers and probationary retailers are more likely to be selected for unannounced monitoring visits by the WIC Program.

C. Authorized retailers that fail to consistently comply with any of the general requirements and conditions for authorization may be terminated. The state agency shall monitor:

1. Number of paid and rejected food instruments;

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

3. 2. Level of compliance with program requirements;

4. 3. Use of approved wholesalers and suppliers for purchasing WIC-approved foods and formulas; and

5. 4. Compliance with retaining purchasing records for WIC-approved foods and formulas.

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

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

F. Agency representatives may conduct an unannounced monitoring visit to ensure that authorized retailers or applicants meet all program requirements. Authorized retailers and applicants shall have the minimum stocking requirement available onsite at all times. The required specific foods, contract formulas, and administrative procedures are outlined in the Minimum Stocking Requirement minimum stocking requirement in the Retailer Manual retailer manual.

G. Agency representatives shall conduct unannounced monitoring visits during hours the retailer is open to the public. Authorized retailers must submit any changes to their normal hours of operation to the state agency in writing.

H. Authorized retailers with more than one year of continuous participation in the program may request in writing to the state agency that 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 regarding the retailer's waiver request within 30 calendar days after receipt. The waiver to the minimum stocking requirement for a required item shall expire upon the presentation to the retailer, on behalf of a participant, of a WIC food instrument for the purchase of that required food item. The authorized retailer shall provide the food item within 48 hours, excluding weekends and holidays, after presentation of the WIC food instrument.

I. H. The state agency may conduct other types of unannounced onsite monitoring visits to a retailer's location including random, price verification, formula audits, purchased formula records review, and high risk high-risk.

J. I. During an unannounced onsite monitoring visit, the state agency representative may:

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

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

3. Validate if administrative requirements have been met;

4. Collect and confirm prices submitted by retailers;

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

5. 6. Review purchase or invoice records;

6. 7. Conduct formula inventory analysis;

7. 8. Educate the retailer about program changes;

8. 9. Provide educational materials and supplies;

9. 10. Provide technical consultation;

10. 11. Confirm WIC-approved shelf labels are being used correctly to identify WIC-designated brands; and

11. 12. Confirm the number of reported cash registers.

K. J. During the unannounced onsite monitoring visits, retailer management may receive:

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.

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

M. L. Each federal fiscal year, a sample of authorized retailers shall be selected for one or more announced onsite formula monitoring visits. The state agency shall ensure that authorized retailers sell formulas that have been purchased from a WIC-approved supplier, distributor, wholesaler, or authorized resource. A listing of WIC-approved suppliers, distributors, wholesalers, and authorized resources is located on the state agency's website. State agency personnel shall review formula purchasing records and invoices, compare formula redemption data from WIC sales, and complete a prephysical and postphysical post-physical inventory of formula available at the retailer location during a specific analysis period. Retailers 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 shall be documented and a written assessment shall be sent to the retailer once the state agency has completed its analysis.

N. M. Authorized retailers 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 the state agency determines that inadequate participant access would exist if the authorization were terminated. Depending upon the service delivery impact, the state agency may temporarily waive terminating a retailer that fails to comply with any of these requirements until an alternative retailer located in the same area can be authorized. The state agency shall 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 do one of the following:

1. Pay as submitted;

2. Make a price adjustment, if applicable; or

3. Deny payment of the deposited redeemed 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 retailers that have a signed retailer agreement with the Virginia WIC Program. Unauthorized retailers 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. 3. Making price adjustments to the reimbursement amount paid to retailers in order to ensure individual retailer's reimbursement levels remain eligible for authorization, based upon competitive prices charged by similar retailers;

5. 4. Collecting bank account and routing numbers from applicants and authorized retailers in order to process direct deposit ACH automated clearinghouse (ACH) payments;

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

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

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

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

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

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

C. Authorized retailers 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 authorization stamp" or "no authorization stamp" error messages must be corrected and redeposited within 30 calendar days of the last date printed on the food instrument.

E. All food instruments or IRDs rejected for payment or undeposited food instruments require WIC Program review for exception payment consideration and must be submitted by the authorized retailer to the state agency. The state agency reserves the right to deny a submitted request for payment depending on the explanation provided by the retailer or bank of first deposit. Approved exception payments will only be made to an authorized retailer.

1. Retailers must submit their undeposited or rejected food instruments or IRDs and justifications to the state agency within 30 calendar days of the last date printed on the food instrument. A retailer must also simultaneously submit a written request and justification for payments on undeposited or rejected food instruments or IRDs.

2. Undeposited or rejected food instruments 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.

3. Food instruments or IRDs rejected for payment due to a processing error that originates either at the federal reserve or bank of first deposit may be considered for an exception payment. The food instruments or IRDs must be submitted to the state agency within 120 calendar days from the first date to spend printed on the food instrument. A bank representative must submit a written request with the unpaid food instruments or IRDs.

F. C. A maximum allowable reimbursement not to exceed (NTE) amount for each peer group and food item combination UPC is established using pricing sales data (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 retailers 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. Retailers may only get reimbursed for mandatory and optional foods and formula products they have submitted prices for prior to redeeming food instruments for those products. Redeemed food instruments may be subject to repayment as a retailer claim if they include optional items for which a retailer has failed to submit prices. Retailers 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 retailer'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. Prices are purposely not collected by the state agency for formulas that should not be redeemed at retailers. Food instruments redeemed for these types of special formulas are subject to repayment by the retailer.

I. A maximum reimbursement amount will be established for cash value food benefits used by participants to purchase fruits and vegetables. The amount written on the food instrument must not exceed the maximum reimbursement amount printed on it. D. For cash value food benefits only, the retailer must offer one of the following options to the participant if the total dollar amount being purchased exceeds the printed cash value:

1. The participant shall be allowed to pay the amount over the printed cash value; or

2. The participant shall be allowed to reduce the quantity of eligible fruits and vegetables being purchased.

Retailers must notify the state agency in writing which of these options they provide to WIC participants.

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

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

L. The state agency may make payment exceptions for food instruments that would normally be denied payment by its banking services contractor. The authorized retailer 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.

M. F. The state agency shall use a postpayment post-payment 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). From the postpayment post-payment review process, the state agency may determine that one or more payments already made to a retailer were ineligible for payment as a result of a retailer failing to submit pricing data for the purchased item or items provide the cardholder with foods that were taken off the eWIC card. The state agency reserves the right to bill and recoup payments of these ineligible payments, which will be referred to as a retailer claim (7 CFR 246.12). The state agency shall not bill an authorized retailer if the retailer claim amount is less than $10.

N. G. A retailer 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. H. A retailer 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 retailer's bank account or routing number is not valid, then the retailer will receive one written notice from the state agency. Failure by the retailer to resolve any reported discrepancies within 30 days after a written notice has been sent by the state agency may lead to the retailer being ineligible to receive payments for rejected food instruments.

P. I. Retailers 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 retailers (7 CFR 246.12), including completing investigations of all high risk high-risk retailers, all probationary retailers, and selective nonhigh risk select non-high-risk retailers. The state agency will conduct at least two compliance buys at each retailer selected for an investigation.

B. The state agency shall provide written notification to the authorized retailer of the investigation results, including the retailer's violation of any statutes or regulations governing its participation in the WIC Program. Once an investigation has been closed, retailers with documented violations shall receive a final written report of the agency's findings. The final report will identify what administrative action shall be taken by the state agency against the authorized retailer.

C. Violations shall be 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 unless a pattern requirement is not required by federal regulations.

D. For federally mandated violations including overcharge, fraud, trafficking in food instruments, selling firearms, ammunition, explosives, controlled substances, alcohol or alcoholic beverages, or tobacco products, the state agency may not provide the retailer with prior written notice that a violation or violations were documented before imposing administrative sanctions. This notification decision will be made on a case-by-case basis, depending on the type of federally mandated violation documented and if it is determined that notification would compromise the investigation.

E. The type of documented violation dictates the administrative action taken including:

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 retailer.

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 the state agency determines that inadequate participant access would exist if the authorization were terminated.

F. The state agency shall use a multitier sanction schedule that consists of:

The date on which violations become effective is determined by the date indicated on the final compliance investigation letter. Class A, B, and E violations have an active life of one year, a Class C violation has an active life of three years, and a Class D violation has an active life of six years or permanent disqualification.

G. If, within a 12-month period, a retailer has three documented incidents of failure to meet the minimum stocking requirement or failure to properly stamp 50 or more deposited food instruments, then the retailer shall be disqualified for a one-year period unless the state agency determines that inadequate participant access would exist if the authorization were terminated.

H. All documented overcharges or payments for ineligible food items identified during a compliance investigation shall be considered a retailer claim and be subject to repayment.

I. Copies of any investigative evidence collected by the state agency during a compliance investigation shall be available to the authorized retailer, upon request, after the investigation has been closed and the retailer is notified in writing of the final compliance investigation results.

J. A retailer may apply for WIC authorization after the retailer has finished the disqualification period. There is no automatic reinstatement of a retailer once the disqualification period has ended.

K. The state agency shall not issue sanctions solely as a result of complaints submitted by participants.

12VAC5-195-640. Civil monetary penalties.

A. A CMP civil monetary penalty (CMP) may be assessed for documented state agency and federally mandated violations (7 CFR 246.12).

B. The state agency uses a federally mandated formula to calculate both state and federally mandated CMPs that are assessed. The maximum civil monetary penalty assessed shall comply with federal requirements as outlined in 7 CFR 246.12. The state agency cannot make any reductions to the maximum CMP amount due for federally mandated violations because this formula is defined in federal regulations.

C. The same formula shall be used to calculate the civil monetary penalty for retailers retained in lieu of disqualification due to documented state agency sanctions. For state agency violations only, the state WIC director of his or the director's designee has the authority to reduce or waive the penalty amount being assessed against the retailer. The state agency must document in its records the specific factors supporting this administrative decision.

D. A CMP may be paid in a lump sum or through an agreed upon installment plan. Failure of the authorized retailer to pay any scheduled installments in a timely manner shall lead to the retailer's disqualification for the original disqualification period.

E. Payments shall be made by certified check, cashier check, or money order. Payments shall be made out to the Virginia WIC Program and mailed to the address identified on the penalty fine statement.

F. The state agency shall process all past due obligations including administrative fines, retailer claims, civil monetary penalties, or overcharge repayments assessed against authorized retailers in accordance with the Office of the Comptroller's Policies and Procedures, Section Number 205000 (Accounts Receivable), dated June 2004 August 2018. The state agency shall also process all past due financial obligations in accordance with the Virginia Debt Collection Act (§ 2.2-4800 et seq. of the Code of Virginia).

G. The state agency shall notify the Supplemental Nutrition Assistance Program in writing within 15 calendar days after assessing a CMP against an authorized retailer being retained in lieu of disqualification.

12VAC5-195-670. Full administrative review.

A. Authorized retailers and applicants shall be offered an opportunity to request a full administrative review only for the adverse action cited in subsection O of this section.

B. The retailer or applicant has 15 calendar days from the date of receipt of the denial notice or the disqualification letter, either by letter or an electronic format, to request a full administrative review.

C. The request for the full administrative review may be mailed by US U.S. mail, sent by facsimile transmission or sent via email to the state agency. If the request is mailed, it must be postmarked within 15 calendar days from the date of receipt of letter or electronic notification from the state agency, whichever comes first.

D. The retailer or applicant should indicate whether he intends to be represented by an attorney when the full administrative review request is made. This does not preclude the retailer or applicant from seeking legal counsel at any time. At least five days prior to the scheduled full administrative review, the retailer or applicant must provide the state agency with copies of any written information that it wishes to use during the review and names of witnesses that it will call. Failure to provide the state agency with these items may result in rescheduling the full administrative review or the exclusion of documents and witnesses from the full administrative review.

E. Within 30 days of receipt of the retailer's or applicant's request for a full administrative review, after consulting with the retailer or applicant and the adjudication officer, the state agency shall confirm a date, time, and place for the review. For authorized retailers and applicants, the review shall be scheduled to take place within 60 calendar days after the written request is received by the state agency, unless otherwise agreed to by the parties.

F. Failure to attend the scheduled review shall lead to the retailer forfeiting its the rights to any further administrative reviews.

G. The retailer or applicant will have one opportunity to reschedule the full administrative review's review date or time. All requests to reschedule the review date or time must be submitted in writing at least 24 hours before the scheduled review date unless good cause can be shown as determined by the adjudication officer. Rescheduled reviews shall take place within four weeks of the originally scheduled date unless otherwise agreed to by the parties.

H. If the retailer representative is more than 45 minutes late to the review, this shall be considered a "no show" unless he can show good cause as determined by the adjudication officer.

I. A full administrative review shall be conducted by an adjudication officer who is employed by the Virginia Department of Health. The adjudication officer shall ensure that administrative actions taken by the WIC Program are consistently and fairly applied and that those administrative actions comply with established policies, procedures, and federal and state statutes and regulations. A representative from the state agency shall present its case to the adjudication officer and retailer or applicant representative. Conversely, the retailer owner or designated representative, which may include legal counsel, shall present its case to the adjudication officer.

J. All full administrative reviews shall be held in Richmond, Virginia.

K. After a full administrative review is held, the state WIC director shall provide written notification of the adjudication officer's decision, including the basis for the decision, to the applicant or authorized retailer within 90 calendar days of the date of receipt of the full administrative appeal review request, unless otherwise agreed to by the parties involved. This notification will also be sent to the appropriate USDA Food and Nutrition Services office.

L. Authorized retailers that are being disqualified may continue to deposit WIC food instruments submit reimbursement requests until a decision has been rendered by the adjudication officer. The adverse action effective date shall be postponed by the state agency pending the outcome of the review.

M. In accordance with 7 CFR 246.18, if an authorized retailer does not request a full administrative review, then disqualification becomes effective 15 calendar days after the retailer receives the state agency's written disqualification letter.

N. An authorized retailer that is being retained in lieu of disqualification for a state agency violation may elect to voluntarily withdraw from the WIC Program rather than pay a mandated civil monetary penalty. If the retailer voluntarily withdraws and does not pay the civil monetary penalty, then a disqualification status shall be documented in the state agency's records. The disqualification period may range from one to six years, depending on the type of sanctions and violations documented by the state agency.

O. The state agency shall provide a full administrative review to retailers or applicants, upon request, for the following adverse actions pursuant to 7 CFR 246.18:

1. Denial of authorization based on the application of the retailer selection criteria for minimum variety and quantity of authorized supplemental foods or on a determination that the retailer is attempting to circumvent a sanction (7 CFR 246.12);

2. Denial of authorization based upon the retailer selection criteria for business integrity or for a current Supplemental Nutrition Assistance Program disqualification or civil money penalty for hardship (7 CFR 246.12);

3. Denial of authorization based on a state agency established retailer selection criteria if the basis of the denial is a WIC retailer sanction or a Supplemental Nutrition Assistance Program withdrawal of authorization or disqualification;

4. Denial of authorization based on the state agency's retailer limiting criteria (7 CFR 246.12);

5. Denial of authorization because a retailer submitted its application outside the timeframes during which applications are accepted or processed as established by the state agency under 7 CFR 246.12;

6. Termination of a retailer agreement because of a change in ownership, location, or cessation of operations (7 CFR 246.12);

7. Termination of a retailer agreement for cause;

8. Disqualification based on a trafficking conviction (7 CFR 246.12);

9. Disqualification based on the imposition of a Supplemental Nutrition Assistance Program civil monetary penalty for hardship (7 CFR 246.12);

10. Disqualification or civil monetary penalty imposed in lieu of disqualification based on a mandatory sanction imposed by another WIC state agency (7 CFR 246.12);

11. Imposition of a fine or a civil monetary penalty in lieu of disqualification;

12. Denial of authorization based on the application of the retailer selection criteria for competitive price;

13. The application of the state agency's retailer peer group criteria and the criteria used to identify retailers that are above 50% retailers or comparable to above 50% retailers;

14. Denial of an application based on a determination of whether an applicant retailer is currently authorized by the Supplemental Nutrition Assistance Program;

15. A civil monetary penalty imposed in lieu of disqualification based on a Supplemental Nutrition Assistance Program disqualification under 7 CFR 246.12; and

16. Disqualification unless listed in subsection P of this section.

P. The state agency shall not provide a full administrative review to retailers that appeal the following actions, pursuant to 7 CFR 246.18:

1. The validity or appropriateness of the state agency's retailer limiting or selection criteria or retailer selection criteria for minimum variety and quantity of supplemental foods, business integrity, and current Supplemental Nutrition Assistance Program disqualification or civil monetary penalty for hardship (7 CFR 246.12);

2. The validity or appropriateness of the state agency's criteria for competitive price, including peer group criteria and the criteria used to identify retailers that are above 50% retailers or comparable to above 50% retailers;

3. The validity or appropriateness of the state agency's participant access criteria and the state agency's participant access determinations;

4. The state agency's determination whether a retailer had an effective policy and program in effect to prevent trafficking and that the ownership of the retailer was not aware of, did not approve of, and was not involved in the conduct of the violation (7 CFR 246.12);

5. Denial of authorization if the state agency's retailer authorization is subject to the procurement procedures applicable to the state agency;

6. The expiration of the retailer's agreement;

7. Disputes regarding food instrument payments and retailer claims other than the opportunity to justify or correct a retailer overcharge or other error as permitted by (7 CFR 246.12);

8. Disqualification of a retailer as a result of disqualification from the Supplemental Nutrition Assistance Program (7 CFR 246.12);

9. The state agency's determination to include or exclude an infant formula manufacturer, wholesaler, distributor, or retailer from the list required pursuant to 7 CFR 246.12;

10. The state agency's determination whether to notify a retailer in writing when an investigation reveals an initial violation for which a pattern of violations must be established in order to impose a sanction; and

11. The validity or appropriateness of the state agency's prohibition of incentive items and the state agency's denial of an above 50% retailer's request to provide an incentive item to customers pursuant to 7 CFR 246.12.

Q. A full administrative review request shall not be denied or dismissed unless:

1. The request to the state agency is not postmarked or received within 15 calendar days of the applicant or authorized retailer's receipt of the notice of disqualification or adverse action;

2. The request to the state agency is submitted by an individual who does not have the legal or delegated authority to represent the applicant or authorized retailer;

3. The retailer or authorized representative withdraws the request in writing;

4. The retailer or authorized representative fails to appear at the scheduled review date and time without good cause as determined by the adjudication officer; or

5. The request for a full administrative review is not eligible for this consideration based on the specific exclusion criteria outlined in subsection P of this section.

12VAC5-195-680. Food application process.

A. Food WIC eligible food items that are approved for purchase by eligible WIC participants must have a food application submitted by retailers, manufacturers, and distributors for WIC participants must be reviewed and approved by the state agency. The food application process does not apply to WIC approved formulas.

B. The state agency shall conduct a review of the approved foods every two years. Food applications shall be accepted and processed during a two-month period.

C. The state agency shall notify prospective manufacturers, suppliers, and distributors when food applications will be accepted by sending them an announcement letter. The state agency shall also post the food application announcement letter on the state agency website.

D. The state agency shall maintain a database with the contact names and companies who previously submitted food applications or expressed an interest in having their products considered for WIC approval. Individuals may request to be added to the database on behalf of manufacturers by completing a food application contact form, which is an online form located on the state agency's website at http://www.vdh.virginia.gov/livewell/programs/wic/content
/retailers/documents/UPCUpdateRequestForm.pdf.

E. Incomplete food applications or late submissions shall not be eligible for selection and inclusion on the WIC approved food list.

F. The state agency is responsible for evaluating all completed food applications to ensure each product meets both federal and state nutritional and administrative guidelines.

G. After the food application evaluation and selection process has been completed, a new food list will be printed and distributed to local agencies, WIC participants, and retailers by the state agency. The state agency shall pay all costs associated with producing, printing, and distributing the WIC approved food list. Funds from manufacturers, suppliers, distributors, or other sources shall not be used to reprint the approved food list.

H. If a manufacturer, supplier, or distributor changes the name of an approved product whose trade name appears on the approved food list, the new product shall not be automatically eligible for purchase under the current food list. The manufacturer, supplier, or distributor must submit a written request to the state agency, a sample nutritional label for the new product, and documentation outlining the product availability at authorized retailers to have the new product considered for approval. Once this information is received, the state agency shall decide on a case-by-case basis if the new product can be transitioned under the current food list or must wait for the next food list submission cycle. A new product shall not be approved prior to it being available at retailer locations. If the new product is not eligible for inclusion under the current food list, the manufacturer, supplier, or distributor may submit a new food application using the new product name when food applications are being accepted.

I. If a manufacturer, supplier, or distributor changes the nutritional formulation of an approved product, the new product shall not be eligible for purchase under the current food list. The manufacturer, supplier, or distributor must submit a new food application for the new product when food applications are being accepted.

J. Manufacturers, suppliers, or distributors shall not send product samples to the state agency at any time.

K. Changes to the approved food list made during the scheduled two-year period may be made on a case-by-case basis as determined by the state agency based on federal guidance if applicable.

FORMS (12VAC5-195)

Virginia WIC Program UPC Update Request Form (eff. 1/2014)

DOCUMENTS INCORPORATED BY REFERENCE (12VAC5-195)

Vendor Manual for the Virginia WIC Program, January 2011, Virginia Department of Health.

WIC Approved Food List, April 2012, Virginia Department of Health.

Virginia WIC Program's Retailer Agreement, effective November 2011(dated August 2011), Virginia Department of Health.

CAPP Manual, Volume No. 1 - Policies & Procedures, Function No. 2000 - General Accounting, Section 20500 - Accounts Receivable, June 2004, Office of the Comptroller, Commonwealth of Virginia.

Virginia WIC Program - Sanction Violation Schedule, December 1, 2011, Virginia Department of Health.

Retailer Manual for the Virginia WIC Program, April 1, 2018, Virginia Department of Health

WIC Approved Food Food List, April 1, 2018, Virginia Department of Health

Virginia WIC Program's Retailer Agreement, January 2019, Virginia Department of Health

CAPP Manual, Volume 1 - Policies and Procedures, Section No. 20500 - Accounts Receivable, Cardinal, August 2018, Office of the Comptroller, Commonwealth of Virginia

Virginia WIC Program - Sanction Violation Schedule, May 1, 2017, Virginia Department of Health

USDA Memo – SFP 09‑020 Clarification on Use of the WIC Acronym and Logo, January 9, 2009, United States Department of Agriculture, Food and Nutrition Service.

Virginia WIC Program, Infant Formula Flyer, effective April 1, 2012 (dated January 1, 2012), Virginia Department of Health.

Virginia WIC Program Infant Formula Flyer, February 2018, Virginia Department of Health