NOTICE IS HEREBY GIVEN That pursuant to s. 253.06 (5) (a) 1., Stats, and interpreting ss. 46.016 and 253.06 (5) (a) 1., Stats., and the Child Nutrition and WIC Reauthorization Act of 2004, Pub. L. 108-265, s. 203 (e) (10), 118 Stat. 777, the Department of Health and Family Services will hold a public Hearing to consider the repeal s. HFS 149.03 (7) (d) and (e); to amend s. HFS 149.02 (6), (17) and (23), and 149.03 (2) (c) and (7) (a); and to create s. HFS 149.02 (14m), relating to the selection and monitoring of vendors for the special supplemental food program for women, infants and children (WIC) and affecting small businesses.

Tuesday, September 20, 2005, 2:00 - 4:00 p.m.

1 W. Wilson Street

Madison, WI 53702

Room B155

The hearing site is fully accessible to people with disabilities. If you are hearing impaired, do not speak English, or have circumstances that might make communication at a hearing difficult and you, therefore, require an interpreter or a non-English, large print or taped version of the hearing document, contact the person at the address or phone number given below at least 10 days before the hearing. With less than 10 days notice, an interpreter may not be available.

Written comments may be submitted at the public hearing, or in lieu of attending a public hearing. Written comments can be submitted to the Department using the Wisconsin Administrative Rules website at:
http://adminrules.wisconsin.gov or to:

Patti Herrick, Wisconsin WIC Director

P.O. Box 2659

Madison, WI 53701-2659

herriph@dhfs.state.wi.us

Phone 608-266-3821

The deadline for submitting comments at the website and to the contact person is 4:30 p.m., on September 27, 2005.

Under the WIC program, the federal government provides supplemental foods and nutrition education through payment of cash grants to states that administer the program through local agencies at no cost to eligible persons. The WIC program serves as an adjunct to good health care during critical times of growth and development in order to prevent the occurrence of health problems. In Wisconsin, the WIC program has 112,000 certified participants, comprised of low-income pregnant and breastfeeding women, infants, and children under 5 years of age. Seventy local WIC projects (located in city and county public health departments, private non-profit organizations, and one hospital) administer WIC in designated project service areas. These services include health screening, nutrition assessment and counseling, referrals to other health and social services, and vouchers to purchase nutritious foods at authorized grocery stores and pharmacies (WIC vendors).

The Wisconsin WIC program is responsible for the authorization of some 1,000 vendors to provide food to WIC participants. Applications are screened for basic store and management information, business integrity, and the selection of WIC authorized foods at competitive prices, as determined by prices charged by all stores in a project service area.

Currently applicants for WIC vendor authorization are required under s. HFS 149.03 (2) (c) to charge a price that is no more than 115% of the average price charged for a standardized combination of foods by other applicants in the project service area in which the grocery store or pharmacy is located. The average price is determined by the Department and based on reported prices of all stores in a project service area for the standardized combination of foods during the previous 6-month period. Applications are screened for basic store and management information, business integrity, and the selection of WIC authorized foods at competitive prices as determined by prices charged by all stores in a project service area.

The Department believes that this method of computing average price may impede the ability of smaller stores to obtain or maintain WIC vendor authorization, due to the smaller stores' inability to offer prices that are competitive with that of larger stores.

The Department proposes to amend s. HFS 149. 03 (2) (c) to remove the requirement that store prices be competitive with all other stores within a project service area to require that prices be competitive with stores within its vendor peer group of similar stores located throughout the state. This change would result in the Department being able to compute average price based on reported prices of the vendor peer group and, therefore, a more equitable process for small store applicants. Prices of these stores will no longer be compared to the prices of larger stores, who can offer lower prices than their smaller counterparts due to economies of scale.

The Department also proposes to redefine the term contract period and amend s. HFS 149.03 (7) (a) to change the duration of authorization from two years to three years and to specify the beginning and ending dates of contract periods. Instead of ending on October 31 of even-numbered years, authorization would end on October 31 of every third year. This is now allowed per federal regulation and would lessen the burden of reauthorization for both the vendors and the state WIC office. In addition, the Department proposes to repeal s. HFS 149.03 (7) (d) to eliminate the one-year initial certification period. The one-year certification has not proven to be effective in addressing fraud, and is burdensome for both the vendor and the state WIC office.

A copy of the full text of the proposed rules can be obtained at no charge from the Wisconsin Administrative Rules website at http://adminrules.wisconsin.gov or by contacting Patti Herrick at the address above.

Fiscal Estimate

By eliminating the one-year contract for newly authorized vendors, and extending the vendor contract from two to three years, both the state and local WIC programs will reduce administrative expenditures associated with more frequent authorizations. Authorized grocery stores and pharmacies (WIC vendors) will also experience a slight cost savings, assuming that it cost store owners and managers time to complete the applications.

It is not possible to estimate the reduction in expenditures resulting from this administrative rule change.

A copy of the full text of the fiscal estimate may be obtained at no charge at the Wisconsin Administrative Rules website at http://adminrules.wisconsin.gov or by contacting Patti Herrick at the address above.

The proposed rule will affect industries in the Food and Beverage Stores subsector and the health and personal care stores subsector of the retail trade sector (sector 44-45) as classified by the North American Industry Classification System (NAICS).

In Wisconsin, the Food and Beverage Stores subsector includes approximately 2,372 establishments with revenues of approximately $7,830,155 and approximately 61, 524 paid employees. Industries in the Food and Beverage Stores subsector usually retail food and beverage merchandise from fixed point-of-sale locations. The specific industry group affected by the proposed rules in this subsector is grocery stores, including supermarkets and other grocery (except convenience) stores, and convenience stores. This industry group accounts for over half of the Wisconsin Food and Beverage Stores subsector, or 1,410 establishments, revenues of $7,288,475 and 56,204 paid employees.

The Health and Personal Care Stores subsector includes approximately 1,348 establishments with $1,904,229 in revenues, and 17,190 paid employees. Industries in the Health and Personal Care Stores subsector retail health and personal care merchandise from fixed point-of-sale locations. The specific industry group affected by the proposed rules in this subsector is pharmacy and drug stores which includes establishments primarily engaged in retailing prescription drugs and selling other items, such as proprietary drugs, medicines, and health and first-aid products; cosmetics; toiletries; greeting cards; magazines; tobacco; and candy; beauty preparations; household supplies; and candy and prepackaged snacks. This industry group includes approximately 724 establishments $1,646,621 in revenues and 14,058 paid employees.

As of July 21, 2005, the Department authorizes 861 grocery stores and 160 pharmacies for a total of 1,041 authorized WIC vendors. The proposed rules will affect all 1,041 currently authorized WIC vendors and approximately 1,113 potential applicants for WIC vendor authorization.

Currently applicants for WIC vendor authorization are required under s. HFS 149.03 (2) (c) to charge a price that is no more than 115% of the average price charged for a standardized combination of foods by other applicants in the project service area in which the grocery store or pharmacy is located. The average price is determined by the department and based on reported prices of all stores in a project service area for the standardized combination of foods during the previous 6-month period. Applications are screened for basic store and management information, business integrity, and the selection of WIC authorized foods at competitive prices as determined by prices charged by all stores in a project service area.

The Department believes that this method of computing average price may impede the ability smaller stores to obtain or maintain WIC vendor authorization, due to the smaller stores' inability to offer prices that are competitive with that of larger stores.

The proposed changes will allow the Department to compute average price based on reported prices of a vendor's peer group. The Department believes that the proposed method of computing average price will result in a more equitable process for small store applicants. Prices of these stores will no longer be compared to the prices of larger stores, who can offer lower prices than their smaller counterparts due to economies of scale. Also, by eliminating the one-year contract for newly authorized vendors, and extending the vendor contract from two to three years, authorized grocery stores and pharmacies (WIC vendors) will experience a slight cost savings due to the reduction in the time that vendors spend on completing applications for vendor authorization. It is not possible to estimate the reduction in expenditures resulting from this proposed change.The proposed rule does not establish operational standards, or require reporting, bookkeeping and other procedures, or use of professional skills for compliance with the rule.

Patti Herrick, Wisconsin WIC Director

1 W. Wilson St. Room 243

Madison, WI 53702

herriph@dhfs.state.wi.us

Phone: 608-266-3821

Fax: 608-266-3125

Rosie Greer

Department of Health and Family Services

1 W. Wilson St. Rm. 658

Madison, WI 53702

Greerrj@dhfs.state.wi.us

Phone: 608-266-1279

Fax: 608-267-1434

NOTICE IS GIVEN that a hearing will be held beginning on Wednesday, September 28, 2005, at 10:00 a.m. in the Amnicon Falls Hearing Room at the Public Service Commission Building, 610 North Whitney Way, Madison, Wisconsin, and continuing at times to be set by the presiding Administrative Law Judge. This building is accessible to people in wheelchairs through the Whitney Way first floor (lobby) entrance. Parking for people with disabilities is available on the south side of the building. Any person with a disability who needs additional accommodations should contact the Docket Coordinator listed below.

Any person may submit written comments on these proposed rules. The hearing record will remain open for written comments from the public, effective immediately, and until Friday, October 7, 2005, at noon or until Thursday, October 6, 2005, at noon, if filed by fax. All written comment must include a reference on the filing to docket 1-AC-217. All industry parties are required to file comments through ERF.

The Commission does not discriminate on the basis of disability in the provision of programs, services, or employment. Any person with a disability who needs accommodations to participate in this proceeding or who needs to obtain this document in a different format should contact the Docket Coordinator listed below.

October 7, 2005 – Noon