Maine has had to forfeit $1.4 million because it fell behind on its timeline to bring a nutrition program for women and young children into a paperless age. Now, Gov. Paul LePage’s administration says it has “no plan” to upgrade the program’s technology even though the state has to under federal law.

The delay is the result of an impasse between Maine Health and Human Services Commissioner Mary Mayhew — who wants to require photo identification on program benefit cards — and the federal government, as illustrated by emails and documents obtained by the BDN.

Under federal law, states must update the Special Supplemental Nutrition Program for Women, Infants and Children, or WIC, to an electronic system by 2020. The switch from the paper vouchers the program currently uses is expected to make it easier for participants to redeem their benefits, simplify transactions for grocers and reduce improper payments.

But Maine’s transition to a paperless system for WIC has stalled for the past year and a half as other states have moved ahead. That’s because Mayhew insists that Maine’s new WIC benefit cards carry participant photo IDs, despite the lack of evidence of fraud within the nutrition program for low-income pregnant, postpartum or breastfeeding women, and infants and young children that a photo ID would address.

The federal government, which covers all costs in WIC, has told Mayhew that it won’t cover the costs for the state to institute the photo-ID requirement on the basis that it is unnecessary and could discourage participation. Maine would be the only state to include photos on its WIC cards.

Research into WIC has shown that participating mothers are more likely to have healthy infant deliveries, which cost the health-care system less than births with complications; that participating infants are less likely to spend time in the hospital; and that prenatal WIC participation lowers the risk of infant mortality.

In an email to the BDN on Monday, Mayhew spokeswoman Samantha Edwards wrote, “There is no plan to transition to a WIC EBT (electronic benefits transfer) system at this time,” despite the mandate in federal law requiring the state to make the switch by Oct. 1, 2020. She didn’t respond to questions seeking more information.

‘Dormant stage’

At first, Maine DHHS was moving ahead with the required technological changes. Instead of a system based on paper vouchers that participants redeem for a narrow range of nutrient-rich foods, recipients were to begin relying on electronic benefits transfer, or EBT, technology similar to that used by food stamp recipients to redeem their benefits at the cash register.

If Maine had stuck to its timeline, it would have started the pilot phase of the new, electronic system for WIC in November 2016, in preparation for a statewide rollout starting in June 2017.

Instead, Mayhew forced the project into an indefinite pause in the summer of 2015 when she told her staff of her intention to require a photo ID on WIC benefit cards, according to correspondence obtained by the BDN through a Freedom of Information Act request. The correspondence includes emails, periodic required reports from the state, and notes from conference calls, spanning nearly a year and a half.

Maine WIC staff had to put the project on hold as they assessed the feasibility and cost of requiring photo IDs on benefit cards and sought counsel from the federal agency paying for the project. Their communications with federal staff at the Food and Nutrition Service show the following:

— In the time that’s passed since the pause began, Maine has had to forfeit $1.4 million of the $2.5 million federal grant it received to pay for the EBT transition because it hadn’t committed the money to approved expenses soon enough. In one full year with the project in “dormant stage,” Maine still spent almost $275,000 from that account, mostly to keep contractors on board. Those contractors could accomplish little with the project on hold.

— After the state gave up the $1.4 million in November 2016, it had just $300,000 on hand to cover more than $1.7 million in expected remaining expenses.

— Maine still has not secured a vendor for the EBT technology it will need to make the benefit cards operational. In fact, Maine WIC staff had solicited bids and were prepared to start negotiating with a technology vendor when Mayhew put the project on hold.

— Maine WIC staff estimate they have 18-22 months of work left to complete the project. By that time, they have told federal officials, the small number of available EBT technology vendors helping WIC programs across the country abandon paper vouchers could have limited capacity to take on another state staring down a deadline set by Congress. States are generally choosing from three vendors.

With an October 2020 deadline pending for all states to abandon paper vouchers in WIC and switch to EBT technology, the staff working on Maine’s EBT switch have expressed their concerns about a time crunch to the federal officials overseeing the EBT transition.

For their part, officials at the federal Food and Nutrition Service say they’re ready to work with Maine once the state decides to resume work on the EBT switch, and that funding is still available to the state if it requests it.

In Maine, the average value of the WIC package works out to $39.68 per person each month. The federal government covers the cost of WIC benefits and the full cost of administration — which totaled $5.5 million in Maine in 2016 — and it has set aside money each year to cover the costs for states making the switch to EBT cards.

$200,000 cost to Maine

The emails between WIC staff from Maine and federal staff at the Food and Nutrition Service show how Mayhew’s desire for photo IDs, which she made known in the summer of 2015, halted the work involved with switching Maine’s paper WIC vouchers to EBT cards. They also show that including photo IDs on the cards could ultimately cost the state money.

For instance, WIC staff in Maine had already designed the WIC benefit card before learning of Mayhew’s desire to require photos, Maine WIC Director Lisa Hodgkins told federal officials in an Aug. 13, 2015, email.

And in an Oct. 1, 2015 conference call with federal officials, Maine WIC staff said they had solicited bids from EBT technology vendors and were prepared to start negotiations with the sole bidder.

“Then we heard that our DHHS decided not to award the contract,” Hodgkins said in the call.

Hodgkins, in a report submitted to the Food and Nutrition Service on Sept. 3, 2015, estimated the photo IDs would add more than $200,000 annually to Maine’s administrative costs for WIC. The requirement could cost more if additional technological upgrades were needed, the report noted.

Even without photos on benefit cards, the report read, “The WIC program inherently has a high degree of program integrity and fraud prevention measures due to the structure of the program.”

Through WIC, participants can buy only a limited array of nutrient-rich foods meant to fill in nutritional gaps in the diets of the program’s low-income participants. The foods covered include juice, milk, fresh fruits and vegetables, whole-grain breakfast cereal and whole-wheat bread.

WIC vouchers can also cover infant formula, but the program design has changed in recent years to promote breastfeeding.

‘Potential barriers’

On Sept. 3, 2015, Maine received word from the federal government that it wouldn’t cover the cost of including photo IDs on WIC benefit cards.

“We are concerned regarding this proposal and the potential barriers it could pose to participant access to the critical services provided by WIC,” Kurt Messner, the acting Northeast regional administrator for the Food and Nutrition Service, wrote in a letter to Mayhew.

“Requiring the PIN is intended to ensure the WIC EBT card is only used by the participant or authorized proxy,” he wrote. “Adding a photograph to the card will not provide additional, functional protection and is therefore unnecessary for purposes of program integrity. Moreover, vendors are prohibited from demanding to see the participant’s WIC EBT card as part of the WIC transaction, and this is likely to cause confusion at the vendor level.”

Messner left the door open to the state covering the cost of photo IDs on its own, but he added that “the Food and Nutrition Service will not approve any policy change that would create a real or perceived barrier to the critical WIC benefits needed by the women, infants and children served by the program.”

Emails and conference call notes from the correspondence also show federal officials asking state staff how they could help with restarting the EBT switchover. They offered, for example, to meet with Mayhew and Sheryl Peavey, chief operating officer of the Maine Center for Disease Control and Prevention, where WIC is housed.

As the pause continued, Food and Nutrition Service officials grew concerned that Maine’s $2.5 million grant would lapse, and the money would return to the U.S. Treasury for Congress to reallocate. The state originally faced a Sept. 30, 2016, deadline for committing all of the money to particular expenses — essentially, “a use it or lose it” policy. If the state required it, it could take advantage of an extension that would give Maine an additional year to use the money.

“My concerns regarding this grant are increasing,” Jerilyn Malliet, chief of the state technology branch at Food and Nutrition Service offices in Washington, D.C., wrote in a March 22, 2016, email to colleagues in which she raised the possibility of an extension for Maine’s grant.

“(W)e lose it now, or we lose it later,” she wrote.

The Food and Nutrition Service approved an extension on June 20, 2016. But federal officials remained concerned that the state, with its EBT switch so far behind schedule, would be unable to spend the money promptly enough to avoid losing it, even with an extra year’s reprieve.

At the start of October 2016, the Food and Nutrition Service and Maine staff agreed on a plan to keep the money within the federal WIC program: Maine would transfer $1.4 million to a multi-state consortium, called SPIRIT, that operates the management information system that Maine and a handful of other states rely on for operating WIC.

The $1.4 million — which was the amount Maine had set aside for the technology vendor it had put off hiring — would “support necessary system changes to the SPIRIT Management Information System,” Food and Nutrition Service spokeswoman Jane Francis wrote in an email to the BDN. It would no longer be available to Maine for the state to use on its change to EBT.

After the federal government signed off on that transfer on Nov. 3, 2016, Maine had about $300,000 remaining from its $2.5 million grant — far from enough to complete the switch to EBT.

There’s still time for Maine to meet the 2020 deadline specified in federal law, said Francis, the Food and Nutrition Service spokeswoman. Congress set that deadline as part of the Healthy Hunger-Free Kids Act, which President Barack Obama signed into law in late 2010.

Francis added that money will be available to Maine “to fund allowable expenses” when the state resumes its transition to EBT cards.

But it’s unclear when, or if, that will happen, with Maine DHHS now saying it has no plans to transition to EBT cards for WIC.

The federal EBT mandate applies to every state. The law allows states exemptions from the mandate in some instances — for example, if a state experiences technical barriers or finds the new technology is unaffordable — but the exemption lasts up to three years, during which states are required to continue moving toward EBT technology.

Edwards, the DHHS spokeswoman, didn’t respond to a question from the BDN asking if Maine planned to apply for an exemption.

If a state doesn’t comply with the mandate, “FNS will review the circumstances on a case-by-case basis and take the appropriate administrative actions as needed,” Cynthia Tackett, a Food and Nutrition Service spokeswoman, wrote in an email.

‘Interested in seeing a swift transition’

While Maine hasn’t been on the leading edge of states switching to EBT technology, the state’s WIC staff have been planning for the change for years.

“Some states were more aggressive in moving to EBT than others for a whole range of reasons,” said Douglas Greenaway, executive director of the National WIC Association in Washington, D.C., which represents WIC program directors from across the nation. “It was strongly felt by our community that if we’re going to improve the client’s customer service experience, then everybody needs to be on EBT.”

In 2010, Maine received a $227,000 federal grant to cover the costs of planning for the new system. Three years later, Maine received its $2.5 million technology grant to fund the switch to EBT.

As of last month, 20 states and four Native American tribes that run WIC programs had completed the switch. Maine is among the 37 states, tribes and territories officially in the implementation stage. WIC programs run by the Passamaquoddy Tribe at Pleasant Point Reservation and Indian Township in Washington County are in the planning stage.

“We know it’s just been on hold, and we’re waiting for the go-ahead from the state,” said Patty Hamilton, director of Bangor Public Health and Community Services, which serves WIC participants in Penobscot and Piscataquis counties. “We’re ready, and we’re excited for the transition when it comes.”

More than 20,000 low-income women and children in Maine receive WIC services, which include nutrition education at local clinics and paper vouchers that participants redeem for food at participating retailers.

Participants receive those vouchers at their local WIC clinic; they come in a folder that carries the signatures of household members authorized to make purchases.

In the checkout line, customers are expected to sign the paper vouchers, and cashiers are expected to verify that the signature matches one of the valid signatures on the clinic-issued folder. Cashiers are also expected to mark on the voucher which items the WIC participant has purchased.

The Maine retailers who accept WIC vouchers are looking forward to a change to the EBT system, said Shelley Doak, executive director of the Maine Grocers and Food Producers Association.

“Certainly, our multi-state operators are very interested in seeing a swift transition because they’ve seen how efficient EBT cards [are],” Doak said. “It eliminates the stigma on their customer and provides not only for efficiencies, but accuracy in that transaction.”

‘Another punishment’

The push for a photo ID on benefit cards in the name of fraud prevention isn’t new for the administration of Maine Gov. Paul LePage. Currently, food stamp recipients have the option of having their photos taken and placed on their EBT cards.

In 2015, about a third of food stamp recipients had photos on their cards, according to the Maine Department of Health and Human Services.

The LePage administration tried to make the photo ID a requirement for EBT cards in 2012, and federal officials wouldn’t allow it. The U.S. Department of Agriculture last month finalized rules for states seeking to place recipient photos on EBT cards, clarifying that they can’t condition an applicant’s eligibility for benefits on their willingness to place a photo on their EBT card.

When it comes to the use of photos on EBT cards for WIC, Maine is the only state pursuing this option, according to both the federal Food and Nutrition Service and state-level WIC staff in Maine.

“This is another punishment of people who are availing themselves of public assistance,” said Greenaway of the National WIC Association. “For God’s sake, it’s a $45 food package.”

With food stamps, multiple states that have placed photos on EBT cards have found that the practice cost more than it saved. For example, a 2015 Urban Institute analysis of a photo EBT program for food stamp recipients in Massachusetts concluded that the photos needlessly added to administrative costs for the state and federal governments, and sometimes made it more difficult for eligible residents to obtain benefits.

Plus, the Urban Institute concluded, there was little chance photos would “meaningfully reduce card trafficking, given that such trafficking involves the complicity of individuals and retailers for whom a photo on the card will not act as a deterrent.”

In addition, individual EBT cards often serve households with multiple members who are allowed to use them for groceries. And retailers, the Urban Institute found, seldom checked the photos.

Retailers are required to treat food stamp customers as they treat all others, so if they examined every EBT card, they would have to examine all customers’ credit or debit cards.

With EBT cards in WIC, Messner of the Food and Nutrition Service’s Boston office wrote to Mayhew in September 2015 that “vendors are prohibited from demanding to see the participant’s WIC EBT card as part of the WIC transaction.”

Formula sales, program errors

It’s unclear how photo IDs would address the primary concerns about program integrity in WIC.

One of those concerns is the sale of infant formula that WIC participants purchase using program benefits, which is illegal.

In 2014, the U.S. Government Accountability Office surveyed a dozen states to determine how frequently WIC participants bought infant formula using the benefits and then resold it. In the three states they surveyed that had monitored this practice closely, officials said they found less than 0.5 percent of WIC participants attempting to sell formula online. GAO auditors were able to document two instances of online WIC formula sales in monitoring e-commerce sites for 30 days in four large metropolitan areas.

Plus, over time, the U.S. Department of Agriculture has redesigned the WIC food package to emphasize breastfeeding, covering smaller amounts of formula for infants who are partially breastfed and more fruits, vegetables and whole grains.

Between 2000 and 2012, the portion of WIC infants whose mothers breastfed them rose to 67.1 percent from 44.5 percent, research performed for the USDA has shown.

The other main program integrity concern, improper payments, is one of the reasons behind the switch to EBT in WIC.

In 2013, researchers working for a USDA contractor used undercover shoppers to test how well more than 1,900 retailers adhered to WIC rules. They found that the use of EBT cards — without photos — substantially reduced the likelihood of a retailer allowing a WIC participant to purchase an unauthorized item.

In states where WIC participants still used paper vouchers, the undercover shoppers found that 20.2 percent of retailers allowed minor substitutions — charging an unauthorized food to WIC that’s similar to a food covered by the program. In EBT states, only 7.3 percent of vendors allowed them.

Above all, said Greenaway of the National WIC Association, the change to EBT in WIC nationwide is about making the program easier for participants to use — a change that now isn’t on the horizon in Maine.

“If you talk to any WIC consumer, you soon discover that the most difficult part of participating in the program is the retail shopping experience,” Greenaway said. “If we’re going to keep moms and kids on the program to improve their nutritional health and well being, that’s the one glitch that has to be straightened out.”

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