WPM 2024-2: Vendor Cost Containment Certification Clarification for the Initial Authorization of Above-50-Percent Vendors

This policy memorandum provides clarification to WIC state agencies on the initial authorization of vendors that derive more than 50 percent of their annual food sales revenue from WIC (above-50-percent or A50 vendors) as well as information on the requirements for A50 vendors following authorization.

Prior to authorizing A50 vendors, state agencies must submit information to FNS demonstrating their competitive price selection criteria (CPSC) and maximum allowable reimbursement levels (MARLs) will not result in higher average payments for A50 vendors than average payments to comparable regular (non-A50) vendors. ¹ WIC regulations establish a procedure for calculating average payments by assessing redemption data of A50 and comparable vendors.

FNS recognizes WIC redemption data are only available for vendors currently participating in the program. State agencies without any A50 vendors authorized to transact WIC benefits cannot obtain this information. WIC state agencies requesting initial certification to authorize A50 vendors must therefore submit their proposed cost containment methodology outlining how they plan to calculate average payments in compliance with 7 CFR 246.12(g)(4)(vi), once the appropriate redemption data is available. If FNS determines the state agency’s proposed methodology fulfills the requirements, then FNS will certify that the state agency's CPSC and MARLs will not result in higher average payments for A50 vendors than average payments to comparable regular vendors.¹

All recertifications must continue to submit redemption data and related calculations per the requirements of 7 CFR 246.12(g)(4)(vi).

Once the cost containment certification is provided, WIC state agencies that choose to authorize A50 vendors must ensure the prices of A50 vendors do not inflate the CPSC and MARLS for the applicable peer groups or result in higher total food costs if program participants shop at A50 vendors rather than at regular vendors. ²

To monitor compliance, any WIC state agency authorizing A50 vendors must compute statewide average costs at least quarterly. ² If a quarterly cost neutrality assessment shows that payments to A50 vendors exceed payments to regular vendors, the WIC state agency must take necessary action to ensure compliance, such as adjusting payment levels.² FNS may require annual updates of selected redemption data,¹ including quarterly cost neutrality assessments. At least every three years following initial certification, the state agency must submit recertification information to demonstrate that it continues to ensure average payments to A50 vendors are not higher than to regular vendors. ¹ If FNS determines that a state agency has failed to ensure cost neutrality, FNS will establish a claim against the state agency to recover excess food funds expended and will require remedial action. ²

Any WIC state agency with questions regarding this guidance should contact its respective FNS regional office.

Sara Olson
Director
Policy Division
Supplemental Nutrition and Safety Programs

¹ 7 CFR 246.12(g)(4)(vi)
² 7 CFR 246.12(g)(4)(i)(D)