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Public Sector Applications of the ESD Concept Outside of Texas

Note: To help the reader navigate this report, a chart of acronyms is provided at the beginning of Chapter 2 in Exhibit 1 .

2.5. Public Sector Applications of the ESD Concept Outside of Texas

The use of EBT as an ESD method to deliver Food Stamp benefits has become the norm rather than the exception. By 2002, all states' Food Stamp programs are required to implement card-based EBT systems. 8 A few states, including Texas, are working on their "second generation" of Food Stamp EBT systems.

EBT/ESD technology in the WIC program is less well developed than in Food Stamps. Only one state, Wyoming, is currently implementing WIC EBT/ESD statewide. Wyoming's first WIC demonstration project proved the feasibility of using smart cards for delivery of WIC benefits. A second, larger demonstration project, dubbed the "PayWest" card, validated the success of the first pilot. Based on the positive outcome of these demonstrations, Wyoming is now rolling out a statewide, smart card-based WIC and Food Stamp EBT system. Nevada is testing WIC EBT/ESD in its pilot site for the Western Governor's Association Health Passport Project described below. The pilot site began issuing WIC food benefits through EBT/ESD in June 2000. 9

Ohio and Wyoming have adopted a smart card approach for Food Stamps, and Ohio is currently in user acceptance testing for a smart card WIC pilot. The Texas and New Mexico WIC programs have issued a joint Request for Offers (RFO) for a card integrator to assist in developing a pilot EBT/ESD project for the two states using a hybrid card. The Texas and New Mexico pilots will be located in El Paso and Truth or Consequences, respectively. 10

ESD applications in the Medicaid program, in the form of electronic eligibility verification systems employing magnetic stripe cards, are widespread, with 20 states currently using or in the process of implementing such a system. To date, these ESD applications are stand-alone systems, with no connection to other EBT or ESD systems.

Beyond these examples, the use of the ESD concept in other states is fairly limited, with most potential applications still in the planning or pilot stages. As part of the data collection process for this report, a survey of states was conducted and additional research was obtained through Internet searches and contacts with other states. The results of the research are provided in Exhibit 2, "State Use of EBT and ESD." A more detailed, summary description of several significant initiatives is provided following the exhibit.

Exhibit 2
State Programs Operational
or in Pilot
Programs being Planned
or Explored
Additional Comments
Alabama FS; TANF and child support Childcare SAS
Alaska FS   WSEA/WGA (Colorado Procurement)
Arizona FS, TANF, GA, LTC Training-related payments; childcare WSEA/WGA (Colorado Procurement)
Arkansas FS and TANF None SAS
California FS FS and cash assistance WGA
Colorado FS, TANF, ABD, energy assistance, childcare, adoption & foster care subsidies Child support WSEA
Connecticut GA, FS, TANF and child support disregard for TANF recipients WIC NCS
Delaware Direct deposit for childcare, vendors FS; child support, TANF, GA, child support MARC
District of Columbia FS, Farmers' market   MARC
Florida FS, Medicaid ID on card Farmers' market with wireless terminals  
Georgia FS, TANF   SAS
Guam none   WGA
Hawaii FS, TANF, GA, ABD, childcare Farmers' market, WIC WSEA/WGA (Colorado Procurement)
Idaho FS,TANF, state supplemental payments, child support Childcare, Medicaid WSEA/WGA (Colorado Procurement)
Illinois FS, TANF, elderly assistance, refugee and migrant assist Medicaid  
Indiana None FS and cash programs  
Iowa FS (small pilot)    
Kansas FS and cash assistance WIC, unemployment insurance WGA
Kentucky FS   SAS
Louisiana FS    
Maine None FS, WIC, farmers' market NCS, Partners Project
Maryland FS, TANF, GA, child support   Maryland was the 1st statewide EBT system
Massachusetts FS and supplemental food benefits to legal immigrants WIC NCS; Partners Project
Michigan FS and cash programs WIC  
Minnesota TANF, FS Child support Choice of warrant or Direct Deposit for TANF
Mississippi None FS, TANF, child support, childcare, Medicaid, CHIP SAS
Missouri FS,TANF, Direct Deposit as an option for child support Other states and employers transmit to state or from state via EFT/EDI child support SAS
Montana None Feasibility Study WGA
Nebraska None FS, cash programs, childcare WGA; teaming with Minnesota
Nevada WIC, Intertribal Council, Head Start, Immunization   WGA; HPP; WSEA (Colorado Procurement)
New Hampshire FS WIC, Head Start, FMNP and lead screening Partners Project; NCS
New Jersey FS, TANF WIC, Medicaid, transportation MARC
New Mexico FS, paper scripts for farmers' market at POS terminals WIC, time and attendance tracking for employment and training WGA
New York FS, TANF, GA, child support disregard, energy assistance Farmers' market, EBT-GA restricted, Safety Net restricted cash, SSI State Supplement, WIC NCS
North Carolina FS   SAS
North Dakota FS, WIC, immunization, Medicaid ID and Headstart   WGA, partnered with South Dakota, HPP
Oklahoma FS Med ID  
Oregon FS    
Pennsylvania FS   First EBT demo in the US; MARC
Puerto Rico Economic assistance, food stamps WIC and unemployment insurance benefits  
Rhode Island FS, TANF WIC, farmers' market, childcare, bus passes NCS, Partners Project
South Carolina FS    
South Dakota FS, state supplemental payment, energy assistance, childcare providers, assisted living facilities, child support, Med ID cards CTX format for child support, DD-homemaker providers, respite care, Adult Day Care providers, time and attendance on Web for childcare, childcare notices via e-mail WGA/FS partnered with North Dakota
Tennessee FS   SAS
Texas FS, TANF Joint WIC project with New Mexico, developing 10 year strategic plan for ESD WGA
Utah FS, TANF, GA, refugee assistance, energy assistance, child support Direct deposit unemployment payments WGA
Vermont FS WIC health data, immunization, EPSDT, private medical docs NCS, Partners Project
Virgin Islands None FS  
Virginia None FS, TANF MARC
Washington FS, TANF, GA, emergency assistance, refugee assistance SSI food benefits assistance, payments to WorkFirst clients, Med ID, childcare tracking and provider payments and payments to Voc. Rehab clients Option of Direct Deposit for all recipients of EBT cash benefits
West Virginia FS, TANF Med ID, childcare time and attendance SAS
Wisconsin FS and cash programs    
Wyoming FS, Health Passport card in pilot area includes WIC health and demographic data, also medical information shared with private physicians and immunizations, Maternal and Child Health programs, public health nursing, Headstart WIC appointments and WIC transfer information, Medicaid, childcare WGA, HPP
Navajo Indian Nation (in the states of Arizona Colorado, Utah and New Mexico None FS and cash assistance  
NCS = Northeast Coalition of States
MARC = Mid-Atlantic Regional Coalition
SAS = Southern Alliance of States
HPP = Health Passport Project
WSEA = Western State EBT Alliance
NEPP = New England Partners Project
WGA = Western Governors Association

Legend: FS - Food Stamps Program
TANF - Temporary Assistance for Needy Families Program
GA - General Assistance
LTC - Long Term Care
ABD - Aged, Blind, and Disabled Services

Source: Texas Comptroller of Public Accounts, survey, July 2000.

2.5.1. Western Governors' Association Health Passport Project

The Western Governors' Association's (WGA) Health Passport Project (HPP) represents a significant step in the use of ESD, especially for the WIC Program. The HPP incorporates multiple health and human service programs onto one card and is also a multi-state project, including North Dakota, Nevada, and Wyoming. Three pilot sites were chosen to participate in the HPP: Bismarck, North Dakota; Reno, Nevada; and Cheyenne, Wyoming. The programs included are WIC, Head Start, Immunization, Maternal and Child Health, and Medicaid. 11

The HPP has four key goals:

  • Reduce health-care costs, both in terms of time and money for the participants and providers;
  • Allow participants of the public health programs named above to carry their health data and the health data of their children on a smart card and to have access to that data when needed;
  • Give participants control over the information (by restricting access to the data on the card without the PIN entry of the cardholder, the health and benefit data on the card remains secure); and
  • Improve customer satisfaction with public health services.

Meeting these goals is expected to result in better client health because all participating providers will share health data, reducing the number of unnecessary duplicated medical tests and paperwork, faster check-ins for clients, and faster processing of payments to vendors. The project is an example of multiple programs coordinating to allow for shared clients to use the same card and equipment to access program benefits and provide health information and program authorization.

Use of the Health Passport card for transfer of food benefits for WIC is being tested as part of the Nevada and Wyoming projects. Since EBT is already part of the WIC program in Cheyenne, the WIC participants who have a PayWest card will be asked to exchange that card for the Health Passport card. This will allow them to continue the purchase of their WIC foods with a smart card in the same manner as they did with their PayWest card, and to have the additional health data available to them on their Health Passport card. Nevada began issuing cards on June 1, 2000 to WIC participants, allowing them to purchase WIC food with the cards.

Cardholders can use their card at point-of-sale (POS) terminals at WIC authorized grocery stores to obtain their WIC food benefits and at kiosks to check their WIC food balance. The card holder can also use a kiosk to access other pertinent data including a child's immunization status, other health information, and reminders of any upcoming appointments with the participating programs.

A significant challenge faced by the Health Passport development team has been the coordination of the information needs of several programs. Health Passport participants also face a challenge with the need to use multiple cards per family. The decision was made to place the WIC food benefits on the head of household card because of the amount of data being collected and stored on the card. However, each child receives a separate card with his or her individual health data. This approach to card issuance has not been tested sufficiently to know if the advantages outweigh the disadvantages, but the Health Passport Project will provide a good opportunity to evaluate the impact of the issuance of multiple cards per family.

The Health Passport system is currently in Phase I of operations with Phase II plans underway. Phase II will incorporate advanced smart card features for secure authentication and real time patient record retrieval via the Internet, and includes two applications.

  • Web-based patient account. This is a database of patient information accessible via the Internet through a Web-browser application. The card carries a digital certificate that provides identity for the patient and/or the provider. This Web-based application would determine the access privileges and the identity from the card. Once this is done, the application would pull the pertinent data for the client and the program then displays the information through the patient account. This method assures the most up-to-date information for each client from the multiple programs' systems in which the client participates.
  • Shared information by different programs. The second application is the expansion of Phase I that allows information which is card based to be shared by the different programs. Health Passport will soon have a new partner, the U.S. Department of Defense (DoD). The DoD demonstration project will take place in Pearl Harbor, Hawaii and possibly San Diego, California. The Health Passport Card in these locations will be issued to WIC participants, who are also military dependents.

The HPP evaluation is a little more than halfway completed. At the end of the two-year project a complete evaluation by an independent contractor will take place. Based on the evaluation, the decision will be made to: 1) maintain the project at a similar size; 2) begin rolling out all programs in all three states; 3) expand the project scope with possible transfer to other programs and other states; or 4) dissolve the current pilot project. The evaluation of the WGA HPP holds a particular significance to Texas because it has similar goals to the Texas WIC EBT/ESD project.

2.5.2. New England Partners

This project is a joint initiative among the six New England states of New Hampshire, Maine, Massachusetts, Connecticut, Rhode Island and Vermont to develop and implement a smart card-based electronic service delivery system for several public health and social services programs. 12 The programs to be included are:

  • WIC (as the lead program);
  • WIC Farmer's Market Nutrition Program (FMNP);
  • Immunization Program;
  • Head Start; and
  • Early and Periodic Screening, Diagnosis, and Treatment Program (EPSDT).

Although WIC will participate in every state, each state will test a different combination of programs. Access to the information on the card will be controlled by the client's personal identification number (PIN) entry. The U.S. Department of Agriculture (USDA) provided a grant to obtain a planning contractor and an ESD implementation contractor. An executive committee, with representatives from each participating state, will receive guidance throughout the project from an Advisory Council consisting of the program directors from the different programs involved, the retailers, and the federal agency staff.

The PARTNERS card will contain data shared by the participating programs, but there will be no central database of this information. The card functions as a portable health record which the client can carry between providers. The client maintains control of, and access to, the information held on the card, and each program will be able to read and write only to identified portions of the record on the card.

The pilot is currently planned for a 42-month life cycle with development to begin in May 2001 and
pilot implementation in 2002. An independent evaluation contractor will be hired to provide a recommendation regarding roll out of the project throughout the rest of the states and to determine if further expansion of the number and scope of programs should be included. If the program was rolled out statewide in its present configuration, it would serve an estimated 280,000 families. The long-term objectives of the project are:

  • Use ESD to streamline the business practices of the participating programs;
  • Deliver WIC benefits and reconcile payment through a paperless EBT system;
  • Improve client services and dignity through greater shopping convenience;
  • Increase accountability and program integrity;
  • Make WIC benefit redemption and payments more efficient for retailers;
  • Increase WIC's speed, efficiency, and accuracy through ESD technology; and
  • Improve coordination of participating programs for both the program staff and the clients.

2.5.3. Ohio Food Stamp and WIC Programs

Ohio was the first state to use a smart card to deliver Food Stamp benefits, and is now planning a pilot to deliver WIC food prescriptions through the same card. If successful, this will allow WIC participants to use their card and PIN to access their benefits from either program using the same hardware at the retailer. Ohio is currently in user acceptance testing for the Ohio Direction Card system. The basic software design to be used is the Wyoming WIC system, and the processing contractor is the same for both states. 13

2.5.4. New Jersey WIC Access Project

The New Jersey WIC Program plans to issue an RFP to obtain a contractor to transfer and modify an EBT/ESD system, and to install, operate, and maintain that system. A unique factor of this RFP is that it is seeking donor systems (systems that exist in some other state and are considered in the public domain) and asking bidders for a new form of costing. Rather than requesting a fixed price or a form of caseload month price, as typically used, bidders are asked to cost out approximately fifty different items, including a cost per card, a cost per day's worth of reports, and a cost per transaction on the card. The RFP is currently waiting on federal review.

New Jersey plans to use a hybrid card (a combination of a smart card and magnetic stripe card) for a variety of health care partner functions including verification of Medicaid eligibility, and for recipients to access Food Stamp and TANF benefits. Card readers will be installed at Medicaid providers and WIC authorized retailers participating in the pilot. 14

2.5.5. Michigan WIC Project

Michigan received funding from the U.S. Department of Agriculture to develop a magnetic-stripe approach to delivering WIC program benefits. Michigan plans to develop the technical and programmatic operational plan from October 2000 until Fall 2001. This approach would be developed in cooperation with stores that have existing computer systems that could support the prescription requirements of the WIC program. A pilot for this new approach is scheduled for Fall 2001. The advantage to this approach is that it uses equipment and technology that is for the most part already deployed in grocery stores.

2.5.6. Texas and New Mexico WIC Programs

The Texas and New Mexico WIC Programs have teamed to conduct a pilot EBT project in El Paso, Texas and Truth or Consequences, New Mexico. (Although not strictly an example of projects from other states, this project is included here because it is one of the first WIC EBT/ESD pilots.) The two programs released a Request for Offers (RFO) for a single prime vendor approximately one year ago, but received no responsive bids. The approach has now been modified to allow the states to function as their own prime contractor. An RFO for a card integrator was released in June 2000. The pilot is planned to include approximately 40,000 WIC participants and is expected to use a smart card with PIN access. Implementation of the pilot is scheduled to begin in 2001. 15

Many of the projects cited above have involved the WIC Program with USDA as the major funding source. USDA has provided $20 million in special grant funds to date for WIC ESD system initiatives for capital investment. However, USDA specifies that ongoing support of these systems must be with the regular WIC operating funding. 16

2.5.7. Oklahoma e-Childcare

An audit conducted by the Oklahoma childcare program in 1999 discovered over $1 million in overpayments to providers, resulting from inaccurate tracking of attendance and payment processing. 17 The state sought a more efficient system from their current EBT provider for welfare services. Oklahoma's contractor developed a system for electronically tracking attendance, using the existing Food Stamp and TANF magnetic stripe card for accessing an Intranet Web site. As part of the development costs, the state provided the POS devices for providers. The system requires that a parent or authorized representative physically enter the day care center to swipe the card and enter their PIN at least once every 10 days. Tying the benefits to the EBT card for Food Stamp and TANF cases should reduce the likelihood that the parent will leave the card with the provider. Their program, called e-Childcare, was implemented August 1, 2000. The system is expected to allow for faster payments to providers and significantly reduce overpayments. Sources of program funds can also be tracked and charged appropriately. 18

2.5.8. Comprehensive Attendance Administration and Security System (CAASS)

A system of student identification and validation of attendance has been implemented in the Philadelphia public school system as well as in six Maryland schools and some Massachusetts schools. Students swipe a bar-coded card as they enter or leave any school entrance. The date and time is recorded each time and entered into a central database at the school. If the system recorded an unexcused absence for a student on the previous day, the system emits the sound of a rooster crowing. At that point, a faculty member monitoring school entrances intervenes and counsels the student. The program sounds applause when a student with a good attendance record for the previous month enters the building. Students currently suspended are identified and not allowed entry. An additional feature allows parents with an internet service provider (ISP) access to a Web site where they can check the daily attendance of their child. The cards are also used in the public libraries for access to services and to record attendance there.

The system is well received by students, parents, and school faculties. It has reduced truancy and increased security by making it more difficult for outsiders to gain entry. The costs are minimal for this application and initial expenses have been recovered in the first year by the reduction of staff time formerly required to compile attendance records and tracking procedures. 19

2.5.9. Military Applications of ESD

One of the federal government's strongest proponents of the use of smart cards has been the military, with a multi-technology automated reader card (MARC) application administered by the Department of Defense (DoD). Within the DoD, the Department of the Navy has been designated the executive agent for smart cards. Distribution of cards began in 1992 and became widespread throughout the military by 1997. The Navy is providing the necessary planning, with the hopes of providing interoperability (operates in multiple locations such as in other states or on other bases) for their multi-application card throughout the military. Their goal is complete interoperability for any chip, any card, any reader, and any host, although it is recognized that this will be a difficult task.

Card usage will include checking out weapons, entry to mess halls, deployment of troops, cash cards, and other service authorizations. A significant advantage of the smart card for DoD is the projected time savings. The goal of the Navy is to reduce deployment time from six or eight hours to 45 minutes. DoD estimates it will eventually use up to 40 million cards. 20

2.5.10. Federal Government Initiatives

Some of the most diverse uses of card technology are the projects planned by the federal government's General Services Administration (GSA). GSA awarded a $1.5 billion contract to five vendors in May 2000 for the government-wide Smart Access Common ID. The goals of these projects are to develop interoperable application specifications, establish a set of core requirements with value-added services, and build in the capability to add new applications and migrate to advanced technologies over time. Employees will use the card resulting from these projects for access to facilities and automated systems. 21

The functionality on the cards includes:

  • Identification;
  • Building access control;
  • System (network) control;
  • Biometrics;
  • Digital signature; and
  • Other value-added services such as training certification, property and inventory control, and medical information).

One pilot project has distributed a number of smart cards to Government employees. The card contains:

  • An identification badge with picture, signature and encoded security information;
  • A calling card;
  • A travel card;
  • Biometrics information for computer and building access;
  • An American Airlines pass for direct boarding at the gate; and
  • A property pass which allows an employee to bring certain personal property into their office.

An important aspect of the project is to make the card interoperable with a multitude of card readers. Each participating agency will, however, be able to maintain a unique identifier allowing tracking of activities by agency.

GSA and Citibank are also piloting a project called SmartPay, the next generation of travel, purchase, and fleet card contracts. This project is a multi-billion dollar procurement for federal government travel, fleet, and fuel cards.

The technology for use with the GSA cards is magnetic stripe for the financial transactions, radio frequency for the building access, digitized certificate biometrics for identification, and an integrated circuit (IC) card (chip) for information storage.

Piloting has begun on some phases of the GSA cards; however, several aspects of the card usage are still in the planning phase. In addition to the GSA projects, a number of smaller applications are being explored by other federal agencies. Examples include:

  • The Department of Housing and Urban Development (HUD) is piloting an Access/ID Card. The card will provide HUD employees with photo identification and physical access to HUD headquarters buildings. 22
  • The U.S. Department of Transportation (DOT) delivered a report of a feasibility study in 1996 on the use of smart cards for commercial vehicle operations including driver's license, smart vehicle cards providing secure assess to a vehicle, and electronic toll collection. The report provides information that each of these functions of a smart card is possible. It also provides a migration path and a cost benefit analysis of several smart card applications. DOT is planning a project to provide program management support for technical assistance, outreach, and development of functional requirements and specifications for transit fare collection systems. 23
  • The Social Security Administration (SSA) is planning a project to use smart cards to track information regarding surplus property that is eligible for removal from government facilities. 24
  • The Veterans' Administration (VA) in Tampa, Florida and the Bronx, New York provides patients and VA personnel with a card that provides identification and stored value for purchases. 25

All of these projects are either in the early stages of piloting or are still in the planning and development stage. Additional information can be obtained on these projects on the Web site -

2.5.11. Campus Cards

A large number of universities are using or planning to use campus cards for access, identification, and debit accounts. Currently, there are about 2,200 college card programs, mostly employing magnetic stripe and bar code technology, although the use of smart cards is expanding to uses such as an electronic purse (stored value card). Several universities in Texas have or are in the process of developing such applications. 26

2.5.12. Transit Projects

It is estimated that by the end of 2000, there will be about 50 million contactless cards in use around the world, primarily in transit applications, with another 5 to 10 million cards to be used with a dual transit and bankcard interface. 27

Most transit applications use contactless smart cards, also known as proximity cards. Public transportation payment systems must be very fast to use, in addition to secure and convenient. Traditional card systems that require inserting a card into a reader and processing a transaction require a minimum of several seconds (four or five seconds to insert a card and another two seconds to process the transaction). A contactless card merely has to be passed by (in the proximity of) the reader, and a transaction can occur in about 250 milliseconds.

The Washington, D.C. transit system implemented a pilot project and has issued more than 60,000 contactless smart cards in the first year. The San Francisco area transit system will begin using contactless smart cards in the fall, 2000. 28

2.5.13. International Applications

The majority of both contactless and contact-type smart cards are being used, or planned for use, in Europe and Asia. The first transit system applications of this type were installed in Seoul and Hong Kong. In 1999, Hong Kong's transit system averaged 30 million transactions a week. Seoul's system averaged 80 million transactions a month. 29

Other international transit systems planning to implement contactless cards are Berlin, the Netherlands, London, and Rome. Some of these systems plan to incorporate bank debit cards. 30

One of the most ambitious card projects is a smart card-based health card in France. The plan is to provide a smart card to all thirty-five million families in France. Another 300,000 cards will be issued to each doctor or health care professional. There is also a multi-country health card, the G7 Healthcard, in the planning stages. 31