LSG2: Expansion of ESD
Note: To help the reader navigate this report, a chart of acronyms is provided at the beginning of Chapter 2 in Exhibit 1 .
3.2 LSG2: Expansion of ESD
TESD project research supports a different direction for the second stage of the strategic plan for ESD. For clarity, the basics of LSG2 will be first described in a general overview, which will be followed by the specific recommendations.
To take full advantage of the possibilities for ESD, it would be necessary to develop a card that contains multiple technologies. The hybrid card proposed for LSG2 specifies a magnetic stripe, a microprocessor chip, and a biometric measurement of the cardholder. While some applications or service access can and should be combined on a single card, it is neither feasible nor useful to attempt to combine every possible application on one card. Given the applications that will be recommended below, two cards would be appropriate at the LSG2 stage: one card that transitions all LSG1 applications to a multiple technology LSG2 card and applies ESD to additional population groups; and another card that targets a second population group-state employees. The first card is characterized by HHSC-related programs and certain cash and information transactions and, for this report, will be labeled the Benefits Transfer Card. The second card will be labeled the State Employee Card and will incorporate a number of authorization, security, and data sharing applications. Additional cards may be appropriate as the system expands.
Because of the expanse of the proposed ESD system and the number of functions that cross agency and program lines, the administration and operation of the ESD system is critical. There would need to be an administrative structure in place that can support the complete ESD system and an operational strategy that can focus on the specific functions and maintain the integrity of the components. Recommendations for both administration and operation are described below.
The recommendations contained in LSG2 would require modifications to existing systems or development of new systems. Examples of these include the state employee database, tracking and payment systems, and any other systems that the state chooses to include in the LSG2 environment. This should become more clearly defined in discussions below as the recommendations are explained. While some of the work could be performed independently of other elements, there must be coordination of the efforts and a central decision-making agency. In the proposed system, there are two organizational levels.
A. The state should establish an ESD Task Force, effective September 1, 2001, as the first level of the organizational structure for the ESD system. This task force should be responsible for ensuring that the issues, concerns, and recommendations of groups represented by the members and other stakeholders are heard and considered by the full task force. The current EBT task force could be the base for the ESD Task Force, but membership should be expanded. All state agencies that deliver the programs involved in the proposed ESD applications, other stakeholders such as medical associations, and users of the applications should have representation to ensure their needs and interests are addressed. The focus of the ESD Task Force would be different from the EBT Task Force, because the ESD Task Force would not set standards and rules as done by the current task force. The ESD Task Force would function in an oversight and advisory role. B. The state should designate an administrative agency by September 1, 2001, as the second level of the structure. This agency would function as the decision making body and have coordination responsibility for the ESD system. The agency, in coordination with the chair of the ESD Task Force, would be responsible for authorizing membership to the ESD Task Force. The agency would also be responsible for setting standards and technical specifications, assurance of statewide procurement opportunities, approval of new application plans, multi-agency coordination, and management and protection of the various stakeholder interests. In addition, this agency would function as the system integrator and operational entity for the ESD core systems for LSG2 operations. DIR would also serve as the system integrator and operational entity for LSG1 operations after the consolidation of TDHS and TDH operations occurs. DIR would also provide for LSG2 applications initially and LSG1 applications. DIR would resolve issues including when programs are transferred and security. After LSGI operations are transferred, DIR would be responsible for quality, performance, financial monitoring, and transferred contract management-such as card issuance, host operations, and call centers, and planning and development of new and enhanced systems. It would work with program staff from other agencies to provide ESD services to populations served by those programs. By assigning these responsibilities within a single administrative agency, the state would be in a position to leverage the best costs and benefits of ESD and ensure new ESD initiatives fit within the defined standards and structure.
The administrative organization should be an objective entity with statewide responsibilities for similar technologies, and would not necessarily have operational authority for any particular card application. The task force and the participating agencies would provide input to the administrative agency, however, final authority would rest with the administrative agency.
The Department of Information Resources has statewide responsibility and does not administer any of the proposed ESD programs. In addition, this agency has oversight and coordination responsibilities now for statewide automation initiatives. Based on these conditions, DIR would seem to be the best choice for this responsibility and is in a position to provide the administrative structure required to support the proposed ESD system. Designation of DIR as the administrative agency is recommended.
To assume these responsibilities, DIR would require additional staff. Some of these staffing needs would be addressed by moving staff from other agencies that are currently involved with the individual ESD initiatives. This would include EBT2 and WIC staff, and the staff who would be allocated to develop the LSG1 initiative. Consideration should also be given to adding three to four FTEs for overall project management responsibilities. In considering other staffing needs, it is expected that much of the work would be completed by stakeholder-staffed workgroups. DIR has suggested that ESD be established as a separate project, and this recommendation supports that suggestion.
Both the ESD Task Force and the administrative agency should be in place by September 1, 2001, following the legislative authorization. Once these are in place, the first order of business should be development of the standards, technical specifications, and architecture for the ESD system.
The EBT2 structure positions TDHS as the system integrator with vendors providing all or most support for the system. These contractual functions with the vendors, that include operation of the EBT2 host application, deployment of POS devices, provider relations, and the call center, should be moved to the administrative agency no later than September 1, 2005. DIR should have the authority to determine the timing of the move to minimize any problems or disruptions to the operating systems, retailers and providers, and clients. Although the state's interest and programs should be the primary concern, it is anticipated that DIR would consider in the timing of the transfer any possible impact on opportunities to market EBT services. Staff currently responsible for EBT2 should move with the operations component. WIC EBT staff and other staff allocated to develop the LSG1 initiatives should also move at this time. Interagency agreements would need to be developed by the administrative agency, TDHS, and TDH to transfer the operations and contracts. Until the consolidation of operations occurs, THDS, TDH, and OAG (for child support) should work in coordination with DIR to ensure that operations fit within the vision and architecture developed for LSG2.
As the ESD system expands beyond the recommendations in LSG2, the number of cards may change, and if changes occur, the organizational structure may require modification. Any future decisions regarding the structure and where new applications should reside should be made by the administrative agency. In making these decisions, consideration should be given to the following factors:
- The most appropriate technology type for each application;
- What ESD Tier is included;
- The locations of service delivery;
- The population using the service, and
- The population's relationship to other populations served by an existing card or other technology.
The paramount consideration should be to maximize user convenience by incorporating new applications onto existing cards to the extent feasible, practical, and cost effective. Consideration and balance also must be given to vendors, service providers, and other stakeholders.
LSG1 and LSG2 establish the base or structure that can grow into a more comprehensive, interoperable ESD environment. It is in the later part of the decade that the state is strongly positioned for fuller expansion into the commercial infrastructure.
Recommendations related to administration do not shift any program responsibilities or program staff. Policy and program decisions would remain in the agencies as currently structured.
The structural scheme for administration and operations for LSG1 and LSG2 is presented in Exhibit 6. The structure for LSG1 appears on the left, with LSG2 on the right.
The recommendations for LSG2 lean heavily toward new Tier III applications, using card technology to improve access to and sharing of information.
A. Multiple technology cards should be developed and used for LSG2. The cards should incorporate a magnetic stripe, a microprocessor chip, and a biometric measurement of the cardholder that can be stored on the microprocessor chip and space for a bar code and the cardholder's picture. Both the Benefit Transfer and State Employee Cards could have some or all of this functionality depending upon the complexity of the services on the card. However, as the specifications for the cards are developed, consideration would need to be given to cost and feasibility of maintaining cards with different levels of functionality. By the time these cards are needed, costs would likely be much lower, and attempting to maintain different levels of functionality might be less cost effective. B. The LSG2 cards should be developed independently of the existing LSG1 Lone Star Card, so that it can be designed with an open architecture to more efficiently function as the interface to a number of new applications. Some of these applications would require new system development, but would result in improved business processes. Examples of these applications include adding individuals' medical information on the State Employee and Benefit Transfer Cards, or tracking service delivery and payment for agencies such as TXMHMR or TRC. For others, the cards would simply provide access to legacy application systems but would enhance the current method of service delivery. An example is the State Employee Card that limits access to client databases through the use of a smart card and biometrics. This technology increases the level of security for the agency and for the data used and stored by the agency.
The State Employee Card should have interoperability across state agencies. Every card should contain a finger image and should have two basic functions: identification of the employee and holding basic medical information. The card should have the flexibility to include these additional applications:
- FLEXcard for state employees who participate in TEX Flex;
- Employee payroll - required for state employees who choose not have direct deposit;
- Building security for employees in agencies/buildings that choose to add this function;
- System security for selected employees based on the level of security required for particular positions and at the request of the agency;
- Credit card for employee travel expenses; and
- E-commerce linkage for selected employees.
When used for building access, employees would pass the card through a reader or scanner as they entered or left a building, automatically creating a log and record. The system would verify a person's authorization for building entry and would document what staff was currently in the building at any point in time. It could also function as a time card for employee payroll in situations in which time tracking was required. Some agencies have such systems already in place. In those cases, as the existing systems require replacement they should transition, over a reasonable period of time, to the use of the State Employee Card and a system that complies with statewide standards for these applications, and fits within cost constraints.
Biometric access, like finger imaging, should be incorporated for controlling access to sensitive local or wide area networks and access to certain directories in a system. Smart card and biometric readers would be connected to PCs or terminals that are on a network. The system would read biometric information stored on the card's microprocessor chip and compare it to the same measurement provided by the cardholder. For example, the employee would place a finger on a fingerprint reader and the security system would convert that image to a digital record and compare it with the digital record stored on the chip. A biometric match would allow the person access to the sensitive data if that person were authorized to access that location in the system or directory. The agency for which the employee works would maintain the employee data and control security much as it does now with password protected networks.
Use of the State Employee Card as a credit or debit card for employees' travel expenses would require additional study to determine the feasibility of this function. The multi-purpose card would, however, have the capability for this application if it is determined viable. The decision regarding e-commerce would also require exploration. The card would have the capability to be used in an authorization/ approval process for state employees making purchases for the state if the state chooses to pursue this option.
Over a two- to three-year period, the state should develop an assortment of applications that could be selected by state agencies to customize the card to meet their specific needs and those of their employees. In addition to the above applications, options could include maintenance of training/certification records, key management, maintaining rosters (meeting attendance and emergency evacuations), electronic forms submission, and property management data.
A. Incorporate the ERS FLEXcard. The ERS FLEXcard system, implemented in September 2000, for paying pre-tax expenses should be merged with the state employee LSG2 card. State employees use the FLEXcard with a magnetic stripe to pay for health and dependent care expenses. The card debits the employees Tex Flex accounts to pay providers of these services. The system itself should not be changed, but the LSG2 card should be used in lieu of having a separate card. Coordination with and modification of ERS vendor contracts may be necessary. B. State Payroll. The printing of state payroll warrants for those employees who do not receive direct deposit should be replaced with an account accessible using the State Employee Card. Currently, state agencies submit monthly payroll files to the CPA through the Unified Statewide Payroll System (USPS) or directly to the CPA USAS system. The USAS system creates a warrant print file for those employees not receiving direct deposit. These warrants are printed and delivered to the agencies, then hand delivered to the employees which results in no postage costs. This system should be modified to create an electronic file that would be sent to the EBT2 operations contractor. State employees would use the LSG2 State Employee Card to access their account. ATM access would also be necessary for this application (see Recommendation 5).
This function of the card would require legislative action in the 2003 session to modify state law to allow employees the option of receiving payment either through direct deposit or through the card, and eliminating the paper warrant.
C. Health Information. The microprocessor chip on the LSG2 card should contain basic health care and health insurance related information that would be available to health care providers. Medical information could allow better care, since providers would have access to medical history and treatment information via this card. Ready access to this data would result in saving time and expense for both clients and providers. The information proposed to be stored on the chip includes: name of the insured's health care plan; amount of any co-insurance payments; and name of the primary care physician. The employee could choose to include other information on the card such as: a record of current prescriptions; a list of chronic illness diagnoses; a list of drug allergies; special medical needs or devices used; and a record of immunizations for children. Other options of special uses in emergencies would be the person's blood type or next of kin.
By placing health information on the card, the issue of privacy is substantially reduced, if not eliminated, because the individual owning the card also owns and controls the use of the data on the card. The card owner can choose what optional information to include on the card and can choose when and to whom to release the information.
Health care providers have the potential to expedite administrative processes involved with collecting and recording data on patients. By using the card, data entry to create and maintain patient records could be reduced if the data on the card is used to complete the records. Reducing these time-consuming administrative processes could improve patient care and treatment. It could also help to reduce or prevent problems created by forgotten and unreported medical data.
Access to the information on the card would be through a card reader or a computer with a card reader attached. Health care providers who would want access to this information would need the appropriate software and a card reader. It is recommended that both of these be obtained through a third-party vendor, similar to the arrangement recommended for the Med ID function in LSG1.
Planning for the addition of health care data on the State Employee Card should be coordinated with planning for adding this information on the Benefit Transfer Card. Efforts should also be made to initiate discussion with the Social Security Administration to explore the possibility of including Medicare in this process.
All of the applications currently on the Lone Star Card and proposed for the LSG1 card should transition to the LSG2 (multiple technology) Benefit Transfer Card. Additional functions (included in the recommendations) should be considered for incorporation onto the Benefit Transfer Card. Some of these functions, including health information and participation/payment tracking, would immediately use microprocessor technology, while others would continue to use the magnetic stripe. The advanced technology would, however, create the capacity necessary for other potential applications.
A. Health Information. In addition to the other applications transitioning from the LSG1 card to the Benefit Transfer Card, it is recommended that health care information, similar to that planned for the WIC pilot, be added to this card. The microprocessor chip should be used to store the same health care and health insurance information as described for the State Employee Card. The state's leadership in this area may cost more initially, but should help health care to move in an effective direction with other public programs and private insurance. With the addition of the health information, the Benefits Transfer Card should be issued to clients of the CHIP program as well. B. CHIP Premium Co-Payments. HHSC, TDHS, and the CHIP program should work with the grocery retailers to develop a cash payment option for CHIP participants to use for premium co-payments. Currently, this program has check or money order payments only for participants. A magnetic stripe card and the existing ESD system could be used to capture cash payment information. About 80,000 children were enrolled by August 2000, and about 428,000 children are expected to be enrolled by the end of fiscal year 2001. 54 Administrative funds to cover this system will not be available until at least fiscal year 2002. However, preliminary development and planning should begin in fiscal year 2001. Additional legislative authorization for use of a portion of the premium to cover administrative costs of cash collections would be necessary to implement this project. 55 C. School Attendance Tracking. The General Services Commission (GSC), in coordination with the Texas Education Agency (TEA), CPA, and DIR, as the administrative agency, should make available electronic school attendance tracking systems, using the Benefit Transfer Card, that could be implemented locally by individual schools or school districts. This could be accomplished through statewide contracts with multiple vendors that negotiated standardized features, allowed for customization and choice by school districts. These systems would allow automatic collection of attendance records for reporting to TEA for funding purposes. This same system could be modified for use in the subsidized breakfast and lunch programs available through nutrition services and could be used by all students as a debit card to purchase breakfast and lunch at the school. A benefit to this system would be elimination of the need for a student to carry cash to school and, as a result, fewer opportunities for school theft. This is a recommendation for study and does not include a cost analysis. D. Participation and Payment Tracking. The Benefit Transfer Card could be used to track participation and payments; however, specific recommendations about the use of electronic means for these functions are not being made in this report. A cost benefit analysis will be required to determine the feasibility of this use for the card. There does, however, appear to be potential for increased efficiency in many service delivery processes as well as for electronically monitoring actual service delivery and payment of claims for those services. All programs that encompass the purchase of services from local providers should explore the feasibility of using the technology available in the LSG2 system for improving their service delivery process. Examples of these agencies and services include TXMHMR's In-Home and Community Services, TWC's Employment and Training Services, and TRC's Vocational Rehabilitation Services. The highest priority should be given to programs with the largest percentage of clients with Benefit Transfer Cards from other programs such as Medicaid or the Food Stamp program. Consideration should also be given to the programs that offer the most savings or service delivery improvements.
The development and implementation of these additional applications should begin during the detailed planning for LSG2 and continue throughout the decade.
E. WIC. If the WIC EBT pilot project is successful and a decision is made to expand the system statewide, the LSG2 card should be used for this application. Depending upon the WIC pilot findings, the LSG2 hybrid card with the available multi-technology-both a chip and a magnetic stripe-could be used to redeem WIC Program food prescription benefits at participating retail grocery stores. The chip on the hybrid card would be necessary for additional health information to be included on the card. The health data and access to the data by health care providers would assist WIC in its mission to assure that participants receive ongoing health care. F. Transportation. Many agencies are involved in the provision of services that include a transportation component, and a variety of methods are used to pay for the transportation services. It is recommended that the state authorizes HHSC to explore options for how to standardize transportation payments using the Benefit Transfer Card and pilot the most viable option. HHSC should coordinate this effort with the Department of Transportation and other agencies that include transportation as a component for service delivery. Equipment for vehicles used for public transportation could be eligible for enhanced federal funding. Research on specific funding criteria would need to be completed to secure these enhanced federal matches.
TWC conducted a feasibility study in 1997 to examine the applicability of direct deposit and card technology for recipients of unemployment insurance (UI) benefits and, as a result of the study, determined that neither option was viable without the elimination of current barriers. However, TWC believes the elimination of the requirements for the customer signature on an authorization form justifies another focused staff effort to reexamine the viability of a direct deposit solution. This new evaluation would be able to clarify the feasibility of authorizing client direct deposits by telephone, which would fit with TWC's current UI approach. Card technology is still, however, not a viable option because UI benefits are generally limited to one or two months. 56 This short time for payment of benefits does not support the expense of issuing a card and setting up the funds distribution process.
TWC has indicated the intent to reevaluate current direct deposit opportunities and technologies to identify a cost-effective approach that will successfully address all of TWC's and the U.S. Department of Labor's requirements. Through a formal assessment, TWC would propose to address the following issues and requirements that must be resolved before TWC can move forward with a direct deposit program: privacy and security; timeliness; fund accounting; liability for improper transfers; customer sign up; customer turnover; and current customer statement of accounts. TWC should complete the evaluation by September 1, 2001 and, if warranted, begin design and development as soon as the study is completed. A plan for implementation should also be developed as part of the overall development strategy.
As stated in the implementation strategy for LSG1, legislative authorization to accept and move forward with development and implementation of the recommendations included in both LSG1 and LSG2 should be sought during the 2001 legislative session. The administrative structure, including both the ESD Task Force and the administrative agency, should be in place by September 2001. The first tasks for these two groups are to define an operating plan and determine specific roles and responsibilities. The administrative structure should be fully functional by January 1, 2002, and begin the process of determining standards, technical specifications, and the architecture for LSG2 and oversight of LSG1. DIR, as the administrative agency, would be responsible for developing a transition plan for moving staff into the DIR organizational structure. The transition to DIR would be completed by September 2005.
There are several significant dates in current contracts that should be coordinated with the timeline for LSG2. The contract for FLEXcard ends in September, 2003. Any negotiation to extend or renew this contract should consider the LSG2 implementation schedule and the transition to LSG2 cards planned for September 2005. The EBT2 contract with Northrup/Grummond for the host system ends in September, 2005, with the potential for extensions. This date coincides with the proposed statewide rollout of LSG2, and negotiation for extension or renewal would need to include LSG2.
The pilot for use of the LSG2 card as a state employee ID and facilities access tool should begin with the Comptroller of Public Accounts. It would be necessary to equip CPA facilities with smart card and biometric readers. Other agencies, including DIR, DPS, GSC, and others as determined by CPA should be mandated to provide necessary support to CPA for this pilot. DIR may determine to pilot this technology in other agencies as well. Following a successful pilot, a schedule should be developed for rollout of this technology to other agencies, prioritizing those with the greatest security needs and those who volunteer. All agencies should be evaluated and those that are feasible be converted or transitioned to the LSG2 ESD system. The state payroll transition to the card should also be piloted in a representative geographical area before a statewide rollout.
To pilot the use of health care and health insurance information for Medicaid and CHIP clients, a rural and urban county should be selected. The state should provide smart card readers for the pilot to participating health care providers who do not already have such equipment. The state could elect to provide these readers directly or contract for the equipment, distribution, and maintenance.
A detailed statewide implementation schedule for all cards, applications, and populations should be developed by the administrative agency responsible for this initiative. Statewide rollout could begin following successful operation of the pilots. Once the rollout for LSG2 begins, new clients enrolled for any of the LSG1 applications such as Food Stamp, TANF, Medicaid and other LSG1 applications should be issued the new LSG2 Benefit Transfer Card.
The WIC program has already developed a tentative rollout schedule for their EBT application, if the pilot proves successful. This rollout schedule should be combined with the master ESD schedule.
In the event that any of the pilots, including the WIC pilot, are not successful, an examination of the reasons for failure must be completed to determine the next appropriate action. The administrative agency, ESD Task Force, and participating agencies should develop a contingency plan to address the possible scenarios that would require modifications or could result in a "no-go" decision.
Full implementation would require replacement of the universe of LSG1 cards. This should be phased in over a two-year period. The first priority for replacing cards should be clients of the Medicaid and CHIP programs, who would use the health and insurance information on the chip. This replacement should be accomplished within one year. The lowest priority should be those individuals who are only receiving cash payments through the card. There is no compelling reason to replace these cards en masse. As cards are replaced due to loss or damage, or recipient benefits are modified necessitating a new card, the replacement should be with LSG2 cards.
One issue that must be faced with the deployment of the LSG2 cards is the lack of infrastructure to read the computer chips on the cards. Health care providers cannot be required to have access to this information. Participation must be a voluntary effort on their part and would require an investment in the readers to make use of them. There is an existing industry serving health care providers by facilitating access to the electronic verification system and the electronic claims processing system. This service provided by third-party processors is described in more detail in the Medicaid Identification Analysis, in Appendix B. It is recommended that the state provide the technical specifications necessary for readers to access the information on the cards and authorize these third-party companies to market the readers to health care providers. These companies would already be providing magnetic stripe card readers to providers and could replace those readers with dual purpose ones. These companies would determine the handling and the cost of the transition. Health care providers would also have the option of securing smart card readers independently. These readers could be attached to computers, allowing access to the health data on the cards. Access to the information on the chip does not require an on-line connection. The information would enable health care providers to offer better patient care and should reduce the staff time devoted to administrative functions.