EBT solution hiding in plain sight

Officials say there’s no tech solution available for EBT misuse but the fix may already be in many stores.

State officials say the technology doesn’t exist to make sure users of Electronic Benefit Transfer cards, which took the place of paper food stamps, aren’t buying alcohol, tobacco, or Lottery tickets.

But all officials need to do is look at their nearest drug store or supermarket to see that the technology does, in fact, exist. It’s been in use since 2007 on a number of pre-tax health spending accounts accessed by a debit card and monitored by the Internal Revenue Service.  The software, called Inventory Information Approval System, uses bar codes to identify items that can and can’t be purchased with the pre-tax money. When the total amount of the purchase is tallied, the register will only debit the card for those items that are allowed. The remaining balance has to be paid with a separate form of payment. Thousands of pharmacies and stores across the country that carry medical supplies and prescription items are using the technology, including Stop & Shop, Shaw’s, Wal-Mart, and Target.

Although the IRS-approved technology seems to mirror what the Massachusetts Legislature is asking the Patrick administration to do for EBT recipients, Secretary of Health and Human Services John Polanowicz told House members recently that the state doesn’t have and can’t find the technology. Polanowicz spokesman Alec Loftus told the State House News Service the technology doesn’t exist anywhere in the country and it’s up to stores to make sure users are acting within the law.

“For tobacco and alcohol, the things that are banned by law, we sent out communications to all the retailers informing them that they are prohibited from vending those goods to EBT card holders, and announcing the fines,” Loftus told the news service. “We send regular communications informing them.”

The United States Department of Agriculture, which oversees the EBT benefits program, says most supermarkets and superstores, where 82 percent of benefits were spent in 2012, have the technological capability to segregate eligible from noneligible items during the checkout. Loftus referred questions about EBT technology to the Department of Transitional Assistance. Officials there did not respond to a request for comment.

State officials monitoring the EBT situation said they were surprised that the administration is adamant that it cannot find a technology fix for fraud and abuse. Some lawmakers also find it ironic that the IRS is able to restrict purchases people can make with their own pretax Flexible Service Accounts, but state officials haven’t been able to find a way to restrict the way EBT cardholders spend taxpayer money.

 “With all the technological know-how we have in this state, then to be told we don’t have the technology, that’s what I’m left scratching my head about,” says House Minority Leader Brad Jones. “You have an FSA system in place to restrict what you can spend your own money on, yet we find it somehow offensive to ask people to be accountable with taxpayer money.”

State Rep. Caroline Dykema of Holliston, a member of the House Ways and Means Committee, which heard Polanowicz’s testimony, says she didn’t think the secretary intended to infer that there was no technological fix available but rather that the state currently doesn’t have the ability and that the cost to implement such a program could be high. But Dykema agrees that a system needs to be in place to assure taxpayers their money is being used for its intended purpose.

“It seems clear to me, at least at this point, investment in technology is going to be a large part of the solution,” Dykema says. “Virtually any technology is available for a price.”

The pricetag may be available in the near future as the state issues a new seven-year contract to manage the EBT card system. State Treasurer Steven Grossman, whose office is overseeing the request for bids, says he won’t approve any proposal that does not include some component for ensuring benefits are used only for eligible items.

Meet the Author

Jack Sullivan

Senior Investigative Reporter, CommonWealth

About Jack Sullivan

Jack Sullivan is now retired. A veteran of the Boston newspaper scene for nearly three decades. Prior to joining CommonWealth, he was editorial page editor of The Patriot Ledger in Quincy, a part of the GateHouse Media chain. Prior to that he was news editor at another GateHouse paper, The Enterprise of Brockton, and also was city edition editor at the Ledger. Jack was an investigative and enterprise reporter and executive city editor at the Boston Herald and a reporter at The Boston Globe.

He has reported stories such as the federal investigation into the Teamsters, the workings of the Yawkey Trust and sale of the Red Sox, organized crime, the church sex abuse scandal and the September 11 terrorist attacks. He has covered the State House, state and local politics, K-16 education, courts, crime, and general assignment.

Jack received the New England Press Association award for investigative reporting for a series on unused properties owned by the Catholic Archdiocese of Boston, and shared the association's award for business for his reporting on the sale of the Boston Red Sox. As the Ledger editorial page editor, he won second place in 2007 for editorial writing from the Inland Press Association, the nation's oldest national journalism association of nearly 900 newspapers as members.

At CommonWealth, Jack and editor Bruce Mohl won first place for In-Depth Reporting from the Association of Capitol Reporters and Editors for a look at special education funding in Massachusetts. The same organization also awarded first place to a unique collaboration between WFXT-TV (FOX25) and CommonWealth for a series of stories on the Boston Redevelopment Authority and city employees getting affordable housing units, written by Jack and Bruce.

About Jack Sullivan

Jack Sullivan is now retired. A veteran of the Boston newspaper scene for nearly three decades. Prior to joining CommonWealth, he was editorial page editor of The Patriot Ledger in Quincy, a part of the GateHouse Media chain. Prior to that he was news editor at another GateHouse paper, The Enterprise of Brockton, and also was city edition editor at the Ledger. Jack was an investigative and enterprise reporter and executive city editor at the Boston Herald and a reporter at The Boston Globe.

He has reported stories such as the federal investigation into the Teamsters, the workings of the Yawkey Trust and sale of the Red Sox, organized crime, the church sex abuse scandal and the September 11 terrorist attacks. He has covered the State House, state and local politics, K-16 education, courts, crime, and general assignment.

Jack received the New England Press Association award for investigative reporting for a series on unused properties owned by the Catholic Archdiocese of Boston, and shared the association's award for business for his reporting on the sale of the Boston Red Sox. As the Ledger editorial page editor, he won second place in 2007 for editorial writing from the Inland Press Association, the nation's oldest national journalism association of nearly 900 newspapers as members.

At CommonWealth, Jack and editor Bruce Mohl won first place for In-Depth Reporting from the Association of Capitol Reporters and Editors for a look at special education funding in Massachusetts. The same organization also awarded first place to a unique collaboration between WFXT-TV (FOX25) and CommonWealth for a series of stories on the Boston Redevelopment Authority and city employees getting affordable housing units, written by Jack and Bruce.

“I’m not going to sign a contract that does not protect the taxpayers to a greater extent than ever before from the waste, fraud, and abuse that has often characterized this program,” Grossman says. “Vendors are put on notice that we will look into new technology. I am hopeful and optimistic that we will have some tools and techniques that will give us the ability and capacity to manage this process.”

Technology may not be able to address one aspect of the EBT program: purchases made with cash withdrawn using an EBT card. Some states have adopted a cashless benefit system with their EBT cards, a move some Massachusetts lawmakers are eyeing as well.

Jones says he finds it troubling that the Patrick administration, which released an online program to let taxpayers make their own state budget and see how tax hikes would impact them, would insist nothing can be done with technology to meet legislative demands for the EBT program.  “I just can’t believe when we can send a man to the moon, we can’t figure this out,” Jones says.