Insurance Regulatory and Development Authority (Third Party Administrators-Health Services) Regulations, 2001 were notified on 17thSeptember 2001 introducing the concept of Third Party Administrators (hereafter referred as TPAs) into the Health Insurance Industry. Since the notification of these Regulations, significant developments have taken place in Health Insurance space. In this backdrop, the then IRDA (TPA-HS) Regulations, 2001 were revisited and Insurance Regulatory and Development Authority of India (Third Party Administrators-Health Services) Regulations, 2016 (referred as TPA Regulations, 2016) were notified on 14th March 2016. Subsequently, certain clarifications on the provisions of TPA Regulations, 2016 were issued vide Circular Ref no IRDA/HLT/REG/CIR/219/11/2016 dated 15th Nov 2016. For effecting the clarifications issued in to the Regulations and as also to introduce certain new provisions and carry out certain modifications, it is proposed to amend the TPA Regulations, 2016.
2. In the Draft IRDAI (TPA – Health Services) (Amendment) Regulations, 2019, the following major changes are proposed:
(i) Definition of the “Cashless Facility” is omitted as it is already defined under Regulation 2(f) of IRDAI (Health Insurance) Regulations, 2016 and there was an inconsistency in both the definitions.
(ii) The definition of “Network Provider” is substituted to give effect to the Circular dated 15th Nov, 2016 wherein clarification furnished to the definition of Network Provider.
(iii) The definition of “Third Party Administrator” is revised to remove the word “remuneration” as the word ‘remuneration’ is defined under IRDAI (Payment of commission, remuneration and rewards to insurance agents and insurance intermediaries) Regulations, 2016.
(iv) “Health Services” as specified under TPA Regulations, 2016 covered, inter alia, only foreign travel policies under its ambit while allowing the TPAs to service foreign travel policies issued by foreign insurers for policyholders travelling to India. However, now, “Foreign Travel” is replaced with “foreign travel or health or medical insurance”.
(v) In order to enhance the competition amongst the TPAs and to let the policyholders have an option of choosing TPA, it is considered to allow the policyholders to choose the TPA of their choice from amongst the TPAs engaged by the Insurer. Towards this, suitable regulatory provisions are proposed.
(vi) The concept of “Working Capital” is replaced with “Net Worth” of the TPA Company.
(vii) Various fees charged by the Authority from the TPAs is revised which is as follows: the non-refundable processing fee from Rs. 20,000 to Rs. 1,00,000 (One Lakh), registration fee for new applicants from Rs. 30,000 to Rs 2,00,000 (Two lakhs) and renewal application fee from Rs. 15,000 to Rs. 1,50,000 (Rs. One lakh fifteen thousand).
(viii) New qualifying norms are specified to the promoters of the applicant TPA Companies. These, inter alia, include;
1) that promoters of the applicant shall be carrying on any business or profession in the preceding three years to the date of application; and
2) their net worth is positive in all the immediate preceding three years to the date of application; and
3) the net worth of each promoter in the immediate preceding two financial years to the date of application is more than the capital contribution of the respective promoters.
4) Investors holding more than 10% stake of the applicant shall be considered as the promoter;
5) all Indian investors other than promoters together shall not hold more than 25% of paid up equity share capital
6) all promoters to agree to a lock in period of three years from the date of grant of Certificate of Registration.
(ix) Suitable provisions for cancellation of CoR in case the TPA does not commence business are introduced.
(x) Existing provisions stipulate that the applicant whose application for grant of CoR is refused is not eligible to apply afresh for two years. This provision is now modified to be applicable to the promoters of the Applicant whose application for grant of Certificate of Registration is refused and to bring down the waiting period to one year for the Applicant. Further, a new provision is incorporated that a TPA whose CoR is revoked, cancelled or denied renewal shall also be barred from applying fresh application for a period of two years.
(xi) With reference to handing over of claims files and data, a period of 15 days after the close of every quarter is stipulated in the existing provisions. This is modified to “90 days after the close of the quarter”. Further, it is specified that a TPA who maintains files, data and other information pertaining to settlement of claim in an electronic form is dispensed in maintaining the same in physical mode.
(xii) As part of the code of conduct, a clause is inserted specifying that a TPA shall furnish information or data pertaining to a group insurance policy of one insurer to another insurer only with explicit and written approval of both the Insurer and Group Policyholder to whom the data belongs.
(xiii) Consequent to the introduction of a provision allowing policyholders to choose a TPA, a provision is incorporated in Code of Conduct to ensure that the TPA shall not canvass business of rendering health services directly from the policyholders or prospects.
(xiv) Modification is effected under Clause 2 (d) of Code of Conduct to ensure that the information which is relevant to the concerned insurer is only shared by the TPAs.
Draft Regulations are published as Annexure – 1. A comparative statement of the existing regulatory provisions and the proposed provisions along with the rationale is also published as Annexure – 2.
All stakeholders are requested to forward their comments to the office of IRDAI, Hyderabad or by e-mail to email@example.com by 30th July, 2019 in the format attached as Annexure – 3.
Insurance Regulatory and Development Authority,
Survey No: 115/1, Financial District,
Nanakramguda, Hyderabad 500 032