The committee, in its report submitted to the regulator, observed that there was a need for some guidelines to protect the financial exposure of insurance companies and TPAs.

It recommended that the paid-up capital be enhanced to Rs 2 crore for a start-up TPA business.

The fresh infusion of capital will have to be effective in the financial year subsequent to the year in which the billings cross the thresholds specified. The existing organisation may be given time till March 31, 2010 to comply with the conditions, it said.

It had also recommended a schedule for fresh capital infusion in tune with the growth in billing/revenue of TPAs.

The panel, headed by Mr S.B. Mathur, Secretary-General, Life Insurance Council, suggested that TPAs below Rs 20 crore revenue/billing would require Rs 2 crore paid-up capital and those with over Rs 41 crore in revenue would require Rs 5 crore.

There should be specific investment guidelines for deployment of capital. “TPAs can invest only in TPA-related activities and in bank deposits for approved securities. Inter-corporate deposits are not permitted,” it said.

Security

To ensure the financial security of the insurance companies or other stakeholders, a sum of Rs 1 crore should be kept as fixed deposit with IRDA.

Further, they may be required to purchase adequate insurance cover with an E&O policy of three times the fee earned in the last financial year with a minimum of Rs 1 crore and a floater fidelity guarantee for Rs 3 crore.

The funds for making payments for claims must be released within seven days of submission of the request by the TPAs with an appropriate mechanism for reporting delays, the report said.

Customer service

To ensure best practices, the committee suggested adopting common wording of MoUs with hospitals, standard list of documents to be enclosed with the claim form and standard billing formats.

“A standards-based consumer redressal system, where in all consumers have to approach only one standard level of care is planned,” the report said.

During the first half of 2008-09, the total premium grew 47 per cent and stood at Rs 3,350 crore.

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TPAs: Panel calls for setting up health council

May 13, 2009 : A committee set up by the Insurance Regulatory and Development Authority (IRDA) to look into the functioning of third party administrators has suggested that a health council be set up.

The committee wants the council to be a self regulatory body of third party administrators with members from all segments of stakeholders, including insurance companies, third party administrators, hospitals and consumers.

IRDA had formed the panel in November 2008 to look into the scope of function, best practices, turnaround time and financial aspects of third party administrators (TPAs). The council would enable insurance companies and TPAs to follow simple and standardised pre-authorisation and claim forms. Also, third party administrators and hospitals would have a common software platform to cut down the delay in processing pre-authorisation and settlement of claims, Mr S.B. Mathur, Secretary General, Life Insurance Council, and Head of the TPA Committee, told Business Line.

This, he said, would help in making it easier for insured patients to get treatment without having to pay cash. Bringing in the “cashless” system of getting medical treatment (the customer pays only the insurance premium; when he gets medical treatment the insurance company will pay the hospital directly) was meant to be a key role of TPAs, and this has not happened so far.

Another recommendation made by the committee is to bring about professionalism among TPAs in terms of providing information to policyholders and help in claim settlement, said Mr Mathur.

The health council will also look into issues such as TPAs not answering calls made by customers, time taken by the administrators to settle claims, insurance companies providing third party administrators with float funds, TPAs settling hospital bills in time and overcharging by hospitals.

IRDA panel to evaluate TPAs

December 31, 2009 : The Insurance Regulatory and Development Authority (IRDA) has constituted a 12-member committee for evaluation of the performance of the Third Party Administrators-Health Services (TPAs).

In a circular issued on Wednesday, IRDA has said the committee “will examine the role of TPAs in the current health insurance market scenario and to make suitable recommendations clarifying their utility to the future growth of the health insurance industry”.

The committee has also been asked to suggest standards of best practices for TPAs and to devise customer service benchmarks for TPAs with optimum and maximum time lines for different processes. “To suggest minimum skill sets for the TPA personnel, including training in ICD-10 coding, claim and pre-authorisation processing, medical and insurance knowledge,” the circular signed by Mr J. Hari Narayan, Chairman, IRDA, said.

The committee, headed by Mr S.B. Mathur, Secretary General, Life Insurance Council, has been asked to submit its report by April 30.