Health-Risk Products Out Of Bounds For Tpas

The Insurance Regulatory and Development Authority (Irda) has finally ruled that third-party administrators (TPAs) will not be allowed to sell any health products, whether related or unrelated to health insurance.

The revised Irda guidelines, finalised late last week, are being circulated to top officials in the Union finance ministry for eventual placing in the monsoon session of parliament.

The Irda decision puts managed healthcare companies in a fix as they will no longer be able to sell managed healthcare products. Though the Irda was earlier open to the idea of TPAs selling managed health care products, a memorandum from the General Insurers' (Public sector) Association (Gipsa) dated May 28, protesting against the move, seems to have swung the debate.

State insurers have pointed out that should TPAs be allowed to sell managed care products, they will perhaps be siding with customers when it comes to preferring or settlement of claims. This, the state insurers say, is not in the interest of the insurance industry.

But sources said this restraint may force some of the large managed care institutions to avoid applying for the TPA licence.

The revised regulations also equire the TPA to pay a fee to the Irda for every agreement signed with an insurance company. The regulator has identified a fee of Rs 20,000 for the first agreement signed, and thereafter Rs 10,000 for every other agreement.

Even as the Irda has not finalised the minimum paid-up capital for a TPA to be eligible to commence business, a debate is currently on to change the working capital to paid-up capital, and to lower the earlier proposed amount of working capital of Rs 1 crore. The issue is still open.

Meanwhile, the Irda has directed TPAs to have separate chief operating officers (COOs) for multiple insurance tie-ups. In the revised draft regulations for TPAs, the insurance regulator has stated that in the case of a TPA having offices in different centres or agreements with various insurance companies, a separate COO has to be designated by the TPA with reference either to the location or the insurer.

This in effect implies that a TPA having a tie-up with all the four state-owned insurance companies as well as the four new private players will need to designate eight separate COOs.

Further, the draft calls for each of the COO to possess dual qualifications in terms of having passed hospital management course and the licentiate examination conducted by the Insurance Institute of India.