The Insurance Regulatory and Development Authority of India (Third Party Administrators - Health Services) (Amendment) Regulations, 2019

Dec 13, 2019 | by Avantis RegTech Legal Research Team


The Insurance Regulatory and Development Authority of India (IRDAI) on December 03, 2019, notifies the IRDAI (Third Party Administrators - Health Services) (Amendment) Regulations, 2019 to further amend the IRDAI (Third Party Administrators - Health Services) Regulations, 2016.

The followings are the amendments made in the IRDAI (Third Party Administrators - Health Services) Regulations, 2016:-

 Regulation 2(1)(f) related to “Cashless facility” has been omitted.

 Regulation 2(1)(k) defines “Network Provider” means hospital enlisted by an insurer, a TPA or jointly by an insurer and a TPA to provide medical services to an insured by a cashless facility.

 Regulation 2(1)(m) defines “Third Party Administrator (TPA)” means a company registered with the Authority, and engaged by an insurer, for a fee or by whatever name called and as may be mentioned in the health services agreement, for providing health services as mentioned under these regulations.

 Regulation 3(4) and (5) related to “Health services by TPA” has been inserted, namely:-

“Regulation 3(4):- The policyholder can choose a TPA of their choice from amongst the TPAs engaged by the insurer, where services of TPAs are engaged by the insurer for a given insurance product. 

(a)Where the services of the TPA are terminated during the course of health services rendered by the said TPA, every insurer shall allow the policyholder to choose an alternate TPA from amongst the TPAs engaged by it. 

(b)The insurer shall explicitly provide the names of the TPAs amongst whom the policyholder may choose the TPA of their choice at the point of sale. The Policyholder may be allowed to change the TPA of their choice only at the point of renewal. 

Provided that the policyholder shall have no right to seek dispensing the services of the TPA and request the insurer to undertake rendering the health service directly. 

Provided further that the insurer shall have the prerogative of whether or not to engage any TPA or to terminate the services of the TPA or not to engage the services of the TPA for a particular health insurance product or discontinue the services of the TPA to service a particular health insurance product. 

Provided further that the insurer shall have the prerogative of changing the TPA in accordance to the provisions of Regulation 20(8) of these regulations. 

(c)Where the Policyholder did not choose any of the TPAs, the insurer may allot the policy servicing to a TPA of its choice. 

(d)Where the insurer engages the services of only one TPA, no option need be provided to the policyholder. 

Explanation — For the purposes of this sub-regulation, the choice of the policyholder to choose a TPA for rendering health services is limited to the TPAs with whom the insurer is having Service Level Agreements in place. Based on the health insurance product and geographical location of the policyholders, the insurer may also limit the number of TPAs amongst whom the policyholder may choose a TPA of their choice. The insurer explicitly shall provide the list of the TPAs engaged, from amongst whom the policyholder may choose a TPA of their choice, at the time of proposal or the renewal as the case may be. 

Regulation 3(5):- The Authority may specify guidelines for disclosure of qualitative and quantitative parameters by all insurers and TPAs with respect to the health services rendered.”

 Regulation 5(1) and (4) related to “Compulsory registration for Health services by TPA” have been substituted, namely:-

“Regulation 5(1):- No person or an entity can commence or carry out the business of TPA and render health services mentioned at Regulation 3(1)(a) and (b) of these regulations without a valid certificate of registration from the Authority.”

“Regulation 5(4):- No insurer shall engage any person or entity to render health services mentioned at Regulation 3(1)(a) and (b) of these regulations unless such person or entity is holding a valid certificate of registration from the Authority as TPA.”

 Regulation 6(3) related to “Minimum Capital and Working Capital Requirements” has been substituted, namely:-

“The net worth of a TPA shall at no time during the period of registration fall below rupees one crores. Explanation: For the purposes of these regulations, “net worth” shall have the meaning assigned to it in the Companies Act, 2013 and as amended from time to time.”

 The application fee for grant of Certificate of Registration as TPA specified under Regulation 7(2) has been increased from Rs. 20,000/- to Rs. 1,00,000/- and other taxes as may be applicable.

 A new Regulation 8(3)-(6) related to “Conditions for grant of Certificate of Registration” have been inserted:-

“Regulation 8(3):-Each of the promoters shall satisfy the following criteria. 

a) Must be carrying on business not related to insurance or engaged in offering professional services not related to insurance for a period of not less than three years to the date of application; 

b) Have positive net worth in all the immediately preceding three financial years to the date of application; and 

c) Have net-worth of not less than the respective capital contribution in the immediately preceding two financial years to the date of application; 

Regulation 8(4):- Where there are one or more investors in an applicant, any investor holding the shares in the applicant exceeding ten percent of the paid up equity capital shall be considered as promoter of the applicant. 

Regulation 8(5):- Indian investors, other than promoters referred at sub-regulation 4 of regulation 8 above, put together shall not hold more than twenty-five percent of paid up equity capital of the applicant. 

Regulation 8(6):- The promoters shall agree to a lock-in period of three years for the funds proposed to be invested in the applicant. The lock-in period of three years shall reckon from the date of granting certificate of registration by the Authority.”

 For grant of Certificate of Registration specified under Regulation 9(2), every applicant approved by the Authority shall pay a further sum of Rs. 2,00,000/- (Rupees two lakh only) and other taxes as may be applicable to the Authority as registration fee prior to grant of Certificate of Registration.

 Regulation 9(3) has been substituted, namely:-

“A TPA which has been granted Certificate of Registration shall commence business operations within twelve months from the date of grant of Certificate of Registration by the Authority. Where a TPA could not commence the business operations within twelve months as stipulated, it shall, within thirty days before the expiry of twelve months from the date of grant of certificate of registration by the Authority, seek in writing further extension of time substantiating the reasons thereof. The Authority on considering the request may grant a further period of six months to the TPA to commence the business operations.

Provided that where the TPA did not commence the business operations within the period stipulated under this sub-regulation, the Authority shall cancel the certificate of registration and publish the same in its website for information of general public.”

 Regulation 10(3) related to “Refusal for grant of Certificate of Registration” has been substituted, namely:-

“An applicant or any of the promoters of the applicant against whom an order of refusal for grant of certificate of registration has been passed by the Authority shall not, for a period of one year from such refusal, submit a fresh application to the Authority for grant of certificate of registration as a TPA.”

 The application fee for renewal of Certificate of Registration of Rs.15,000/- as specified under Regulation 15(3), has been increased till Rs. 1,50,000/- (Rupees one lakh fifty thousand only) along with other taxes as may be applicable.

 Regulation 16(1)(k) related to “Revocation, Suspension, Cancellation or denial of renewal of Certificate of Registration granted to a TPA”, has been substituted, namely:

“The TPA failed to maintain the minimum capital or net worth requirement in accordance with the provisions of regulation 6 of these regulations.”

 Regulation 16(6) has been newly inserted:-

“A TPA against whom an order of revocation or cancellation or denial of the renewal has been passed by the Authority shall not, for a period of two years from the date of such revocation or cancellation or denial, submit a fresh application to the Authority for grant of certificate of registration as a TPA.”

 Regulation 19(6) related to “Maintenance of books of account, records, and confidentiality of information, submission of annual report to Authority” has been substituted, namely:-

“Where TPAs maintain files, data and other related information pertaining to the settlement of claims in electronic form, maintenance of the same by the TPAs again in physical form is dispensed with. TPAs shall submit or handover all the files, data and other related information pertaining to the settlement of claims to the respective insurers within 90 days after close of every quarter commencing from April of every financial year and the insurer shall accept the same under acknowledgement.”

 The amendments are also made in Schedule-I and Schedule-II.

These Regulations shall come into force on the date of their publication in the Official Gazette that is on December 04, 2019.

[Notification F. No. IRDAI/Reg/15/166/2019]


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