REQUEST FOR PROPOSAL
(RFP)
For Engagement of a Consultant for Setting Up Operations
of
ANew Third Party Administrator CompanyBeingIncorporated As
A Joint Venture
Between
National Insurance Co.Ltd
The New India Assurance Co. Ltd
The Oriental Insurance Co. Ltd
United India Insurance Co. Ltd
and
General Insurance Corporation of India
CONTENTS
- Introduction
- Duration of the Contract
- Scope of Work
- Eligibility Criteria
- Evaluation and Selection - Process and Criteria
- Guidelines for RFP Preparation and Submission
- Confidentiality
- Jurisdiction
- Force Majeure Clause
- Disclaimer
Annexures
- Model Format for Technical Bid
- Model Format for Commercial Bid
- Model Format for the Forwarding Letter of the Complete RFP Documents
1. INTRODUCTION
1.1Health Insurance (HI) has emerged as one of the largest segments in the general insurance industryin India. During 2012-13, gross underwritten HI premium was about Rs.15,000 crores. This segment is expected to register very high growth during the current decade and beyond. The public sector general insurance companies are significant players in this segment.
1.2The four public sector general insurance companies, namely, National Insurance Co Ltd,The New India Assurance Co. Ltd, The Oriental Insurance Co. Ltd, and United India Insurance Co. Ltd(hereinafter referred to collectively as PSGIC) along with General Insurance Corporationof India(GIC) have decided to set up a new companywhose main objects would beinter aliato establish, promote, assist, undertake, engage in and to carry on the business of Third Party Administrator (TPA) in health services as permissible under applicable laws.
1.3The said new company (hereinafter referred to as HI-TPA) is under incorporation and is expected to have the capability tomanage all aspects of claims arising out of HI policies underwritten by an insurer company, as per global industry practices. This would involve both technical and medical management of claims.
1.4By way of illustration, technical management of claims would include: enrolment of policy holders, pre-authorization of cashless claims, techno-medical adjudication of claims (including fraud detection), payment processing, and customer servicing (including grievance management). Medical managementwould inter alia include all aspects of: building and managing an effective and efficient healthcare provider network, provider and pharma cost management, quality assurance of healthcare providers including on-site physical verifications wherever needed, management of case histories (for both individual and group clients), disease management(including accident cases), and sharing of claims experience and knowledge with the insurers to enable them to design and price their HI policies better.The above description is only illustrative. HI-TPA would, subject to applicable laws, discharge all other functions and responsibilities as are deemed to be incidental to effective discharge of its broad responsibilities as per global best practices.
1.5To realise the above objective, all policies, systems, procedures, processes, and the supporting technological, human and physical infrastructure of HI-TPA should conform to global best practices and/or standards. In this regard, information technology (IT) platform on which the organizational processes will be run and the human resource need particular emphases (without in any way diminishing the importance of other types of resources).
1.6To help set up the operations of HI-TPA, and subject to necessary approvals and permits, for being engaged in administering health insurance claims, proposals are invited by PSGICs and GIC from reputed and eligible management consulting firms who have operations in India. Detailed terms and conditions to be complied with by the applicant including the eligibility criteria, scope of work, evaluation and selection criteria are described hereinafter in this RFP (Request for Proposal) document.
1.7It is made clear that participation in this RFP process by anyapplicant(s)does not create any rights or obligations between the HI-TPA,PSGICs and/ GIC and the applicant(s). Further, the HI-TPA and/or the PSGICs and GIC reserve the right to cancel the RFP process at any stage without assigning any reason.
2. DURATION OF THE CONTRACT
2.1Duration of the contract with the selected consultant (hereinafter referred to as ‘the Consultant’) shall be 18 (eighteen) months during which time the Consultant is to deliver to the satisfaction of HI-TPA all outcomes as are required to be delivered as per the Scope of Work (Section 3) defined hereinafter.
2.2 HI-TPA shall retain the sole discretion and right to extend the services of the Consultant for another 6 months (beyond the originally stipulated 18-month period) on payment ofa proportionate fee based on the structure of fee and other relevant conditions as are stipulated in the original contract to be signed with the Consultant. HI-TPA may seek, if required, the Consultant’s service for a further period beyond 24 months on mutually agreed terms and conditions.
3. SCOPE OF WORK
3.1 Preamble
The scope of work of the Consultant would involve end-to-end implementation of the project assignment which would inter alia cover the following areas (as broadly defined) and would include all matters, activities, and/or actions as may be incidental to and necessary for effective discharge of the end-to-end project implementation responsibility of the Consultant.
3.2 Basic Condition and Planning Time Horizons
3.2.1Time horizon for all plans required to be submitted should cover the period up to 2020 (unless the context requires otherwise) with clear year wise/phase wise breakupswherever relevant.
3.2.2 All plans and proposals should be premised on the following Basic Condition:
“The Consultant shall plan its activities in such a manner that HI-TPA is able to make ‘pilot launches’ (as described subsequently in sub-section 3.10.2) within 12 months from award of the contractand to start its regular commercial operations within 15 months of the award of the contract.”
a)For purpose of planning of activities for pilot and commercial launch and for preparation of business plan, the Consultant can assume claims volume of around 5,00,000 in first full year of operation going up to around100,00,000 claims in 5th full year.
b)During the first full year of commercial operation, HI-TPA should be able to handle claims which are a reasonable mix of retail, corporate, and government customer segments of above volume.
3.3 Business Plan
3.3.1 Business Plans(BP)for each year should inter alia cover all items relating to revenue, operating expenses (under relevant heads), capital expenditure, management control ratios (both financial and non-financial) including infusion of share capital, long- and short- term borrowings, and any other relevant items necessary to reflect the adequacy of the BP.3.3.2 All assumptions that is necessary to be made (e.g. market growth rate, rate of inflation, claim processing fee to be charged from insurers, claim incidence rate, manpower strength, infrastructure to be in position, etc) should be stated.. Some of these assumptions (e.g. fee to be charged from insurers, claim incidence rate, etc) should be arrived at after due consultation with the relevant stakeholders.
3.3.3 The consultant needs to recommend to HI-TPA two or more viable pricing strategies (i.e. fee to be charged for services rendered) for consideration. Revenue implications of the alternate pricing strategiesmay be shown separately.
3.3.4 A Management Control System should be developed for control and improvement of the business performance. This should cover inter alia the reports and feedback that HI-TPA should use for control of the business processes and improving business performance. These reports and feedback are to be provided through the MIS software that would be a part of the information technology platform discussed later.
3.4 Mapping of Major Business Processes
3.4.1 All major processes (including all staff functions and support services) should be mapped comprehensively into activities/sub-activities covering the entire gamut of functional responsibilities broadly indicated in the Introduction (Section 1; sub-section 1.4). Process designs should conform to the global best practices in the relevant areas.
3.4.2 Wherever feasible, alternate designs based on different process management strategies (like centralized vs. decentralized, or in-house vs. outsourced activity) should be evolved and compared based on their relative merits/demerits on relevant functional parameters.
3.5 Organization Structure
3.5.1 A multi-layered organization structure should be recommended to support the major processes and their related activities. Reporting relationships between different hierarchical levels and between different organizational units at different locations should be clearly mentioned.
In developing this structure, various alternatives (based on considerations like process efficiency and control, geographical reach needed for effectively carrying out certain activities, availability of skills required, and so on) should be deliberated upon with the Company and other stakeholders.
3.5.1 Growth of the fully developed structure from start up phase to the steady state should be clearly delineated in the form of a phased roll out plan that would also indicate themanpower and other infrastructure needed.
3.6 Human Resource Plan
3.6.1 A comprehensive human resource (HR) plan needs to be developed to support the organization structure and processes. The major components of the HR Plan are enumerated below. However, this enumeration is only illustrative. The consultant needs to cover other aspects as are considered necessary.
a)Identification of major Job Categories required along with descriptions of role responsibilities, key performance areas (KPAs), and key performance indices (KPIs) for measuring role performance.
b)Educational and professional qualifications, relevant work experience, age, etc for recruitment, the mode of recruitment (e.g. examination cum interview, only interview, etc), and the nature of employment contract (e.g. permanent appointment, fixed tenure contract, agency placement, deputation from PSGICs, etc) with its broad terms and conditions should be specified for each Job Category and for each hierarchical level within a category.
c)A comprehensive HR Development (HRD) Plan identifying the training needs at induction, post-induction, and mid-careerphases for all employees should be developed keeping in view the functional needs at various phases of the growth of HI-TPA.
d)A Career Development Plan (involving transfers and promotions) to be followed as the organization transits from start up to maturity stage should be prepared. This plan should have a linkage with the HRD Plan.
e)A Compensation Plan indicating the salary and allowances to be paid to the employees at different hierarchical levels is to be prepared. This plan should factor in the nature of employment contract and the industry best practices.
f)A Performance Linked Incentive Payment Scheme should be developed. The structure of the incentive and linked performance parameters should reflect the KPAs/KPIs of various levels of employees. The Scheme should incorporate need for periodic review of the linked parameters depending upon internal functional needs, competitive market performance of HI-TPA, and overall market conditions.
More than one design may be presented for deliberations before arriving at the final recommendation.
3.7 Information Technology (IT) Platform
3.7.1 A clearly articulated IT strategy to be followed by HI-TPA should be presented keeping in mind the global best practices. This strategy should drive all actions related to the development of the IT Platform needed to support the major organizational processes.
3.7.2 All major processes and intra- and inter- organizational linkages should be mapped to the various components of the IT Platform and these maps should be well-documented.
3.7.3 A comprehensive architectural design of the IT Platform with all its components (hardware,DC/DR, software, ERP modules and other applications like those related to business analytics and MIS for Management Control System, fraud detection, knowledge management system,and multi-channel interfaces with customers, health care providers, insurers, and other stakeholders) should be prepared keeping in view the global best practices.
This design should be developed through a process of detailed deliberations wherein various alternative design choices should be presented and evaluated.
3.7.4 As a logical outcome of the designing exercise, the Consultant would be required to develop aRFP (Request for Proposal) document for evaluation and selection of a System Integrator (SI) who will be responsible for establishment of the IT Platform. Development of RFP should be done through a process of detailed deliberations.
3.7.5 At post-RFP stage, the Consultant will be required to assist HI-TPA in all stages from bidder evaluation and selection of the SI up to and including drafting and signing of ‘Service Level Agreement’ (SLA) with the SI.
3.7.6 Post-SLA, the Consultant will be responsible for ensuring performance of the selected SI as per the SLA signed.
3.8 Project Management
3.8.1 The project implementation should be delineated into distinct phases - as may be necessary.
3.8.2 For the purpose of effective project implementation, a multi-tier project management organisation should be designed (as appropriate for each phase) indicating inter alia the composition of the various committees/teams.
3.8.3 Requirement of manpower and infrastructure (e.g. office space, office equipment, and other facilities) as may be needed in each phase should be indicated.
3.9 Physical Infrastructure Development Plan
3.9.1 Consistent with the progress of the project implementation and the Business Plans, a comprehensive Physical Infrastructure Development Plan should be prepared covering inter alia the requirements of office space, office equipment, other facilities and services (e.g. telecommunication, security, conservancy, etc).
3.9.2 This plan should also indicate the broad policies to be followed (e.g. leasing vs. purchase, outsourcing of services, etc).
3.10 End-to-End Role
3.10.1 As a part of the end-to-end project implementation role, the Consultant shall remain responsible forcapacity building and technology transfer(from SI and its vendors) by way of employeetraining andtechnology transfer documentation(including making available system specifications and manual preparation) to enable HI-TPA to make ‘pilot launches’ and thereafter startregular commercial operations as per the Basic Conditions (stipulated in sub-section 3.2.2).
3.10.2 The Consultant shall be responsible for enabling HI-TPA to make successful ‘pilot launches’ in at least 10locations/units as to be identified by HI-TPA.
3.10.3 The Consultant shall also be responsible for makingHI-TPA and its processesready for relevant ISO certificationso that HI-TPA can apply for such a certification within a period of 12 months from the start of the regular commercial operations.
4. ELIGIBILITY CRITERIA
A management consulting firm should meetall the following criteria to become eligible for bidding:
a)It should be operating in India as a business consultant for a minimum period of 5 years as on 31/03/2013.
b)It should have a minimum annual turnover of Rs 100 crores from its business consulting operations in India,in each year, during the past three financial years.
c)It should have relevant past consulting experiencewith corporate clients having pan India operations in financial services sectorwith minimum contract value (price charged perconsulting job ) of Rs 5crores.
5. EVALUATIONAND SELECTION - PROCESS AND CRITERIA
A management consulting firm meeting the minimum eligibility criteria who intends to respond to the RFP (hereinafter called ‘Applicant’) is required to submit its proposal in two separate parts, namely, a technical bid and a commercial bidin 2 (two) separate and properly marked sealed envelopes. The submission procedureis described in detail in Section 6.
5.1 Technical Bid
For preparation of the Technical Bid and choosing the items on which adequate details are to be furnished therein, the Evaluation Criteria (hereinafter described in sub-section 5.4) may be used as broad guidelines. Itshould inter alia adequately coverthe following items:
a)All relevant details to establish the Applicant’s credentials for undertaking the project.
b)All relevant details about similar and/or closely related consultancy projects undertaken by the Applicant during the last 5 (five) years (as on 31/03/2013).
c)The Applicant’s overall approach to execute the tasks described under Scope of Work (Section 3) including clear articulation of the deliverables, milestones, and timelines for each specific area/item mentioned therein.
d)Size, composition, and structure of the Project Team that the Applicant proposes to deploy for effective and timely execution of the project. Qualification, area of expertise, and consulting experience in relevant areas should be indicated for each team member.
5.2 Commercial Bid
Commercial Bid shouldquote a consolidated amount (in Indian rupees) that the Applicant proposes to charge for execution ofthe project. This amount should cover all fees and costs related to execution of the entire projectand its entire duration of 18 (eighteen) months. Taxes or levies and such other statutory charges, if any, to be paid by HI-TPA, should be indicated separately.
5.3Evaluation Process for Eligible Applicants
5.3.1 After opening of the Technical Bids, an Evaluation Committee (EC) will screen the proposals received. Incomplete proposals and applications which do not fulfill the eligibility criteria will not be considered further.
5.3.2 Only eligible Applicants would then be invited to present their proposals and provide necessary clarifications to the EC during the presentation. Presentation(to be made before the EC) shall be an integral part of the evaluation process.
5.3.3 After completion of the presentations, the EC will make their final evaluations of each Applicant, who had presented their case before it,by using the Evaluation Criteria mentioned in sub-section
5.4. Applicants who fail to present their case before the EC will not be considered further.
5.4Evaluation Criteria
5.4.1 The broad parameters based on which the technical competence of a short listed Applicant will be evaluated and the relative weightage to be attached to each parameter are indicated in Table 1.
Table - 1
Evaluation Parameters(see Explanatory Notes in sub-section 5.4.2) / Weightage
(%)
A. / Credentials of the Applicant As a Consultant
A.1 / Market Profile of the Applicant / 15
A.2 / Relevant Experience / 15
Sub-Total: / 30
B. / Approach, Methodology, and Consulting Resources to be Deployedfor Project Execution
B.1 / Understanding of the Scope of Work / 5
B.2 / Sharing of Experience of Project Execution in Financial Services Sector / 5
B.3 / Project Execution Roadmap: Major Phases, Deliverables in Each Phase, and Timelines / 5
B.4 / Quality, Size, and Composition of the Project Team to be Deployed (both on-site and off-site) / 20
Sub-Total: / 35
C. / Implementation Plan for Starting Regular Commercial Operations of HITPA
C.1 / Sharing of Experience of Implementation Phase of Projects Undertaken, with Special Emphases on CapacityBuilding, Technology Transfer, and Technology Documentation. / 5
C.2 / Approach and Methodology of Roll Out of Regular Commercial Operations of HITPA / 5
C.3 / Clear Description of the ‘Hand-Holding Role’ (to be played by the Applicant at all stages up to the start of regular commercial operations) / 5
C.4 / Clear description of the Processes of: CapacityBuilding, Technology Transfer, Technology Documentation and Preparing HITPA for ISO Certification, and the Role to be Played by the Applicant in all such matters / 10
C.5 / Quality, Size, and Composition of the Project Team to be Deployed (both on-site and off-site) specifically to carry out the activities described under Items C.2 to C.4. / 10
Sub-Total: / 35
Grand Total: / 100
5.4.2 Evaluation Criteria: Explanatory Notes