A turning point for TPAs: Opportunity meets oversight

To borrow a line from Charles Dickens, it is the best of times and the worst of times for third-party administrators. The potential has never been greater: TPAs are helping to reshape the health benefits landscape, from managing traditional employer-sponsored group plans to pioneering “working owner” models that challenge long-standing norms. But with that potential comes pressure comes intense and growing scrutiny from state regulators determined to hold administrators to higher standards.

Over the past year, we’ve seen a surge in regulatory inquiries related to TPAs. Some are familiar— consumer complaints about specific products or service issues. Others go deeper: data calls requesting details on covered lives, how dollars flow and how operations are structured. The trend is clear — regulators are not just watching; they’re actively digging.

Often, TPAs respond with a familiar line: “We’re exempt under ERISA.” And although it’s true that employer-sponsored plans fall under federal oversight, that exemption applies to the plan itself — not automatically to those who administer it. State regulators still have a critical mandate: to protect their residents from fraud, abuse, and unlicensed or unethical actors. And they’re taking that role seriously.

Just this month, the Delaware Department of Insurance announced targeted market conduct exams of TPAs, with a focus not only on claims and premiums, but operational practices. Other states in the Northeast have taken similar steps. At the national level, the National Association of Insurance Commissioners has elevated TPAs as a topic of priority. Even state attorneys general are getting involved, issuing detailed inquiries on behalf of harmed consumers.

For TPAs, this moment demands a shift in mindset. Every inquiry deserves a thorough, thoughtful response — even when the facts may not be flattering. Attempting to deflect or delay only increases the risk. What starts as a simple request can quickly escalate: inquiries become investigations, investigations become enforcement actions. And once enforcement begins, it rarely ends at the state line. A single action can trigger a chain reaction across multiple jurisdictions — a slow, painful erosion of trust and credibility.

So what should TPAs do?

Many are already working hard to set themselves apart from the industry’s bad actors. They’ve built compliant operations, they respond promptly to regulators, and they emphasize internal quality control. But in this environment, it’s not enough to be compliant. You have to be demonstrably compliant — proactive, transparent and always audit-ready.

That means doubling down on the basics:

• Document everything.
• Record and retain consumer interactions.
• Review those interactions regularly — not just for customer service, but for regulatory readiness.
• Train your teams to engage with empathy, accuracy and accountability.
• Hold partners and affiliates to the same high standards you set internally.

These may sound like common-sense steps, but when the spotlight turns your way, they’ll matter enormously. Preparedness isn’t just good practice — it’s your best protection.

For TPAs, the moment is full of promise. But it’s also a test. Those who approach it with diligence and discipline will not only survive — they’ll lead. So be ambitious. Be bold. But in an era of growing oversight, above all — be ready.

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Michael Bertrand is the chief of staff of NTG Consultants, a national regulatory and government relations firm. He is the former Commissioner of Insurance for Vermont. Contact him at [email protected].