What does prudent vendor selection and monitoring look like for a health plan?
Last updated October 2, 2026
Prudence means a documented process — defining needs, comparing candidates, evaluating fees and services, checking references — followed by ongoing monitoring through periodic performance reviews, fee benchmarking, and renewal-time reassessment. The file you build is the proof your process existed.
Hiring TPAs, brokers, PBMs, and carriers is a fiduciary act, and ERISA judges it by process. A defensible selection includes:
- A written scope of the services needed
- Comparison of multiple candidates (an RFP for major vendors; documented market checks for smaller ones)
- Evaluation of fees — including the CAA-required compensation disclosures — against services
- Reference and capability checks, memorialized in the file
Selection is half the duty; monitoring is the other half. Review vendor performance and total compensation at least annually, revisit the market periodically (every 3–5 years for major vendors is a common benchmark), and act on service failures. Committee minutes recording these reviews convert routine oversight into legal protection.
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