Palhic 99

MARKET CONDUCT EXAMINATION REPORT
AS OF
DECEMBER 31, 1999
_________________________________
PROVIDENT AMERICAN LIFE & HEALTH INSURANCE COMPANY

17800 Royalton Road
Strongsville, OH 44136-5197
_________________________________
NAIC Group Code 1200

NAIC Company Code 67903
EXAMINATION PERFORMED BY INDEPENDENT CONTRACTORS FOR
COLORADO DEPARTMENT OF REGULATORY AGENCIES

DIVISION OF INSURANCE
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Market Conduct Examination Provident American Life & Health Insurance Company
Sarah S. Malloy, CIE, AIRC, PAHM

Sandra J. Rich, AIE, ALHC
Independent Market Conduct Examiners

Contracting with
The Colorado Division of Insurance
1560 Broadway, Suite 850
Denver, Colorado 80202
(303) 894-7499
2

17800 Royalton Road
Strongsville, Ohio 44136-5197
MARKET CONDUCT
EXAMINATION REPORT
as of
December 31, 1999
Examination Performed by

Independent Contract Examiners
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August 18, 2000
The Honorable Willia m J. Kirven III

Commissioner of Insurance
State of Colorado
Commissioner:
This market conduct examination of Provident American Life & Health Insurance Company, was
conducted pursuant to Sections 10-1-203, 10-1-204, 10-1-205(8), 10-3-1106 and 10-16-216, Colorado
Revised Statutes, which authorizes the Insurance Commissioner to examine Individual Health Insurance.
We examined the Company’s records at Ceres Group corporate offices located at 17800 Royalton Road,
Strongsville, Ohio 44136-5197. The market conduct examination covered the period from January 1,
1999 through December 31, 1999.
The results of the examination are respectfully submitted by the following independent market conduct
examiners.
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MARKET CONDUCT
EXAMINATION REPORT
OF
TABLE OF CONTENTS
SECTION PAGE
I. COMPANY PROFILE.......................................................................................... 6
II. PURPOSE AND SCOPE OF EXAMINATION .................................................. 7
III. EXAMINERS' METHODOLOGY...................................................................... 8
IV. EXAMINATION REPORT SUMMARY .......................................................... 11
V. FACTUAL FINDINGS ...................................................................................... 16
A. Company Operations/Management .............................................................. 17

B. Marketing and Sales ..................................................................................... 41
C. Complaints ................................................................................................... 79
D. Producers...................................................................................................... 83
E. Underwriting - Forms ................................................................................... 86
F. Underwriting - Rates................................................................................... 129
G. Underwriting – Applications...................................................................... 134
H. Underwriting - Cancellations/Non-Renewals/Declinations ....................... 141
J. Claims ......................................................................................................... 155
K. Utilization Review ..................................................................................... 164
VI. SUMMARY OF ISSUES AND RECOMMENDATIONS ............................... 167
VII. EXAMINATION REPORT SUBMISSION...................................................... 169
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Market Conduct Examination
Company Profile Provident American Life & Health Insurance Company
COMPANY PROFILE
Provident American Life and Health Insurance Company (PAHLIC) is a member of the Ceres Group that
also includes Central Reserve Life Insurance Company and Continental General Insurance Company. As
of December 31, 1998, (PAHLIC) was licensed to transact business in forty (40) states and the District of
Columbia. In 1999, A. M. Best assigned the classification of NR-3 (Rating Procedure Inapplicable)
stating that its normal rating procedure does not properly apply to Provident American’s business and/or
operations. The Company’s financial size category is Class IV.
Ceres Group, Inc. formerly Central Reserve Life Corporation, was incorporated in 1964 as Citation Life
Insurance Company under the laws of the State of Ohio. “Ceres Group, Inc.” became the Company’s
name in December 1998 following shareholder approval of the change of the Company’s state of
incorporation from Ohio to Delaware through a merger of the Company into a wholly owned subsidiary.
The Company is a holding company, which through its subsidiaries, specializes in meeting the accident
and health insurance needs of individuals and small to mid-sized businesses and the health and life
insurance needs of Americans age 65 and older. In 1998, the Company’s business was conducted
primarily through its then principal operating subsidiary, Central Reserve Life Insurance Company.
On December 31, 1998, Central Reserve acquired Provident American Life and Health Insurance
Company from Provident American Corporation. PALHIC is a life and accident and health insurer that
markets managed care health insurance products to individuals and small businesses. Ceres Group, Inc.
owns 100% of Central Reserve which was its principal operating subsidiary as of December 31, 1998.
Central Reserve owns 100% of PALHIC.
PALHIC specializes in marketing managed care health insurance products to individuals and small
businesses in forty (40) states, through a distribution system of 27,000 agents. The majority of its
business is derived from group association major medical products sold to individuals. A smaller portion
of its business is derived from traditional life (whole life and limited pay) products. Agents of PALHIC
are provided with Central products as well, including Central Reserve’s small and large group health line,
specialty health insurance products, in addition to Continental General Insurance Company’s senior
health and life insurance product lines. Through Provident American Corporation and Internet marketing
subsidiary, HealthAxis.com, the Company has the ability to offer direct on-line health insurance products
through the Internet.
The Company’s 1998 direct written premium for accident and health plans in Colorado was $4,182,000
representing 0.33% of market share. The Company’s loss ratio for 1998 in Colorado was 78.06%.
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Purpose and Scope Provident American Life & Health Insurance Company
PURPOSE AND SCOPE OF EXAMINATION
Independent examiners, contracting with the Colorado Division of Insurance (DOI), in accordance with
Sections 10-1-202, 10-1-203, 10-1-204, C.R.S., which empowers the Commissioner to require any
company, entity, or new applicant to be examined, reviewed certain business practices of Provident
American Life & Health Insurance Company. The findings in this report, including all work products
developed in producing it, are the sole property of the Colorado Division of Insurance.
Examiners performed this market conduct examination on a routine basis to assist the Colorado
Commissioner of Insurance in meeting statutory examination requirements. The purpose of the
examination was to determine the Company’s compliance with Colorado insurance law and with
generally accepted operating principles related to individual sickness and accident insurance policies.
Examination information contained in this report should serve only these purposes. The conclusions and
findings of this examination are public record. The preceding statements are not intended to limit or
restrict the distribution of this report.
Examiners conducted the examination in accordance with procedures developed by the Colorado Division
of Insurance, based on model procedures developed by the National Association of Insurance
Commissioners. They relied primarily on records and materials maintained by the Company. The market
conduct examination covered the period from January 1, 1999 through December 31, 1999.
The examination included review of the following:
Company Operations / Management

Marketing and Sales
Complaints
Producers
Policy Forms
Rating
Applications
Cancellations / Non-Renewals / Declinations
Claims
Utilization Review
The final exam report is a report written by exception. References to additional practices, procedures, or
files that did not contain improprieties, were omitted. Based on review of these areas, comment forms
were prepared for the Company identifying any concerns and/or discrepancies. The comment forms
contain a section that permits the Company to submit a written response to the examiners’ comments.
For the period under examination, the examiners included statutory citations and regulatory references
related to individual insurance laws. Examination findings may result in administrative action by the
Division of Insurance. Examiners may not have discovered all unacceptable or non-complying practices
of the Company. Failure to identify specific Company practices does not constitute acceptance of such
practices. This report should not be construed to either endorse or discredit any insurance company or
insurance product.
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Examiners’ Methodology Provident American Life & Health Insurance Company
EXAMINERS' METHODOLOGY
The examiners reviewed the Company’s business practices to determine compliance with Colorado
insurance laws and Colorado regulations as they pertain to individual plans. For this examination, special
emphasis was given to the laws and regulations as shown in Exhibit 1.
Exhibit 1
Law/Regulation Concerning
Section 10-1-101- General Provisions
10-1-130
Section 10-2-101- Colorado Single Insurance Producer Licensing Act
10-2-704
Section 10-3-1101- Unfair Competition – Deceptive Practices
10-3-1104
Section 10-7-109 No Defense for Nonpayment
Section 10-8-601.5 Applicability and Scope
Section 10-16-101- Colorado Health Care Coverage Act: Part I: Short Title - Definitions -
10-16-121 General Provisions
Section 10-16-201- Part 2: Sickness and Accident Insurance
10-16-219
Section 10-16-701- Consumer Protection Standards Act for the Operation of Managed Care
10-16-708 Plans
Regulation 1-1-4 Maintenance of Offices in this State
Regulation 1-1-6 Concerning the Elements of Certification for Accident and Health Forms,
Automobile Private Passenger Forms, and Claims-Made Liability Forms
Regulation 1-1-7 Market Conduct Record Retention
Regulation 1-2-10 Colorado Single Producer Act: Conditions, Fees and Transition
Regulation 4-2-3 Sickness and Accident Insurance Advertising
Regulation 4-2-5 Hospital Definition
Regulation 4-2-6 Concerning The Definition of the Term “Complications of Pregnancy”
Regulation 4-2-7 Payment of Monetary Penalties by Commercial Insurance Companie s,
Nonprofit Hospital and Health Service Corporations, Health Maintenance
Organizations and Property and Casualty Insurance Companies for
Failure to Promptly Pay Claims for Services
Regulation 4-2-8 Required Health Insurance Benefits for Home Health Services and
Hospice Care
Regulation 4-2-11 Individual and Group Health Insurance Rate Filings
Regulation 4-2-12 Concerning Pre-Existing Conditions and Qualifying Previous and
Existing Coverages
Regulation 4-2-13 Mammography Minimum Benefit Level
Regulation 4-2-15 Required Provisions in Carrier Contracts with Providers and
Intermediaries Negotiating on Behalf of Providers
Regulation 4-2-16 Women’s Access to Obstetricians and Gynecologists under Managed
Care Plans
Regulation 4-2-17 Prompt Investigation of Health Plan Claims Involving Utilization Review
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Regulation 4-2-18 Concerning the Method of Crediting and Certifying Creditable Coverage
for Pre-existing Conditions
Regulation 4-2-19 Concerning Individual Health Benefit Plans Issued to
Self-employed Business Groups of One
Regulation 4-2-20 Concerning The Colorado Comprehensive Health Benefit Plan
Description Form
Regulation 4-6-5 Implementation of Basic and Standard Health Benefit Plans
(Amended)
Regulation 6-2-1 Complaint Record Maintenance
Regulation 6-2-2 Responses to Division Inquiries Regarding Complaints
Regulation 6-2-2, Responses to Division Inquiries Regarding Complaints
(Amended)
Company Operations/Management
The examiners reviewed Company management and administrative controls, Board of Directors meeting
minutes, internal/external auditing functions, record retention, provider contracts, and timely cooperation
with the examination process. The Company’s Certificate of Authority was reviewed to determine
compliance with regard to the types of insurance.
Marketing and Sales
The examiners reviewed all of the printed material provided by the Company for language that did not
accurately represent products or that could be untrue, deceptive or misleading. The material used to advertise
one of the plans on the Internet was also reviewed. The examiners determined if the Company had methods
of control over advertising content and checked for the submission of the Certificate of Compliance to be filed
annually with the Colorado Division of Insurance.
Complaints
The examiners reviewed and compared the complaint log maintained by the Division of Insurance against the
Company’s complaint log to verify the accuracy of the Company’s tracking system and determined if the
Company had instituted a Complaint Appeal and Grievance system. The examiners also reviewed the reason
for and disposition of complaints received directly from policyholders, attorneys and providers.
Producers
The examiners reviewed the producer’s licenses for all producers solic iting insurance in 1999 during the
review of the Applications and Cancellation/Declination sections of the examination.
Policy Forms
The examiners reviewed the policy form provided by the Company as the most frequently sold plan
during 1999 and certifie d with the Colorado Division of Insurance as being in use during 1999. Also
reviewed, to prevent a duplication of effort, was a policy form originally sent to DOI staff and transferred
to the market conduct section. The forms reviewed are identified below:
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Most frequently sold Indemnity and PPO Policy PAL997IMM-CO
Policy transferred from DOI to market conduct section PAHHIC-INDMM-POL-96-CO
Applications
Amendatory endorsements and riders
Rating
The examiners reviewed the rates charged in the sample of files used in the Underwriting-Application
section of the examination. These were reviewed for compliance with the rate filings submitted to the
Colorado Division of Insurance as the rates in effect during the examination period.
Applications
The examiners systematically selected a sample of one hundred (100) individual files for plans effective
from January 1, 1999 through December 31, 1999. Fifty (50) of the files selected were new business files
and fifty (50) were renewal business files. The files were reviewed for compliance with applicable
Colorado insurance law.
Cancellations/Non-Renewals/Declinations
The examiners systematically selected a sample of fifty (50) files cancelled and fifty (50) files declined
during the period under examination. These files were reviewed to determine if the procedures used for
cancellations/declinations were in compliance with Colorado insurance law and contractual obligations.
Claims
A systematically selected sample of one hundred (100) paid and one hundred (100) combined
denied/closed-out claims, processed from January 1, 1999 through December 31, 1999, was selected for
review for the Company’s overall claims handling practices to determine timeliness of payment, accuracy
of processing and entitlement to policy benefits.
Utilization Review
The following entities conducted utilization review during 1999 for Provident American Life & Health
Insurance Company:
First Health Entire year for a piece of the Colorado business

The Araz Group January until mid-August
Med-Value Mid-August for the Araz block of business and approximately
1/3 of the First Health Business
The examiners reviewed the Company’s utilization management program including policies and
procedures. The examiners also reviewed samples of files requiring utilization review decisions.
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Summary Provident American Life & Health Insurance Company
EXAMINATION REPORT SUMMARY
The examination resulted in a total of forty-one (41) findings in which the Company did not appear to be
in compliance with Colorado Statutes and Regulations. The following is a summary of the examiners’
findings and recommendations.
• Company Operations/Management: The examiners found seven (7) areas of concern in their
review of company operations and management.
1. Failure to maintain and disclose the existence of an access plan.
2. Failure to include all required provisions in carrier/intermediary and provider contracts.
3. Failure to file a summary of anti-fraud efforts in 1999.
4. Failure to maintain all records necessary for market conduct purposes.
5. Failure to provide responses within the required time period.
6. Failure to file documentation and data on business groups of one.
7. Failure to maintain copies of intermediary health care subcontracts.
It was recommended that the Company develop and establish the necessary procedures to ensure
compliance with Colorado insurance law in general and specifically that:
1. Plans required to be maintained are complete.

2. Provider/Intermediary contracts include all required provisions.
3. Required reports be filed with the Division of Insurance.
4. Records necessary for market conduct purposes be maintained.
5. Timely responses be made to written requests.
6. Copies of intermediary health care subcontracts are maintained
• Marketing and Sales: The examiners found five (5) areas of concern in their review of marketing
and sales materials. Examiners identified and summarized the following issues:
1. Failure to disclose availability of Colorado Health Plan Description Form in marketing

material.
2. Failure to disclose availability of an access plan in marketing material.
3. Failure to use correct format and complete information in Colorado Health Plan Description
Forms.
4. Failure to use sufficiently clear content in internet advertising to avoid a tendency to mislead.
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5. Failure to accurate ly describe coverage in printed advertising brochures.
It was recommended that the Company’s marketing and sales materials be brought into
compliance with Colorado insurance law.
• Complaints: The examiners found two (2) areas of concern in their review of complaints and the
procedures for the handling and processing of complaints.
1. Failure to maintain a complete record of all consumer complaints received.
2. Failure to include required information in complaint record.
It was recommended that the Company ensure that all complaints received are recorded and
recorded in the format required by Colorado insurance law.
• Producers : The examiners found one (1) area of concern in their review of producers writing
business during the period from January 1, 1999 through December 31, 1999.
1. Failure to determine that producers were properly licensed prior to solicitation and
acceptance of risk.
It was recommended that the company establish procedures to ensure that all producers are
licensed and authorized for the line of insurance being solicited.
• Policy Forms : Examiners found fifteen (15) areas of concern in their review of the Company’s
policy forms. The issues are summarized as follows:
1. Failure to file an Annual Report for health insurance forms and failure to file prior to use.
2. Failure to clearly and correctly state the conditions of renewability.
3. Failure to fully disclose and/or allow the following required mandated benefits.
• Hospitalization and general anesthesia for dental procedures for dependent children.
• Outpatient self-management training and education and medical nutrition therapy for
diabetics.
• One newborn home visit during first week of life if released from hospital less than
48 hours after delivery
• Bereavement counseling services, under hospice benefits, for the primary care giver
and individuals with significant personal ties to the patient.
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• Incomplete home health care benefits reflected.
4. Failure to use correct definitions in the policies as indicated below:
• Adopted child-Coverage required placement in the residence of the insured.

• Disabled dependent-Required disability which came into existence prior to age 19 (or
age 25 in the case of a full-time student)
• Home Health Care-Required patients be discharged from a hospital or extended care
facility.
• Complications of pregnancy and childbirth-Defined as conditions requiring hospital
confinement.
5 Failure to have correct and/or approved different wording of required and optional provisions.
6. Failure to reflect the correct type of plan being offered over the Internet.
7. Failure to use a correctly titled policy coversheet for indemnity plans.
8. Failure to indicate the correct entity responsible for obtaining any necessary preauthorization.
9. Using suicide as a defense for non-payment of life benefits for two policy years.
The examiners recommended that the Company review and revise contract forms to comply with
individual sickness and accident policy laws and regulations.
• Rating: Examiners identified two (2) areas of concern.
1. Failure to apply a risk modification plan as it was filed with the Division of Insurance.
2. Failure to use rates that are not excessive in relation to benefits and failure to use rates that
are non-discriminatory.
The examiners recommended that the Company review and revise its procedures to ensure that
rates are applied as filed and that rates are not excessive in relation to benefits. It was
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also recommended that the Company work with the Division of Insurance to identify the cases
in which rates were not applied as filed and the cases in which rates were discriminatory and
excessive in relation to benefits.
• Applications : The examiners found one (1) area of concern in their review of individual application
files for the examination period. The examiners identified the following issue:
1. Failure to adhere to requirements for determining if individual policies were being sold to
business groups of one.
The examiners recommended that the Company review and revise its procedures to determine if
any applicants are self-employed persons meeting the definition of a business group of one and to
comply with all requirements of Colorado insurance law in those applicable instances
• Cancellations/Non-Renewals/Declinations: There were four (4) areas of concern identified during

the review of the individual cancellation/non-renewal/declination files.
1. Failure to reflect the correct number of days allowed for a break in coverage on Certificates of
Creditable Coverage.
2. Failure to send Certificates of Creditable Coverage within forty-five (45) days of termination.
3. Failure to advise of CUHIP eligibility when declining coverage.
4. Failure to advise declined Business Groups of One of the availability of small group coverage.
The examiners recommended that the company review and correct any inadequacies in procedures
to ensure that proper termination information is sent in a consistent and timely manner.
• Claims: The examiners found three (3) areas of concern in their review of the claims handling
practices of the Company.
1. Failure to accurately determine the number of days utilized for processing claims.
2. Failure to consistently pay claims within sixty (60) days after receipt of a complete claim.
3. Failure to consistently process claims accurately.
The examiners recommended that the Company review its claim processing procedures and
quality controls to ensure that they are adequate to minimize or prevent errors from recurring.
Interest due as a result of delayed processing of claims identified during this examination was
calculated and paid to the appropriate party. Copies of the method of computation, letters of
explanation, the checks and explanation of benefit forms were provided to the examiners.
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Utilization Review: The examiners found one (1) area of concern in their review of utilization
review policies and procedures and cases involving utilization review.
1. Failure to provide written/electronic notification of certification or adverse determinations

for utilization review decisions.
The examiners recommended that the Company establish procedures to ensure that the required
notifications are sent to the covered person and/or the provider.
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Factual Findings Provident American Life & Health Insurance Company
MARKET CONDUCT EXAMINATION REPORT
FACTUAL FINDINGS
PROVIDENT AMERICAN LIFE & HEALTH INSURANCE

COMPANY
16
Company Operations/Management Provident American Life & Health Insurance Company
COMPANY OPERATIONS / MANAGEMENT

FINDINGS
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Issue A1: Failure to maintain an access plan document containing or describing all rights
and responsibilities re quired by law.
Section 10-16-704(9), C.R.S., Network adequacy, states:
Beginning January 1, 1998, a carrier shall maintain and make available upon request of the
commissioner, the executive director of the department of public health and environment, or the
executive director of the department of health care policy and financing, in a manner and form
that reflects the requirements specified in paragraphs (a) to (k) of this subsection (9), an access
plan for each managed care network that the carrier offers in this state. The carrier shall make the
access plans, absent confidential information as specified in section 24-72-204(3), C.R.S.,
available on its business premises and shall provide them to any interested party upon request. In
addition, all health benefit plans and marketing materials shall clearly disclose the existence and
availability of the access plan. [Emphasis added.] All rights and responsibilities of the covered
person under the health benefit plan, however, shall be included in the contract provisions,
regardless of whether or not such provisions are also specified in the access plan. The carrier
shall prepare an access plan prior to offering a new managed care network and shall update an
existing access plan whenever the carrier makes any material change to an existing managed care
network, but not less than annually. The access plan shall describe or contain at least the
following:
(b) The carrier’s procedures for making referrals within and outside its network that, at a
minimum, must include the following:
(II) A provision that referral options cannot be restricted to less than all providers in
the network that are qualified to provide covered specialty services;
(III) Timely referrals for access to specialty care;
(IV) A process for expediting the referral process when indicated by medical
condition;
(V) A provision that referrals approved by the plan cannot be retrospectively denied
except for fraud or abuse;
(c) The carrier’s process for monitoring and assuring on an ongoing basis the
sufficiency of the network to meet the health care needs of populations that enroll
in managed care plans;
(d) The carrier’s quality assurance standards, adequate to identify, evaluate, and
remedy problems relating to access, continuity, and quality of care;
(e) The carrier’s efforts to address the needs of covered persons with limited English
proficiency and illiteracy, with diverse cultural and ethnic backgrounds, and with
physical and mental disabilities;
(f) The carrier’s methods for determining the health care needs of covered persons,
tracking and assessing clinical outcomes from network services, and evaluating
consumer satisfaction with services provided;
(g) the carrier’s method for informing covered persons of the plan’s services and
features, including but not limited to the following:
(I) The plan’s grievance procedures, which shall be in conformance with division
rules concerning prompt investigation of health claims involving utilization
review and grievance procedures;
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(II) The extent to which specialty medical services, includin g physical therapy,
occupational therapy, and rehabilitation services are available;
(III) The plan’s process for choosing and changing network providers; and
(IV) The plan’s procedures for providing and approving emergency and medical care;
(h) The carrier’s system for ensuring the coordination and continuity of care for
covered persons referred to specialty providers;
(i) The carrier’s process for enabling covered persons to change primary care
professionals;
(j) The carrier’s proposed plan for providing continuity of care in the event of
contract termination between the carrier and any of its participating providers or
in the event of the carrier’s insolvency or other inability to continue operations.
The description shall explain how covered persons will be notified of the contract
termination or the carrier’s insolvency or other cessation of operations and
transferred to other providers in a timely manner.
(k) Any other information required by the commissioner to determine compliance
with the provisions of this part 7.
The initial material provided by the Company in response to the request in the pre-exam request letter was
a 1999 PPO Accessibility Report that did not describe or contain the required parts of the law reflected
above. The additional material that was provided in response to the comment form was a typed sheet
listing each of the deficiencies mentioned in the comment form and how the Company felt it was
complying with each deficiency. It does not appear that an access plan document containing or
describing the required procedures, provisions and processes had been developed or maintained by the
Company.
Recommendation No. 1:
Within 30 days, the Company should provide documentation demonstrating why it should not be
considered in violation of Section 10-16-704, C.R.S. In the event the Company is unable to show such
proof, it should provide evidence to the Division of Insurance that it has established procedures to ensure
that it maintains a complete access plan in the required manner and form and that the existence and
availability of such plan is disclosed in marketing materials.
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Issue A2: Failure to include all required provisions in contracts between carriers/
Intermediaries/providers.
Section 10-16-702, C.R.S., Legislative declaration, states:
(1) The general assembly hereby finds, determines, and declares that the purposes of this part 7
are:
(a) To incorporate consumer protections in the creation and maintenance of provider

networks by carriers;
(b) To establish standards to assure the adequacy, accessibility, and quality of health care
services offered under a managed care plan; and
(c) To establish requirements for written agreements between carriers offering managed
care plans and participating providers regarding the standards, terms, and provisions
under which the participating provider will provide services to covered persons.
Section 10-16-121, C.R.S., Required contract provisions in contracts between carriers and providers,
states:
(1) A contract between a carrier and a provider or its representative concerning the delivery,
provision, payment or offering of care or services covered by a managed care plan shall make
provisions for the following requirements:
(a) The contract shall contain a provision stating that neither the provider nor the carrier
shall be prohibited from protesting or expressing disagreement with a medical
decision, medical policy, or medical practice of the carrier or provider.
(b) The contract shall contain a provision that states the carrier shall not terminate the
contract with a provider because the provider expresses disagreement with a carrier’s
decision to deny or limit benefits to a covered person, or because the provider assists
the covered person to seek reconsideration of the carrier’s decision or because a
provider discusses with a current, former, or prospective patient any aspect of the
patient’s medical condition, any proposed treatments or treatment alternatives,
whether covered by the plan or not, policy provisions of a plan, or a provider’s
personal recommendation regarding selection of a health plan based on the provider’s
personal knowledge of the health needs of such patients.
(3) Each contract between a carrier and an intermediary shall contain a provision requiring that
the underlying contract authorizing the intermediary to negotiate and execute contracts with
carriers, on behalf of the providers, shall comply with the requirements of subsection (1) of
this section.
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Section 10-16-705, C.R.S., Requirements for carriers and participating providers, states:
(1) In addition to any other applicable requirements of this part 7, a carrier offering a managed
care plan shall satisfy all the requirements of this section.
(3) Every contract between a carrier and a participating provider shall set forth a hold harmless
provision specifying that covered persons shall, in no circumstances, be liable for money
owed to participating providers by the plan and that in no event shall a participating provider
collect or attempt to collect from a covered person any money owed to the provider by the
carrier. Nothing in this section shall prohibit a participating provider from collecting
coinsurance, deductibles, or copayments as specifically provided in the covered person’s
contract with the managed care plan.
(4)(a) Every contract between a carrier and a participating provider shall include provisions for
continuity of care as specified in this subsection (4).
(b) Each managed care plan shall allow covered persons to continue receiving care for sixty
days from the date a participating provider is terminated by the plan without cause when
proper notice as specified in subsection (7) of this section has not been provided to the
covered person.
(c) In the circumstance that coverage is terminated for any reason other than nonpayment of
the premium, fraud, or abuse, every managed care plan shall provide for continued care
for covered persons being treated at an in-patient facility until the patient is discharged.
(7) A carrier and participating provider shall provide at least sixty days written notice to each
other before terminating the contract without cause. The carrier shall make a good faith
effort to provide written notice of termination within fifteen working days after receipt of
or issuance of a notice of termination to all covered persons that are patients seen on a
regular basis by the provider whose contract is terminating, regardless of whether the
termination was for cause or without cause. Where a contract termination involves a
primary care provider, all covered persons that are patients of that primary care provider
shall also be notified. Within five working days after the date that the provider either
gives or receives notice of termination, the provider shall supply the carrier with a list of
those patients of the provider that are covered by a plan of the carrier.
(8) The rights and responsibilities under a contract between a carrier and a participating
provider shall not be assigned or delegated by the provider without the prior written
consent of the carrier, and any subcontracts shall comply with the requirements of this
part 7.
(9) A carrier’s contract with participating providers shall include a provision that
participating providers do not discriminate, with respect to the provision of medically
necessary covered benefits, against covered persons that are participants in a publicly
financed program.
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(14) Every contract between a carrier or entity that contracts with a carrier and a participating
provider for a managed care plan that requires preauthorization for particular services,
treatments, or procedures shall include:
(a) A provision that clearly states that the sole responsibility for obtaining any necessary
preauthorization rests with the participating provider that recommends or orders said
services, treatments, or procedures, not with the covered person; and
(b) A provision that allows a covered person to receive a standing referral, as defined in
section 10-16-102 (43.5), for medically necessary treatment, to a specialist or
specialized treatment center participating in the carrier’s network or participating in a
subdivision or subgrouping of the carrier’s network if the subdivision or subgrouping
demonstrates network adequacy pursuant to section 10-16-704. The primary care
provider for the covered person, in consultation with the specialist and covered person,
shall determine that the covered person needs ongoing care from the specialist in order
to make the standing referral. A time period for the standing referral of up to one year,
or a longer period of time if authorized by the carrier or any entity that contracts with
the carrier, shall be determined by the primary care provider in consultation with the
specialist or specialized treatment center. The specialist or specialized treatment center
shall refer the covered person back to the primary care provider for primary care. To
be reimbursed by the carrier or entity contracting with a carrier, treatment provided by
the specialist shall be for a covered person and must comply with provisions contained
in the covered person’s certificate or policy. The primary care physician shall record
the reason, diagnosis, or treatment plan necessitating the standing referral.
Section 10-16-706, C.R.S., Intermediaries, states:
(1) In addition to any other applicable requirements of this part 7, a contract between a carrier
and an intermediary shall satisfy all the requirements of this section.
(2) Intermediaries and participating providers with whom they contract shall comply with all
the applicable requirements of section 10-16-705.
(3) The responsibility to ensure that participating providers have the capacity and legal authority
to furnish covered benefits shall be retained by the carrier.
(4) A carrier shall have the right to approve or disapprove participating status of a sub-contracted
provider in its own or a contracted network for the purpose of delivering covered benefits to
the carrier’s covered persons.
(6) If applicable, an intermediary shall transmit utilization documentation and cla ims paid
documentation to the carrier. The carrier shall monitor the timeliness and appropriateness of
payments made to participating providers and health care services received by covered
persons.
22
(7) If applicable, an intermediary shall maintain books , records, financial information, and
documentation of services provided to covered persons at the intermediary’s place of
business in this state.
(8) An intermediary shall allow the commissioner access to the intermediary’s books, records,
financial inf ormation, and any documentation of services provided to covered persons as
necessary to determine compliance with this part 7.
(9) A carrier shall have the right, in the event of the intermediary’s insolvency, to require the
assignment to the carrier of the provisions of a participating provider’s contract addressing
the provider’s obligation to furnish covered services.
Regulation 4-2-15, Required Provisions in Carrier Contracts With Providers and Intermediaries
Negotiating on Behalf of Providers, promulgated pursuant to Sections 10-1-109 and 10-16-121(5),
C.R.S., states:
IV.(B) Clarification of Terms
“Intermediary” is defined in Section 10-16-102(25.5), C.R.S. An intermediary must be

authorized by health care providers to negotiate and execute provider contracts with carriers
on behalf of such providers. Examples of intermediaries may include but are not limited to:
medical service organizations, provider networks, provider organizations, physician group
practices, and physician hospital organizations.
V.(II) Rules
Each and every contract between a carrier and an intermediary that concerns the delivery
provision, payment or offering of care or services covered by a managed care plan that is issued,
renewed, amended or extended after January 1, 1997, shall contain a provision substantially
similar to the following:
“[Name of intermediary] shall include in each and every one of its underlying contracts
authorizing said intermediary to negotiate and execute contracts with carriers on behalf of
providers a provision substantially similar to the following:
Each and every contract which [name of intermediary] negotiates and executes
with carriers, on behalf of the providers covered by this intermediary-provider
contract, shall contain a provision stating that: 1) No individual or group of
providers covered by the contract shall be prohibited from protesting or
expressing disagreement with a medical decision, medical policy, or medical
practice of the carrier or an entity representing or working for such carrier (e.g., a
utilization review company); 2) The carrier or an entity representing or working
for such carrier shall not be prohibited from protesting or expressing
disagreement with a medical decision, medical policy, or medical practice of an
individual or group of providers covered by the contract; and 3) The carrier shall
not terminate any contract executed by [name of intermediary] because any
individual or group of providers covered by the contract (a) expresses
23
disagreement with a decision by the carrier or an entity representing or working

for such carrier to deny or limit benefits to a covered person, or (b) assists the
covered person to seek reconsideration of the carrier’s decision, or (c) discusses
with a current, former, or prospective patient any aspect of the patient’s medical
condition, any proposed treatments or treatment alternatives, whether covered by
the plan or not, policy provisions of a plan, or a provider’s personal
recommendation regarding selection of a health plan based on the provider’s
personal knowledge of the health needs of such patients.”
National Insurance Administrators (NIA) and Provident American Life & Health Insurance Company
(PLHIC) were sister corporations, both owned by Provident American Corporation. NIA had a written
access agreement with Araz (a third party administrator) in effect until September 1, 1999. Araz was a
health care management company that established, maintained, and managed provider networks and
delivered cost containment services to insurance companies, third-party administrators, self-insured
employers, and health care providers. NIA retained the services of Araz for the purpose of developing
and managing relationships with PPOs throughout the United States, and for controlling health care costs
through various programs that Araz had developed. The provider network with which Araz had a
contract was Sloans Lake. PALHIC accessed Araz through the written access agreement between NIA
and Araz. The Company provided a copy of this contract to the examiners.
A review of this contract between National Insurance Administrators (NIA) and Provident American
Life & Health Insurance Company, entered into as of April 1, 1998 and terminated on September 1, 1999,
indicated non-compliance with Colorado insurance law in the following instances:
THE ARAZ GROUP, INC. & NIA

MANAGED CARE SERVICES AGREEMENT
Section 10-16-121 Section 10-16-705 Section 10-16-706 Regulation 4-2-15
(1)(a) & (b) (2) V. (II) Rules

Failure to contain Failure to comply with Failure to contain
provisions requirements of Section provisions
10-16-705
(4)(a)(b)(c) (3)
Failure to contain Failure to contain
provisions provision
(7) (4)
provision provision
(15 & 5 day requirements)
(9) (6)
provision provisions
24
(14)(a) & (b) (7)

(8)
Failure to contain
provision
(9)
Failure to contain
provision
A review of the following Sloans Lake Ma naged Care, Inc., Intermediary Provider Contracts indicated
non-compliance with Colorado insurance law in the following instances:
1998 FACILITY AGREEMENT FOR RENAL DIALYSIS SERVICES
(1)(a) (4)(a) & (b) (2) V. (II) Rules

Failure to contain Failure to contain Failure to comply with Failure to contain
provision provision requirements of Section provisions
10-16-705
(8) (3)
provision provision
(4)
Failure to contain
provision
1998 PARTICIPATING GROUP AGREEMENT
(1)(a) (4)(a)(b) & (c) (2) V. (II) Rules

Failure to contain Failure to contain Failure to comply with Use of an incomplete
provision provisions requirements of Section provision as it does not
10-16-705 mention “medical
policy” or “medical
practice”
(8) (3)
provision provision
(14)(a) & (b) (4)
25
1998 HOSPITAL AGREEMENT

PPO/PIP (Personal Injury Protection)
(1)(a) (4)(a) & (b) (2) V. (II) Rules

10-16-705
(8) (3)
provision provision
(4)
Failure to contain
provision
1998 AMBULATORY SURGERY CENTER AGREEMENT

PPO and PIP (Personal Injury Protection)
(1)(a) & (b) (8) (2) V. (II) Rules

provisions provision requirements of Section provisions
10-16-705
(3)
Failure to contain
provision
(4)
Failure to contain
provision
1998 HOME HEALTH SERVICE AGREEMENT
(1)(a) (8) (2) V. (II) Rules

10-16-705
26
(3)
Failure to contain
provision
(4)
Failure to contain
provision
1998 FACILITY AGREEMENT
(1)(a) (4)(b) (2) V. (II) Rules

10-16-705
(8) (3)
provision provision
(4)
Failure to contain
provision
1999 AMBULATORY SURGERY CENTER AGREEMENT

Effective 07/01/99
(1)(a) (3) (2) V. (II) Rules

Section 6.2.1 of the 10-16-705
contract is in direct
contradiction of the
required provision.
(8) (3)
provision provision
(4)
Failure to contain
provision
27
1999 PARTICIPATING PROVIDER AGREEMENT

Effective 07/15/99
(1)(a) (4)(b)(c) (2) V. (II) Rules

provision provisions requirements of Section provision as it does not
practice”
(7) (3)
Provision is not in Failure to contain
compliance with good provision
faith effort to provide
notification within 15
days
(8) (4)
provision provision
(14)(a) & (b)
Failure to contain
provision
1999 HOSPITAL AGREEMENT

Effective 09/01/99
(1)(a) (3) (2) V. (II) Rules

required provision.
(4)(b) (3)
(4)
Failure to contain
provision
28
1999 ALTERNATIVE MEDICINE PPO-Participating Group Agreement

Effective 07/01/99
(1)(a) (3) (2) V. (II) Rules

provision provision requirements of Section provision as it does not
practice”
(4)(b) & (c) (3)
(7) (4)
days
(14)(a) & (b)
Failure to contain
provision
1999 FACILITY AGREEMENT

Effective 07/01/99
(1)(a) (3) (2) V. (II) Rules

required provision.
(4)(b) & (c) (3)
(7) (4)
provision provision
29
1999 HOME HEALTH SERVICE AGREEMENT

PPO and PIP (Pers onal Injury Protection)
Effective 07/01/99
(1)(a) (3) (2) V. (II) Rules

required provision.
(4)(b) (3)
(7) (4)
days
1999 ALTERNATIVE MEDICINE PPO

Participating Provider Agreement
Effective 07/01/99
(1)(a) (3) (2) V. (II) Rules

required provision.
(4)(b) & (c) (3)
(7) (4)
days
30
(14)(a) & (b)

Failure to contain
provision
1999 PARTICIPATING GROUP AGREEMENT

Effective 07/01/99
(1)(a) (3) (2) V. (II) Rules

required provision.
(7) (3)
days
(14)(a) & (b) (4)
provision provision
considered in violation of Sections 10-16-121,10-16-702, 10-16-705, 10-16-706, C.R.S. and Regulation
4-2-15. In the event the Company is unable to show such proof, it should provide evidence to the
Division of Insurance that it has established procedures to ensure that its provider contracts and those of
its intermedia ries include all provisions required by Colorado insurance law.
31
Issue A3: Failure to file a summary of anti-fraud efforts in 1999 with annual report.
Section 10-1-127(6)(c), C.R.S., Fraudulent insurance acts – immunity for furnishing information relating
to suspected insurance fraud – legislative declaration, states:
Every licensed insurance company doing business in this state shall include as part of its annual
report as required in section 10-3-109 a summary of its anti-fraud efforts as described in
paragraph (a) of this subsection (6).
Bulletin 5-96, November 12, 1996, states:
PURPOSE
Since the passage of House Bill 96-1149, the Division of Insurance has received numerous inquiries
regarding the above-described requirements and the procedures which should be followed to comply with
these requirements. The purpose of this bulletin is to respond to the most-frequently asked questions and
to clarify the expectations of the division.
ACTION REQUIRED
When should the company file the summary of its anti-fraud efforts?
On or before the first day of March in each year, with its annual statement
The Company failed to include a summary of its anti-fraud efforts with the annual report that was filed in
February 1999.
that it complies with the requirement to include a summary of anti-fraud efforts as part of its annual
report.
32
Issue A4: Failure to maintain all records necessary for a market conduct examination.
Regulation 1-1-7, Market Conduct Record Retention, promulgated under the authority of Section 10-1-
109, C.R.S., states:
III. Rule
A. Definitions
1. “Application” shall include any application form or enrollment form for coverage
under any policy.
B. Records Required For Market Conduct Purposes
(1) Every insurer/carrier or related entity licensed to do business in this state shall
maintain its books, records, documents and other business records so that the
insurer’s/carrier’s or related entity’s claims, rating, underwrit ing, marketing,
complaint, and producer licensing records are readily available to the
commissioner. Unless otherwise stated within this regulation, records shall be
maintained for the current calendar year plus two calendar years.
(2) A policy record shall be maintained for each policy issued in this state. Policy
records shall be maintained for the current policy term, plus two calendar years,
unless otherwise contractually required to be retained for a longer period.
Provided, however, documents from policy records no longer required to be
maintained under this regulation, which are used to rate or underwrite a current
policy, must be maintained in the current policy records. Policy records shall be
maintained so as to show clearly the policy term, basis for rating and, if
terminated, return premium amounts, if any. Policy records need not be
segregated from the policy records of other states so long as they are readily
available to the commissioner as required under this rule. A separate copy need
not be maintained in the individual policy records, provided that any data relating
to that policy can be retrieved. Policy records shall include:
(a) The application for each policy, if any;
(b) Declaration pages, endorsements, riders, termination notices, guidelines or

manuals associated with or used for the rating or underwriting of the policy.
Binders(s) shall be retained if a policy was not issued; and
(4) Records relating to the insurer’s/carrier’s or related entity’s compliance with this
state’s producer licensing requirements shall be maintained, which shall include
the licensing records of each agency and producer associated with the insurer or
related entity. Licensing records shall be maintained so as to show clearly the
dates of the appointment and termination of each producer.
33
In the following instances the Company could not furnish requested records required for
this market conduct examination:
Cancellations Six (6) instances in which the licenses for agents who
initially solicited the business which was underwritten
could not be produced.
Applications One (1) instance in which the 1999 license for an agent
could not be produced.
One (1) instance in which a new business file could not

be located
Unable to determine the number of instances. The

Company could not produce any documentation of the
initial notification mailing (sent 1/19/99) concerning the
Women’s Health and Cancer Rights Act of 1998.
Fourteen (14) instances in which the Company could not

provide documentation of the Colorado Health Plan
Description Form being sent to applicants applying over
the internet for the HealthAxis plans. There were
fourteen (14) applicants for the HealthAxis plan in the
sample of new business applications.
One (1) instance in which an application for a renewal

application file could not be furnished.
Declinations Five (5) instances in which declination files could not be

produced.
Consumer Complaints Two (2) instances in which information needed for a

review of the files could not be furnished.
Utilization Review Prior to September, 1999, records for the utilization

review cases processed by Araz could not be provided.
Producers One (1) instance in which the notice of termination letter

for a producer terminated June 11, 1999 could not be
located.
Claims Four (4) instances in which claim files could not be

located. (3 closed files and 1 denied file)
Thirteen (13) instances in which required information

(copies of the bill and repricing sheet) could not be
furnished for paid claims.
34
Within 30 days, the Company should provide documentation demonstrating why it

should not be considered in violation of Regulation 1-1-7. In the event the Company is
unable to show such proof, it should provide evidence to the Division of Insurance that it
has established procedures to ensure it maintains all records required for market conduct
purposes.
35
Issue A5: Failure to respond to written requests for information/material/

comment forms within the time period require d by Colorado insurance law.
Regulation 6-2-2, Response to Division Inquiries, promulgated pursuant to Sections 8-45-117(1)(c), 10-1-
109, 10-2-104, 10-3-1110(1), 10-16-109 and 10-1-108(16), C.R.S., states:
Section 2. Background and Purpose
Part 2, article 1, title 10, C.R.S. allows the Division to conduct both formal and informal
examinations into the conduct of all persons transacting insurance business in this state. Section
10-1-204 (2) (b) (I), C.R.S., authorizes the Commissioner to suspend, revoke, deny or nonrenew
the license or authority of a company for failure to comply with any reasonable written request of
the examiner. Sections 10-2-801 (1), 10-2-804 (4), and 10-16-416, C.R.S., authorizes the
Commissioner to impose a monetary penalty and suspend, revoke, refuse to continue or renew or
refuse to issue an insurance producer license for failure to comply with any lawful rule or order of
the Commissioner. This regulation authorizes the Commissioner, after notice and hearing, to
impose penaltie s for violation of any lawful order of the Commissioner.
The purpose of this regulation is to prescribe the time period in which all persons shall respond to
Division inquiries, including requests for documents, formal and informal examinations and
investigations of consumer complaints regarding alleged violations of Colorado insurance laws.
Section 3. Definitions
As used in this regulation:
C. “Market Conduct Examination Comment Form” is either 1) a written request from the
examiner for books, records, materials, information, or data necessary for examination of
the company’s operations, or 2) a written comment from the examiner which identifies
concerns related to company actions and requires additional information or
acknowledgement from the company.
Section 4. Rules
B. Unless a longer time period is specified in the request, every insurance company shall
provide a complete response to Market Conduct Examination Comment Forms within
five business days from the date of the receipt of the form.
C. If additional time to respond is required, the person shall request an extension by letter to
the Division employee or examiner making the inquiry. The request shall be made within
the original response period established in sections (A) and (B) above, and shall state in
detail the reasons necessitating the extension. When a request for extension is granted,
the person shall respond within the new time period granted by the Division employee or
examiner.
The Company failed in the instances described below to respond to written requests and comment forms
within the time frame ( 5 business days) required by Colorado law.
36
Memoranda
Response Time: 7 Business Days Two (2) instances
6 Business Days Eight (8) instances
8 Business Days One (1) instance

beyond the extension granted
1 Business Day Four (4) instances

beyond the extension granted
Requests for Extensions 6 Business Days Two (2) instances
Comment Forms
Response Time: 6 Business Days Two (2) instances
There were eight (8) comment forms issued in connection with provider contracts that
were not completely responded to at the close of the examination.
As of the date the comment forms were issued the business days that had elapsed from
the date of issue with none of the comment forms returned with an agree or disagree
were:
Response Time 36 Business Days One (1) instance
26 Business Days Two (2) instances
37
considered in violation of Regulation 6-2-2. In the event the Company is unable to show such proof, it
should provide evidence to the Division of Insurance that it has established procedures to ensure that all
written requests and/or written comment forms from market conduct examiners can be completely
responded to within either the time period required by law or within the new time period granted by an
extension.
38
Issue A6: Failure to file documentation of compliance and data on number of Business
Groups of One that were covered.
Section 10-8-601.5(1)(G), C.R.S., Applicability and scope states:
Before marketing or selling individual health benefit plans to business group of one self-
employed persons, and on or before March 1 of each year during which it markets or sells such
plans, the individual carrier provides to the commissioner documentation that it meets the
conditions of this subparagraph (I) and submits data on the number of business groups of one
covered.
Regulation 4-2-19, Concerning Individual Health Benefit Plans Issued to Self-Employed Business Groups
of One, promulgated pursuant to Sections 10-1-109(1), 10-8-601.5(1)(c)(I) and (3), 10-16-108.5(8), and
10-16-109, C.R.S., states:
V. A. Rules
7. Pursuant to Section 10-8-601.5(1)(c)(I)(G), C.R.S., before marketing or selling individual

health benefit plans to self-employed business groups of one, and on or before March 1 of
each year during which it markets or sells such plans, the individual carrier shall provide
documentation that it meets all of the conditions of this part A of Section V of this regulation,
and shall submit data on the number of business groups of one in force as of December 31 of
each year. The documentation shall be sent to the Rates and Forms Section of the Colorado
Division of Insurance, 1560 Broadway, Suite 850, Denver 80202. Acceptable documentation
is shown in Appendix B
The Company had not made the required filing, described above, concerning the individual plans it
markets in Colorado.
considered in violation of Section 10-8-601.5, C.R.S. and Regulation 4-2-19. In the event the Company
is unable to show such proof, it should provide evidence to the Division of Insurance that it has
established procedures to ensure that all required documentation and data on business groups of one is
filed as required by Colorado insurance law.
39
Issue A7: Failure to maintain copies of all intermediary health care subcontracts.
Section 10-16-706(5), C.R.S., Intermediaries, states:
A carrier shall maintain copies of all intermediary health care subcontracts.
The Company did not maintain a copy of any of the contracts between Sloans Lake and the providers and
facilities with which they contracted.
it maintains copies of all intermediary health care subcontracts.
40
Marketing and Sales Provident American Life & Health Insurance Company
MARKETING AND SALES

FINDINGS
41
Issue B1: Failure to display on marketing materials a notice advising of the availability of
the Colorado Comprehensive Health Benefit Plan Description Form.
Amended Regulation: 4-2-20, Concerning the Colorado Comprehensive Health Benefit Plan Description
Form, promulgated pursuant to Sections 10-1-109, 10-3-1110(1), 10-16-108.5(11)(b), and 10-16-109,
C.R.S., states:
Section 4. RULES
(F)(1) Carriers shall prominently include with all marketing materials the following
notice:
“Colorado law requires carriers to make available a Colorado Health Plan Description Form,
which is intended to facilitate comparison of health plans. The form must be provided
automatically within three (3) business days to a potential policyholder who has expressed
interest in a particular plan. The carrier also must provide the form, upon oral or written request,
within three (3) business days, to any person who is interested in coverage under or who is
covered by a health benefit plan of the carrier.”
Bulletin 2-98, Distribution and Use of the Colorado Comprehensive Health Benefit Description Form,
Issue and Effective Date: April 14, 1998, states in part:
II. Action Necessary
(A)(2) All marketing materials shall include a statement that a Colorado Health Plan
Description Form for each policy being marketed or sold is available immediately upon
request.
The Company furnished three (3) Product Brochures, used by Provident American agents to present and
quote the following three plans and internet advertising for the fourth plan.
1. HealthQuest Plus Form No. MK-HQ-11/97

2. HealthEdge Form No. MK-HE-11/97
3. Solution Plus Form No. MK-Sol-11/97
4. HealthAxis Marketed via the Internet
Neither of the three (3) brochures nor the internet advertising included the required statement concerning
the availability of the Colorado Comprehensive Health Benefit Plan Description Form.
42
considered in violation of Amended Regulation 4-2-20. In the event the Company is unable to show such
proof, it should provide evidence to the Division of Insurance that it has established procedures ensuring
that all marketing materials include a notice concerning the availability of the Colorado Comprehensive
Health Benefit Plan Description Form.
43
Issue B2: Failure to disclose availability of an access plan in marketing material.
Section 10-16-704(9), C.R.S., Network Adequacy, states:
Beginning January 1, 1998, a carrier shall maintain and make available upon request of the
commissioner, the executive director of the department of public health and environment, or the
executive director of the department of health care policy and financing, in a manner and form that
reflects the requirements specified in paragraphs (a) to (k) of this subsection (9), an access plan for
each managed care network that the carrier offers in this state. The carrier shall make the access
plans, absent confidential information as specified in section 24-72-204 (3), C.R.S., available on its
business premises and shall provide them to any interested party upon request. In addition, all
health benefit plans and marketing materials shall clearly disclose the existence and availability of
the access plan.
The Company furnished three (3) Product Brochures, used by Provident American agents to present and
quote the following three plans and advertising material used on the internet for the fourth plan.
1. HealthQuest Plus Form. No. MK-HQ-11/97

2. HealthEdge Form No. MK-HE-11/97
3. Solution Plus Form No. MK-Sol-11/97
4. Health Axis Marketed via the Internet
None of the three (3) brochures nor the internet advertising disclosed the existence and availability of the
access plan.
considered in violation of Section 10-16-704. In the event the Company is unable to show such proof, it
should provide evidence to the Division of Insurance that it has established procedures to ensure that all
marketing materials disclose the existence and availability of the access plan.
44
Issue B3: Failure to use correct format and complete information in Colorado
Comprehensive Health Plan Description Forms.
Section 10-3-1104, Unfair methods of competition and unfair or deceptive acts or practices, states:
(1) The following are defined as unfair methods of competition and unfair or deceptive acts or practices
in the business of insurance;
(a) Misrepresentations and false advertising of insurance policies: Making, issuing,

circulation, or causing to be made, issued , or circulated, any estimate, circular, statement,
sales presentation, omission, or comparison which:
(b)
(I) Misrepresents the benefits, advantages, conditions, or terms of any insurance policy;
Section 10-16-108.5(11)(b), Fair marketing standards, states:
The format for and elements of the Colorado health benefit plan description form shall be
determined by rule of the commissioner after consultation with consumer, provider, and
carrier representatives. The commissioner shall promulgate such rule no later than November
15, 1997.
Amended Regulation: 4-2-20, Concerning The Colorado Comprehensive Health Benefit Plan Description
Form, promulgated pursuant to Sections 10-1-109, 10-3-1110(1), 10-16-108.5(11)(b), and 10-16-109,
C.R.S., states:
Section 2. Basis and Purpose
The purpose of this regulation is to establish and implement rules concerning the format for,
elements of, and issuance of a Colorado Health Benefit Plan Description Form, pursuant to
Section 10-16-108.5(11)(b), C.R.S. As required by law, the form is designed to facilitate
comparison of different health plans by persons interested in purchasing or obtaining coverage
under a health benefit plan. As also required by law, this regulation sets out procedures for
carriers to make available a Colorado Health Benefit Plan Description Form for each policy,
contract, and plan of health benefits that either covers a Colorado resident or is marketed to a
Colorado resident or such resident’s employer.
Section 4. Rules
A. Effective September 30, 1998, all carriers offering or providing health benefit plan coverage
or medicare supplemental coverage shall make available a completed copy of the Colorado
Health Plan Description Form shown in Appendix A for each policy, contract, and plan of
health benefits that either covers a Colorado resident or is marketed to a Colorado resident or
such resident’s employer, except as provided in Part B of Section 4 of this regulation.
However, carriers shall be deemed to be in compliance with this amended regulation if they
elect to continue using the health benefit form required in the original regulation 4-2-20,
before amendment, but only for plans issued prior to January 1, 1999.
45
C. Carriers shall use the exact format found in Appendix A for the Colorado Health Plan
Description Form, including all headings, notes, row numbers, and footnotes. All boxes must
be filled in. Carriers may modify box dimensions, reduce margins, or use a landscape rather
than a portrait page layout format, but carriers shall follow the exact requirements and use
only the choices set forth in the directions found in Appendix B of this regulation. A carrier
may also add its logo to the form and print the form in color or black and white. Pursuant to
Section 10-3-1104(1), C.R.S., in completing the form, carriers shall not misrepresent the
benefits, advantages, conditions, or terms of the policy.[Emphases added.]
I. With respect to the specific Colorado Health Plan Description Form required to be made available
by carriers pursuant to Part E (1) of Section 4, a carrier shall develop a separate Colorado Health
Plan Description Form for each of its policies, contracts, and plans of benefits. If a carrier offers
a policy with a choice of copays, coinsurance levels, deductibles, lifetime maximums, annual
maximums, and/or other benefit maximums, minimums or restrictions, the carrier shall provide a
separate Colorado Health Plan Description Form specific to the particular benefits of the policy
being sold, marketed, or which is in place.
Section 7., Effective Date
This amended regulation is effective on September 30, 1998. However, carriers shall be deemed
to be in compliance with this amended regulation if they elect to continue using the health benefit form in
the original regulation (i.e., before amendment) for plans issued prior to January 1, 1999.
A review of the Company’s Colorado Health Plan Description Form for the plan indicated below, indicates
that it does not appear to comply with the required format and appears to misrepresent the benefits of the
plan in some instances.
HealthEdge
As this plan has both a traditional plan and a hospital & physician PPO, it appears that a Colorado Health
Plan Description Form should have been developed for each of these plans instead of combining them in
one form.
Appendix B
Part A:, Type of Coverage
Question 1., Type of Plan. Enter type of plan. Select one of the following choices only: (1) “Medical
expense policy,” (2) “Hospital expense policy”, (3) “Preferred provider plan,” (4) “Health maintenance
organization (HMO)”, (5) “Point of service (i.e., an HMO plan with some out-of-network benefits)”, or
(6) “Limited service licensed provider network (LSLPN) plan”. Note: Plans that have in- and out-of-
network benefits that are not offered by an HMO but which use gatekeepers should enter “Preferred
Provider Plan.”
The Company has used: Traditional Plan (Any Hospital/Any Physician) and Hospital & Physician
PPO.
46
Question 2, Coverage for Out-of-Network Care. Indicate if out-of network care is covered. Select one of
the following choices only: (1) “Only for emergency care,” (2) “Only for emergency and urgent plans];
(3) “only for specified services, patient pays more for such out-of-network care” [e.g., POS
plans]; (4) “Yes, but patient pays more for out-of-network care,” [e.g., PPO’s], (5) “Yes; policy makes
no distinction between in and out-of-network care” [e.g., traditional indemnity plans].
The CHPDF reflects, “Yes, but patient pays more for out-of-network services.”
This would be correct for the Hospital & Physician PPO, but not for the Traditional Plan, which would
use “Yes, policy makes no distinction between in and out of network care.
Part B: Summary of Benefits
Questions 4-31: General Directions.
• If the plan does not make such a distinction (e.g., traditional indemnity plan) replace two columns
with a single column labeled “Benefit Levels.”
The CHPDF reflects two columns which would be correct for the PPO plan, but does not appear to
be correct for the traditional version of this plan.
Question 4, Annual Deductible. Enter applicable individual and family annual deductibles for the plan as
a whole. Indicate whether they are aggregate or separate deductibles. If the plan does not require
deductibles, enter “No deductibles.”
The CHPDF does not indicate whether the deductibles are aggregate or separate deductibles.
Question 5, Out-of-Pocket Annual Maximum. Enter applicable out-of-pocket individual and family
annual maximums. If the out-of-pocket maximum excludes deductibles and/or copays, so indicate. If the
plan has combined in- and out-of-network annual out-of-pocket maximum, so indicate. If the plan has no
out-of-pocket maximum, enter “No out-of-pocket maximum.”
The CHPDF reflects: Individual a) Selected ded. Per insured & coins. % of next $5000 or $2500 of
covered charges & copays Family b) MAX. 3 deds./cal. Yr. + coins. % of next $5000 or $2500 of
covered expenses & copays per insured. This is reflected in both the In-Network and the Out-Of-
Network columns.
This information appears to be both incomplete and misleading. There are two (2) coinsurance choices
for the Traditional Plan and three (3) coinsurance choices for the PPO Plan. The wording indicates that
the deductible will be included in the maximum out of pocket amount. This is in contradiction to what is
stated in the advertising brochure for The Provident HealthEdge plan. For both the Traditional and the
PPO Plan, the brochure states under “Maximum Out Of Pocket For Covered Expenses”: (not including
deductibles and copayments) There are also specific amounts shown in this brochure as maximum out of
pocket for covered expenses for both plans as follows:
47
$1000 (80/20) and $1250 (50/50) for the Traditional Plan

90% Plan
$500 PPO, $1500 Non-PPO
80% Plan
$1000 PPO, $2000 Non-PPO
50% Plan
$1250 PPO and Non-PPO
Question 7A, Covered Providers. Indicate covered providers. Select one of the following choices only:
(1) “[Insert name of provider network]. See provider directory for complete list”, (2) [Insert total
number] physicians and [Insert total number] hospitals in Colorado. See provider directory for complete
list”, or (3) “All providers, licensed or certified to provide covered benefits.”
The CHPDF reflects under the In-Network column: “Sloans Lake Managed Care (see provider dir.
For complete list)” and “N/A” under the Out-Of-Network column.
This would be correct for the PPO Plan, but choice (3) “All providers, licensed or certified to provide
covered benefits” would be correct for the Traditional Plan.
Question 7B, Accessibility of Providers. Select one of the following choices only: Network plans using
this kind of pod system should answer “No”; all other network plans should answer “Yes”. If the answer
depends on the service area or some other factor, so indicate (e.g., “Yes, except in Denver and Adams
County.”) Plans that do not use networks should enter: “Not applicable. This is not a network plan.”
The CHPDF does not reflect a Question 7B.
Question 8, Routine Medical Office Visits, See General Directions for questions 8-30.
The CHPDF reflects under the Out-Of-Network column: “For Trad. Plan-covered, subj. to ded. &
coins.
This is an accurate description of the benefit, however it would not apply only to the Out-Of-Network
column for the Traditional Plan which is the same benefit whether in- or out-of-network.
Question 12, Inpatient Hospital, See General Directions for questions 8-30.
The CHPDF reflects under the Out-Of-Network column: “For Trad. Plan-covered subj. to ded. &
coins. and add’l $500 copay.”
48
Question 13, Outpatient/Ambulatory Surgery, See General Directions for questions 8-30.
coins. And an add’l $250 copay.”
Question 14, Laboratory & X-Ray, See General Directions for questions 8-30.
coins.”
Question 16, Ambulance, See General Directions for questions 8-30.
The CHPDF reflects under both the In-Network and the Out-Of-Network columns, “Covered up to
$600, subj. to ded. & coins.”
This is an accurate description of the benefit, however the General Directions state: “Indicate significant
benefit limits. If per diem, annual, or per visit maximums apply, show them.” The $600 ambulance
benefit is $600 per occurrence and is incomplete and could be misleading without this notation.
Question 25, Home Health Care, See General Directions for questions 8-30.
The CHPDF reflects under both the In-Network and the Out-Of-Network columns, “Covered, subj.
to ded. & coins. & pol limits.”
benefit limits. If per diem, annual, or per visit maximums apply, show them.” The maximum 60 visits is
per calendar year and is incomplete and could be misleading without this notation.
Question 26, Hospice Care
The CHPDF reflects: "Covered, subj. to ded. & coins., max of $91 /day, $8,281/benefit paid; max. 3
benefit periods of 6 mos. each.”
Indicating that benefit periods are 6 months is incorrect and misrepresents the benefits of the plan. The
benefit periods should be 3 mos. instead of 6 mos.
49
Question 30, Chiropractic Care, Briefly describe coverage, if any, and note if coverage may be obtained
either under a separate dental/vision/chiropractic care plan or as an optional benefit.
coins., max. 15 visits/insured/cal. yr.”
Part C: Limitations and Exclusions
Question 33, Exclusionary Riders., Can an individual’s specific, pre-existing condition be entirely
excluded from the policy? All group carriers must enter “No”. Depending on the policy, individual
carriers should enter “Yes, unless the individual is a HIPAA-eligible individual as defined under federal
and state law” or “No”.
The CHPDF states: “Yes”.
This is incomplete as the remainder of the sentence that is required if “Yes” is used is not reflected.
Part D: Using the Plan
Questions 36-38: General Directions. If the plan has separate in- and out-of-network benefits, use two
columns and label them “in-network” and “Out-of-network.” If the plan does not make such a distinction
(e.g., a traditional indemnity plan), replace two columns with a single column labeled “Using the Plan.”
The CHPDF has two columns, one “In-Network” and one “Out-Of-Network”.
This is correct for the PPO Plan that is being described, however it is not in compliance with the
instructions for the Traditional plan that this form is also being used for.
Question 39, Customer Service Number: Enter your main customer service number for
members/insureds.
The CHPDF reflects the following question as No. 39: “With respect to network plans, are all the
providers listed in Question 7 of this form accessible to me through my primary care physician”?
The initial Regulation 4-2-20 required this question. The amended Regulation 4-2-20 does not use this
question, making forty-two (42) questions instead of forty-three (43) in Part D of the form. Section 7,
Effective Date, of the amended regulation requires the new format for plans issued as of January 1, 1999.
50
Question 42., To assist in filing a grievance, indicate the form number of this policy; whether it is
individual, small group or large group; and if it is a short-term policy.
The CHPDF reflects this question as Question 43 and states: PAL9971MM-CO.

This should be Question No. 42 and it does not appear to be complete as the instructions for completing
require one of the following choices to be indicated after the form number: (1) Individual, (2) Small
group only, (3) Large group only, or (4) Group—all sizes. Note: If a carrier offers the identical policy in
several markets (e.g., large group market, small group market, etc.) then multiple responses may be
included here
Part E: Cost
The CHPDF reflects this section as Part E: How Physicians Are Paid. This section contains
summary information about physician reimbursement. To find out how a particular provider is
paid under this plan, ask that provider. The CHPDF also uses three questions, numbered 44., 45.,
and 46., under this section.
The amended regulation requires the following format for plans issued as of January 1, 1999: Part E:
Cost with the only question No. 43, “What is the cost of this plan.” The answer should be as follows:
“Contact your agent, this insurance company, or your employer, as appropriate, to find out the premium
for this plan. In some cases, plan costs are included with this form.” The three (3) additional questions
are now included under Part F:, Physician Payment Methods and Plan Expenditures for Health Expenses,
Administration and Profit.
Part F: Physician Payment Methods, and Plan Expenditures for Health Expenses, Administration and
Profit.
The CHPDF states: “Part F: Cost and Medical Expenditures and has Question 47, What is the
cost of this plan and Question 48, What percentage of total Colorado premiums are spent on
health care expenses as distinct from administration and profit?”
This is the format required prior to January 1, 1999. The instructions indicate that the following is
required by the amended regulation: “Any person interested in applying for coverage, or who is covered
by, or who purchases coverage under this plan may request answers to the questions listed below. The
request may be made orally or in writing to the agent marketing the plan or directly to the insurance
company and shall be answered within five (5) working days of the receipt of the request.”
• What are the three most frequently used methods of payment for primary care physicians?
• What are the three most frequently used methods of payment for physician specialists?
• What other financial incentives determine physician payment?
• What percentage of total Colorado premiums are spent on health care expenses as distinct from
administration and profit?
51
A review of the Company’s Colorado Health Plan Description Form for the plan below, indicates that it
does not appear to comply with the required format and appears to misrepresent the benefits of the plan in
some instances.
Solution Plus
Since this plan has both a traditional plan and a hospital and physician PPO, it appears that a Colorado
Health Plan Description Form should have been developed for each of these plans instead of combining
them in one form.
Appendix B
organization (HMO)”, (5) “Point of service (i.e., an HMO plan with some out-of-network benefits)”, or (6)
“Limited service licensed provider network (LSLPN) plan”. Note: Plans that have in- and out-of-
Provider Plan.”
The Company has used: Traditional Plan (Any Hospital/Physician) and Hospital and Physician PPO.
Question 2, Coverage for Out-of-Network Care. Indicate if out-of-network care is covered.

Select one of the following choices only: (1) “Only for emergency care,” (2) “Only for emergency and
urgent care”. (3) “only for specified services, patient pays more for such out-of-network care” [e.g., POS
plans]; (4) “Yes, but patient pays more for out-of-network care,” [e.g., PPO’s], (5) “Yes, policy makes no
distinction between in and out-of-network care” [e.g., traditional indemnity plans]
This would be correct for the Hospital & Physician PPO, but not for the Traditional Plan, which would use
“Yes, policy makes no distinction between in and out of network care.”
• If the plan does not make such a distinction (e.g., traditional indemnity plan) replace two columns with
a single column labeled “Benefit Levels.”
The CHPDF reflects two columns which would be correct for the PPO plan, but does not appear to be
correct for the traditional version of this plan.
52
Question 4, Annual Deductible. Enter applicable individual and family annual deductibles for the plan as a
whole. Indicate whether they are aggregate or separate deductibles. If the plan does not require
Question 5, Out-of-Pocket Annual Maximum. Enter applicable out-of-pocket individual and family annual
maximums. If the out-of-pocket maximum excludes deductibles and/or copays, so indicate. If the plan has
combined in- and out-of-network annual out-of-pocket maximum, so indicate. If the plan has no out-of-
pocket maximum, enter “no out-of-pocket maximum.”
The CHPDF reflects: Individual a) Selected ded. Per insured & coins. % of next % $5000 or $2500 of
covered expenses & copays per insured. This is reflected in both the In-Network and the Out-OF-
Network columns.
This information appears to be both incomplete and misleading. There are two (2) coinsurance choices for
the Traditional Plan and three (3) coinsurance choices for the PPO Plan. The wording indicates that
the deductible will be included in the4 maximum out of pocket amount. This is in contradiction of what is
stated in the advertising brochure for The Provident Solution Plus plan. For both the Traditional and the
PPO Plan, the brochure states under “Maximum Out Of Pocket For Covered Expenses”. (not including
$1,000 (80/20) and $1,250. (50/50) for Traditional Plan

90% Plan
$500 PPO, $1,500 Non-PPO
80% Plan
$1,000 PPO, $2,000 Non-PPO
50% Plan
$1,250 PPO and Non-PPO
Question 7A, Covered Providers. Indicate covered providers. Select one of the following choices only: (1)
“[Insert name of provider network]. See provider directory for complete list”, (2) “[Insert total number]
physicians and “[Insert total number] hospitals in Colorado as of [insert date]. See provider directory for
complete list”, (3) “All providers, licensed or certified to provide covered benefits.”
The CHPDF reflects under the In-Network column: “The Affordable Medical Network (see provider
dir. For complete list)” and “N/A” under the Out-Of-Network column.
53
Question 7B, Accessibility of Providers. Select one of the following choices only: Network plans using this
kind of pod system should answer “No”, all other network plans should answer “Yes”. If the answer
coins.”
This is an accurate description of the benefit, however, it would not apply only to the Out-Of-Network
column for the Traditional Plan which is the same benefit whether in- or Out-of-network.
This is an accurate description of the benefit however it would not apply only to the Out-Of-Network
coins”
54
Question 16, Ambulance, See General Directions for question 8-30.
$600, subj. to ded. & coins.”
benefit limits. If per diem, annual, or per visit maximums apply, show them.” The $600 ambulance
benefit is $600 per occurrence and is incomplete and could be misleading without this notation.
The CHPDF reflects under both the In-Network and the Out-Of-Network columns, “Covered,
subj. to ded. & coins. & pol. limits.”
The CHPDF reflects: “Covere d, subj. to ded. & coins., max of $91 /day, $8,281/benefit paid; max. 3
benefit periods of 6 mos. each.”
The CHPDF reflects under the Out-Of-network column: “For Trad. Plan-covered, subj. to ded. &
column for the traditional Plan which is the same benefit whether in- or out-of-network.
Question 33, Exclusionary Riders. Can an individual’s specific, pre-existing condition be entirely
55
The CHPDF states “Yes”.
Questions 36-38: General Directions. If the plan has separate in- and out-of network benefits, use two
The CHPDF has two columns, one “In-Network and one “Out-Of-Network.”
members/insureds.
The CHPDF reflects the following question as No. 39: “With respect to ne twork plans, are all the
providers listed in Question 7 of this form accessible to me through my primary care physician?”
Effective Date, of the amended regulation required the new format for plans issued as of January 1, 1999.
The CHPDF reflects this question as Question 43 and States: PAL9971MM-CO.

This should be Question No. 42 and it does not appear to be complete as the instructions for
completing require one of the following choices to be indicated after the form number: (1)
“Individual”, (2) “Small group only”, (3) “Large group only”, or (4) “Group –all sizes.” Note: If a
carrier offers the identical policy in several markets (e.g., large group market, small group market,
etc.) then multiple responses may be included here.
Part E: Cost
The CHPDF reflects this section as: Part E: How Physicians Are Paid. This section contains
56
for this plan. In some cases, plan costs are included with this form”. The three (3) additional questions
Profit
The CHPDF states: “ Part F: Cost and Medical Expenditures and has Question 47, What is the
cost of this plan and Question 48, What percentage of total Colorado premiums are spent on
health care expenses as distinct from administration and profit?”
A review of the Company’s Colorado Health Plan Description Form for the plan below indicates that it
does not appear to comply with the required format and appears to misrepresent the benefits of the plan in
some instances.
HealthQuest Plus
Since this plan has both a traditional plan and a hospital and physician PPO, it appears that a Colorado
Health Plan Description Form should have been developed for each of these plans instead of combining
them in one form.
Appendix B
organization (HMO)”, (5) “Point of service (i.e., an HMO plan with some out-of-network benefits)”, or (6)
“Limited service licensed provider network (LSLPN) plan”. Note: Plans that have in- and out-of-network
benefits that are not offered by an HMO but which use gatekeepers should enter “Preferred Provider Plan.”
57
The Company has used: Traditional Plan (Any Hospital/Physician) and Hospital and Physician PPO.
Question 2, Coverage for Out-of-Network Care. Indicate if out-of-network care is covered.

Select one of the following choices only: (1) “Only for emergency care,” (2) “Only for emergency and
urgent care”. (3) “only for specified services, patient pays more for such out-of-network care” [e.g., POS
plans]; (4) “Yes, but patient pays more for out-of-network care,” [e.g., PPO’s], (5) “Yes, policy makes no
distinction between in and out-of-network care” [e.g., traditional indemnity plans]
This would be correct for the Hospital & Physician PPO, but not for the Traditional Plan, which would use
“Yes, policy makes no distinction between in and out of network care.”
• If the plan does not make such a distinction (e.g., traditional indemnity plan) replace two columns with
a single column labeled “Benefit Levels.”
The CHPDF reflects two columns which would be correct for the PPO plan, but does not appear to be
correct for the traditional version of this plan.
Question 4, Annual Deductible. Enter applicable individual and family annual deductibles for the plan as a
whole. Indicate whether they are aggregate or separate deductibles. If the plan does not require
Question 5, Out-of-Pocket Annual Maximum. Enter applicable out-of-pocket individual and family annual
maximums. If the out-of-pocket maximum excludes deductibles and/or copays, so indicate. If the plan has
combined in- and out-of-network annual out-of-pocket maximum, so indicate. If the plan has no out-of-
pocket maximum, enter “no out-of-pocket maximum.”
The CHPDF reflects: Individual a) Selected ded. Per insured & coins. % of next % $5000 or $2500 of
Network columns.
This information appears to be both incomplete and misleading. There are two (2) coinsurance choices for
the Traditional Plan and three (3) coinsurance choices for the PPO Plan. The wording indicates that the
deductible will be included in the4 maximum out of pocket amount. This is in contradiction of what is
58
stated in the advertising brochure for The Provident HealthQuest Plus plan. For both the Traditional and
the PPO Plan, the brochure states under “Maximum Out Of Pocket For Covered Expenses”. (not including
$1,000 (80/20) and $1,250. (50/50) for Traditional Plan

90% Plan
$500 PPO, $1,500 Non-PPO
80% Plan
$1,000 PPO, $2,000 Non-PPO
50% Plan
$1,250 PPO and Non-PPO
Question 7A, Covered Providers. Indicate covered providers. Select one of the following choices only: (1)
“[Insert name of provider network]. See provider directory for complete list of current providers”, (2)
[Insert total number] physicians and [Insert total number] hospitals in Colorado as of [insert date] See
provider directory for complete list’, or (3) “All providers licensed or certified to provide covered
benefits.”
The CHPDF reflects under the In-Network column: Sloans Lake Managed Care (see provider dir.
for complete list)” and “N/A” under the Out-Of-Network column.
Question 7B, Accessibility of Providers. Select one of the following choices only: Network plans using this
kind of pod system should answer “No”, all other network plans should answer “Yes”. If the answer
The CHPDF reflects unde r the Out-Of-Network column: “For Trad. Plan-covered, subj. to ded. &
coins.”
This is an accurate description of the benefit, however, it would not apply only to the Out-Of-Network
59
column for the Traditional Plan which is the same benefit whether in- or Out-of-network.
The CHPDF reflects under the Out-Of-Network column: “Covered, subj. to ded. & coins., and for
Plans B & C an add’l $500 copay.”
The B Plan should not be shown here since it is a Hospital Only Plan.
coins.”
Question 16, Ambulance, See General Directions for question 8-30.
$1,200., subj. to ded. & coins.”
benefit limits. If per diem, annual, or per visit maximums apply, show them.” The $1,200. ambulance
benefit is $1,200. per occurrence and is incomplete and could be misleading without this notation.
The CHPDF reflects under both the In-Network and the Out-Of-Network columns, “Covered, subj.
to ded. & coins. & pol. limits.”
60
The CHPDF reflects: Covered, subj. to ded. & coins., max of $91 /day, $8,281/benefit paid; max. 3
benefit periods of 6 mos. each.
The CHPDF reflects under the Out-Of-network column: “For Trad. Plan-covered, subj. to ded. &
column for the traditional Plan which is the same benefit whether in- or out-of-network.
Question 33, Exclusionary Riders. Can an individua l’s specific, pre-existing condition be entirely
Questions 36-38: General Directions. If the plan has separate in- and out-of network benefits, use two
The CHPDF has two columns, one “In-Network and one Out-Of-Network.”
61
members/insureds.
The CHPDF reflects the following question as No. 39: With respect to network plans, are all the
providers listed in Question 7 of this form accessible to me through my primary care physician?
Effective Date, of the amended regulation required the new format for plans issued as of January 1, 1999.
The CHPDF reflects this question as Question 43 and States: PAL9971MM-CO.

This should be Question No. 42 and it does not appear to be complete as the instructions for
completing require one of the following choices to be indicated after the form number: (1)
Individual, (2) Small group only, (3) Large group only, or (4) Group –all sizes. Note: If a carrier
offers the identical policy in several markets (e.g., large group market, small group market, etc.)
then multiple responses may be included here.
Part E: Cost
for this plan. In some cases, plan costs are included with this form”. The three (3) additional questions
Profit
The CHPDF states: Part F: Cost and Medical Ex penditures and has Question 47, What is the
cost of this plan and Question 48, What percentage of total Colorado premiums are spent on health
care expenses as distinct from administration and profit.
62
A review of the Company’s Colorado Health Plan Description Form for the plan indicated below, indicates
that it does not appear to comply with the required format and appears to misrepresent the benefits of the
plan in some instances.
HealthAxis
As this plan has both a traditional plan and a hospital & physician PPO, it appears that a Colorado Health
Plan Description Form should have been developed for each of these plans instead of combining them in
one form.
Appendix B
organization (HMO)”, (5) “Point of service (i.e., an HMO plan with some out-of-network benefits)”, or
(6) “Limited service licensed provider network (LSLPN) plan”. Note: Plans that have in- and out-of-
Provider Plan.”
The Company has used: Traditional Indemnity Plans and Preferred Provider (PPO) Hospital and
Physician Plans.
Question 2, Coverage for Out-of-Network Care. Indicate if out-of network care is covered. Select one of
the following choices only: (1) “Only for emergency care,” (2) “Only for emergency and urgent care”.
(3) “only for specified services; patient pays more for such out-of-network care” [e.g., POS plans]; (4)
“Yes, but patient pays more for out-of-network care,” [e.g., PPO’s], (5) “Yes; policy makes no
distinction between in and out-of-network care” [e.g., traditional indemnity plans].
63
This would be correct for the Hospital & Physician PPO, but not for the Traditional Plan, which would
use “Yes, policy makes no distinction between in and out of network care.”
• If the plan does not make such a distinction (e.g., traditional indemnity plan) replace two columns
with a single column labeled “Benefit Levels.”
The CHPDF reflects two columns which would be correct for the PPO plan, but does not appear to
be correct for the traditional version of this plan.
Question 4, Annual Deductible. Enter applicable individual and family annual deductibles for the plan as
a whole. Indicate whether they are aggregate or separate deductibles. If the plan does not require
Question 5, Out-of-Pocket Annual Maximum. Enter applicable out-of-pocket individual and family
annual maximums. If the out-of-pocket maximum excludes deductibles and/or copays, so indicate. If the
plan has combined in- and out-of-network annual out-of-pocket maximum, so indicate. If the plan has no
out-of-pocket maximum, enter “No out-of-pocket maximum.”
The CHPDF reflects: Individual a) Selected ded. Per insured & coins. % of next $5000 or $2500 of
Network columns.
This information appears to be both incomplete and misleading. There are three (3) coinsurance choices
for the Traditional Plan and three (3) coinsurance choices for the PPO Plan. There are four (4) different
deductibles for the Traditional Plan and four (4) different deductibles for the PPO Plan. The wording
indicates that the deductible will be included in the maximum out of pocket amount. This is in
contradiction to what is stated in the advertising material on the Internet for The HealthAxis plan. For
both the Traditional and the PPO Plan, the advertising material states under “Maximum Out Of Pocket
For Covered Expenses”: (not including deductibles and copayments) There are also specific amounts
shown in this advertising material as maximum out of pocket for covered expenses for both plans as
follows:
$1,250 for both the Traditional and the PPO-Bronze Plan
$1,000 for both the Traditional and the PPO(In Network)-Silver Plan and $2,000 for Out
of Network
64
$1,000 for both the Traditional and the PPO (In Network)-Gold Plan
and $2,000 for Out of Network
$250 for both the Traditional and the PPO (In Network)-Platinum Plan
and $750 for Out of Network
Question 7A, Covered Providers. Indicate covered providers. Select one of the followin g choices only:
(1) “[Insert name of provider network]. See provider directory for complete list of current providers”,
(2) “[Insert total number] physicians and [Insert total number] hospitals in Colorado as of [insert date].
See provider directory for complete list”, or (3) “All providers, licensed or certified to provide covered
benefits.”
The CHPDF reflects under the In-Network column: “The Affordable Medical Network (see
provider dir. for complete list)” and “N/A” under the Out-Of-Network column.”
Question 7B, Accessibility of Providers. Select one of the following choices only: Network plans using
this kind of pod system should answer “No”; all other network plans should answer “Yes”. If the answer
The CHPDF reflects under the In-Network column: “For Traditional Indemnity Plans: physician
office visit charge copay $20 (Platinum Plan); (Gold Plan). Silver & Bronze Plans – no copay, subj.
to ded. & coins. For PPO Plans: physician office visit charge copay: $15 (Platinum & Gold), $25
(Silver & Bronze)”. The CHPDF reflects under the Out-Of-Network column: “For Traditional
Indemnity Plans: physician office visit charge copay $20 (Platinum Plan); $25 (Gold Plan). Silver
& Bronze Plans – no copay, subj. to ded. & coins. For PPO Plans: physic ian office visit charge
copay; $40 (Platinum & Gold), $60 (Silver & Bronze)
The schedule of benefits, PPO, Out of Network , Page E2-Silver Plan and Page E3-Bronze Plan indicate a
copay of $50 instead of $60.
65
Question 11, Prescription Drugs. Indicate the amount of coverage for prescription drugs. Also indicate
whether the level of coverage is based on generic versus brand name drugs, use of a prescription drug
card, and/or other requirements. Note if separate copays and deductibles apply. Examples: “Separate
$100 deductible. $8 copay per prescription.” Or “80% generic; 50% brand name drugs.” Or “90% with
prescription drug card. Maximum benefit of $200/month.” Or “$5 per prescription for drugs on our
approved list only.” If a formulary is used, add this statement: “For drugs on our approved list, contact
[name], at [telephone number].”
The CHPDF does not appear to be complete with the description of benefits as the advertising
material printed off the Internet indicates different copays and perce ntages that are not mentioned
in the CHPDF. The following is an example for one of the four different plans.
Bronze Plans: IND Brand Formulary, Copay of $20 and the plan pays 80% after Copay.
PPO (In or Out of Network)Brand Formulary , Copay of $20 and the plan pays 80%
after
copay
PPO (In or Out of Network) Brand Non-Formulary, Copay of $30 and the plan pays 70%
after copay
Question 15, Emergency Care,. See General Directions for Questions 8-30.
The CHPDF reflects a heading of “X-Rays & Diagnostic Tests”.
Question 16, Ambulance, See General Directions for questions 8-30.
The CHPDF reflects a heading of “Emergency Care”.
Question 17, Urgent, Non-Routine, After Hours Care, See General Directions for questions 8-30.
The CHPDF reflects a heading of “Ambulance”.
Question 18, Biologically Based Mental Illness Care.
The CHPDF reflects a heading of “Urgent, Non-Routine, After Hours Care”.

The CHPDF reflects the following under both the In and Out of Network columns: “Inpatient:
Indemnity Silver & Bronze Plans: same, plus add’l. $400 copay.”
The benefit for Biologically-Based Mental Illness Care appears to be described under Hospital Co-
Payment on the Schedule of Benefit pages.
66
Question 20., Alcohol & Substance Abuse, See General Directions for Questions 8-30. If coverage varies
depending on whether the care is in- or out-patient, so indicate. Also indicate if coverage varies
depending on whether care is for alcohol versus other substance abuse.
The CHPDF reflects a heading of “Other Mental Health Care” and describes the benefits and
copays as the same as shown for Biologically-Based Mental Illness Care in Question 18.
Question 21., Physical, Occupational and Speech Therapy. If benefit levels vary, so indicate. Example:
“Physical therapy: 50% maximum for up to six visits per event; Occu0pational: 80%, Speech: not
covered.” If coverage varies depending on whether in or out-patient, so indicate.
The CHPDF reflects a heading of Alcohol & Substance Abuse.
Question 22., Durable Medical Equipment.
The CHPDF reflects a heading of Physical, Occupational, & Speech Therapy.
Question 23., Oxygen.
The CHPDF reflects a heading of Durable Medical Equipment.
Question 24., Organ Transplants.
The CHPDF reflects a heading of Oxygen.
Question 25., Home Health Care.
The CHPDF reflects a heading of Organ Transplants.
Question 26., Hospice Care., See General Directions for Questions 8-30.
The CHPDF reflects a heading of Home Health Care. Both the In and Out of Network columns
state: “Covere d, subj. to ded, & coins. & max. of 60 visits.
This does not appear to be complete as the instructions state: “If per diem, annual, or per visit maximums
apply, show them.” The policy provides for 60 visits each calendar year. [Emphasis added.]
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Question 27., Skilled Nursing Facility Care
The CHPDF reflects a heading of Hospice Care. Both the In and Out of Network columns state:
“Covered, subj. to ded. & coins., max of $91/day, $8,281/benefit paid; max. 3 benefit periods of 6
mos. each.”
The benefit periods should be 3 months each instead of 6 months each.
Question 28., Dental Care.
The CHPDF reflects a heading of Skilled Nursing Facility Care.
Question 29., Vision Care.
The CHPDF reflects a heading of Dental Care.
Question 30., Chiropractic Care.
The CHPDF reflects a heading of Vision Care.
Question 31., Significant Additional Covered Services (list up to 5)
The CHPDF reflects a heading of Chiropractic Care and states in both the In and Out of Network:
“For all Plans: Covered, subj. to Routine Medical Office visits copays (#8 above). Benefit
Maximum: 15 visit/insured/calendar year.”
The copays appear to be incorrect as stated for Question 8.
Question 33, Exclusionary Riders., Can an individual’s specific, pre-existing condition be entirely
This is incomplete, as the remainder of the sentence that is required if “Yes” is used is not reflected.
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Questions 36-38: General Directions. If the plan has separate in- and out-of-network benefits, use two
(e.g., a traditional indemnity plan), replace two columns with a single column labeled “Using
the Plan.”
The CHPDF has two columns, one “In-Network” and one “Out-Of-Network.”
members/insureds.
The CHPDF reflects the following question as No. 40: With respect to network plans, are all the
providers listed in Question 7 of this form accessible to me through my primary care physician?
Effective Date, of the amended regulation requires the new format for plans issued as of January 1, 1999.
The CHPDF reflects this question as Question 44 and states: PAL9971MM-CO.
This should be Question No. 42 and it does not appear to be complete as the instructions for completing
require one of the following choices to be indicated after the form number: (1) Individual, (2) Small
group only, (3) Large group only, or (4) Group—all sizes. Note: If a carrier offers the identical policy in
several markets (e.g., large group market, small group market, etc.) then multiple responses may be
included here
Part E: Cost
69
for this plan. In some cases, plan costs are included with this form.” The three (3) additional questions
Profit.
The CHPDF states: Part F: Cost and Medical Ex penditures and has Question 48, What is the cost
of this plan and Question 49, What percentage of total Colorado premiums are spent on health care
expenses as distinct from administration and profit.
considered in violation of Section 10-3-1104, Section 10-16-108.5 C.R.S. and Amended Regulation 4-2-
20. In the event the Company is unable to show such proof, it should provide evidence to the
Division of Insurance that it has established procedures to ensure that all its Comprehensive Health Plan
Description Forms are correctly formatted and reflect complete and correct information.
70
Issue B4: Failure to use sufficiently clear content in internet advertising to avoid a tendency to be
misleading.
Section 10-3-1104, C.R.S., Unfair methods of competition and unfair or deceptive acts or practic es,
states:
(1) The following are defined as unfair methods of competition and unfair or deceptive acts or practices
in the business of insurance:
(b) False information and advertising generally: Making, publishing, disseminating, circulating, or
placing before the public, or causing, directly or indirectly, to be made, published, disseminated,
circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the
form of a notice, circular, pamphlet, letter, or poster, or over any radio or television station, or in
any other way, an advertisement, announcement, or statement containing any assertion,
representation, or statement with respect to the business of insurance, or with respect to any
person in the conduct of his insurance business which is untrue, deceptive, or misleading;
Regulation 4-2-3, Sickness and Accident Insurance advertising, promulgated under the authority of
Section 10-1-109, C.R.S., states:
III. Rules
E. Format and Content of Advertisements.
1. The format and content of an advertisement of an accident or sickness insurance policy shall
be sufficiently complete and clear to avoid deception or the capacity or tendency to mislead
or deceive. Whether an advertisement has a capacity or tendency to mislead or deceive shall
be determined by the Commissioner of Insurance from the overall impression that the
advertisement may be reasonably expected to create upon a person of average education or
intelligence, within the segment of the public to which it is directed.
A review of the advertising material that was on the internet for the HealthAxis plan during 1999 revealed
the following:
Under the Heading: What’s Covered Under Provident Major Medical Plans -Page 5
Child Health Supervision-Not subject to deductible and coinsurance.

This is in conflict with what is correctly stated on Page 30 of Policy PAL997IMM-CO that states: “This
benefit is not subject to the co-payment, deductible and coinsurance requirements.” [Emphasis added.]
Homeopathic Benefit-Homeopathic treatment rendered by a licensed homeopathist is covered to a

maximum of $50 per visit (after the deductible), and a maximum of $500 per calendar year. Not subject
to copay or coinsurance. (Supplies used by the homeopathic provider are not covered.) This is in conflict
with the coverage provided as stated on Page 29 of Policy PAL997IMM-CO that states: “a
71
maximum of $300 per calendar year per covered person”. The advertising is incomplete in not stating
that this amount applies per covered person and the maximum amount payable per calendar year is
incorrect.
Heading: What’s Covered Under Provident Major Medical Plans -Page 5
Hospice Care -Benefits are payable for a benefit period of six months. Benefits will continue for an
additional benefit period if the terminally ill insured lives beyond the prognosis for life expectancy. All
benefits are subject to a maximum of $91 per day, and a maximum of $8,281 per benefit period, and a
maximum of three benefit periods. Subject to deductible and coinsurance. If an insured is receiving
hospice benefits, bereavement counseling services for an immediate family member are covered.
Bereavement benefits are payable up to a maximum of $1,077 and end three months after the insured’s
death. Bereavement counseling services are not subject to deductible and coinsurance.
The benefits described in this section of advertising are not in compliance with benefits required by
Colorado insurance law in the following ways.
1. Benefits are to be provided for not less than three (3) benefit periods to any individual if needed. As a
benefit period for hospice care services is defined in Regulation 4-2-8 as a period of three (3) months,
benefits are payable for up to nine (9) months instead of twelve (12) months.
2. As any policy offered shall provide a benefit of no less than $91 per day for hospice benefits, the
maximum of $8,281 for a benefit period of six (6) months could not be correct.
3. Bereavement benefits cannot be limited to an immediate family member. The definition of

patient/family in Regulation 4-2-8 is one consisting of those individuals who are closely linked with
the patient, including the immediate family, the primary care giver and individuals with significant
personal ties. The definition of “immediate family” in the policy (page 13) is “You or your spouse,
the children, brothers, sisters, and parents or step parents of either you or your spouse; and the
spouses of the children, brothers, and sisters of either you or your spouse”.
Prostate Cancer Screening (PSA) Tests-(for males age 50 and over) No physician office visit or other
copays apply. Subject to deductible and coinsurance.
The benefits described in this section of advertising do not comply with Colorado insurance law in the
following way:
This benefit shall not be subject to policy deductibles.
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Routine Mammograms -A base line mammogram (low dose mammography) for women at least age
35. Every two years for women ages 40-49. Every year for women age 50 and older. Not subject to
deductible.
The benefits described in this section of advertising do not comply with Colorado insurance law in the
following ways:
1. The description is incomplete in that it does not mention the screening available on an annual or
contract year for women ages 40-49 with risk factors to breast cancer as determined by her
physician.
Routine Nursery Care and Well Baby Care -Coverage includes room, board, or miscellaneous
institutional care or care rendered by a doctor associated with the hospital confinement. Coverage also
includes payment for charges for doctors, medical examinations, special studies, x-rays and laboratory
tests, immunizations, supplies for preventive health care and for circumcision and routine nursery care
given to any infant from the moment of birth until discharged from the hospital.
This description of benefits in the advertising material is not in compliance with Colorado insurance law
in the following way:
1. The description indicates there is no well baby care coverage for an infant after being discharged from
the hospital. Colorado insurance law requires, and the policy provides for, 1 newborn home visit
during the first week of life if the newborn is released from the hospital less than 48 hours after
delivery.
Under the Heading: C. Exclusions and Limitations Applicable to Major Medical Expense Benefits -
Page 11
The following exclusions are applicable to all health insurance benefits. Except as specifically provided
for in the policy, the policy does not cover:
Heading: C. Exclusions and Limitations Applicable to Major Medical Expense Benefits-Page 11
• Expenses resulting from suicide or attempted suicide, whether sane or insane;
The prevailing view in Colorado courts is that broad exclusions for self-inflicted injuries or suicide
attempts may not be applied in instances in which the insured or member was “insane” at the time of
injury in sickness and accident policies written in Colorado. The above exclusions do not appear to be an
accurate representation of the plan’s coverage and have the capacity or tendency to be misleading to the
insurance buying public.
73
Under the Heading: What’s Not Covered Under Provident Major Medical Plans -Page 2 of 5
B. Exclusions and Limitations Applicable to Dental Care Expense Benefits
Benefits are not paid for:
• General anesthesia, unless administered in conjunction with bony impaction, prescribed drugs,
premedication or analgesia;
Colorado insurance law requires coverage to be provided for general anesthesia when rendered in a
hospital, outpatient surgical facility or other licensed facility for dependent children receiving dental care.
This is a mandatory coverage effective for both new and renewal policies as of September 1, 1998. The
above exclusion is more limiting than allowed by law and as such would have a tendency to be
misleading in that it misrepresents the benefits to be covered.
Under the Heading: What’s Not Covered Under Provident Major Medical Plans, Page 4 of 5
C. Exclusions and Limitations Applicable to Major Medical Expense Benefits
• Services or supplies for personal comfort or convenience, including custodial care or homemaker
services;
Colorado insurance law requires homemaker services under the hospice benefit. This exclusion is more
limiting than allowed by law and would have a tendency to be misleading in that it misrepresents the
benefits that would have to be covered under the hospice care benefit included in the plan.
Under the Heading: Some Things You Need to Know About Provident Major Medical Plans, Page 1
of 3
considered in violation of Section 10-3-1104, C.R.S. and Regulation 4-2-3. In the event the Company is
unable to show such proof, it should provide evidence to the Division of Insurance that it has established
procedures to ensure that advertising material placed before the public is sufficiently accurate, complete
and clear to avoid any tendency to be misleading or deceptive.
74
Issue B5: Failure to use sufficiently clear content in marketing brochures to avoid a tendency to
mislead.
Regulation 4-2-3, Sickness and Accident Insurance Advertising, promulgated under the authority of
10-1-109, C.R.S.
Section II, Purpose
The purpose of this regulation is to assure truthful and adequate disclosure of all material and relevant
information in the advertising of accident and sickness insurance. This purpose is intended to be
accomplished by the establishment of, and adherence to certain minimum standards and guidelines of
conduct in the advertising of accident and sickness insurance in a manner which prevents unfair
competition among insurers and is conductive to the accurate presentation and description to the
insurance buying public of a policy of such insurance offered through various advertising media.
Section III, Rules
E. Format and Content of Advertisements.
1. The format and content of an advertisement of an accident or sic kness insurance policy shall be
sufficiently complete and clear to avoid deception of the capacity or tendency to mislead or
deceive. Whether an advertisement has a capacity or tendency to mislead or deceive shall be
determined by the Commissioner of Insurance from the overall impression that the
advertisement may be reasonably expected to create upon a person of average education or
intelligence, within the segment of the public to which it is directed.
2. Advertisements shall be truthful and not misle ading in fact or in implication.

Words or phrases, the meaning of which is clear only by implication or by
familiarity with insurance terminology, shall be used.
Section 10-16-104, C.R.S., Mandatory coverage provisions, states:
(12) Hospitalization and general anesthesia for dental procedures for dependent
children.
(a) All individual and all group sickness and accident insurance policies that are
delivered or issued for delivery within the state by an entity subject to the
provisions of part 2 of this article and all individual and group health care service
or indemnity contracts issued by an entity subject to the provisions of part 3 or 4
of this article except supplemental policies that cover a specific disease or other
limited benefit shall provide coverages for general anesthesia, when rendered in a
hospital, outpatient surgical facility, or other facility licensed pursuant to section
25-3-101, C.R.S., and for associated hospital or facility charges for dental care
provided to a dependent child, as dependent is defined in section 10-16-102 (14),
of a covered person. Such dependent child shall, in the treating dentist’s opinion,
satisfy one or more of the following criteria:
75
(I) The child has a physical, mental, or medically compromisin g condition; or
(II) The child has dental needs for which local anesthesia is ineffective because
of acute infection, anatomic variations, or allergy; or
(III) The child is an extremely uncooperative, unmanageable, anxious, or

uncommunicative child or adolescent with dental needs deemed sufficiently
important that dental care cannot be deferred; or
(IV) The child has sustained extensive orofacial and dental trauma
(c) The provisions of this subsection (12) shall not apply to treatment rendered
for temporal mandibular joint (TMJ) disorders.
Regulation 4-2-8, Required Health Insurance Benefits for Home Health Services and Hospice
Care, promulgated under the authority of 10-1-109 and 10-16-104(8)(d), C.R.S., states:
(II) Basis and purpose
The purpose of this regulation is to establish requirements for standard policy provisions
which state clearly and completely the criteria for and extent of coverage for home health
services and hospice care and to facilitate prompt and informed decisions regarding patient
placement and discharge.
(V) Requirements for hospice care
(B) General Provisions Pertaining to Hospice Care
2. The policy offering shall provide that benefits are allowed only for individuals
who are terminally ill and have a life expectancy of six months or less, except that
benefits may exceed six months should the patient continue to live beyond the
prognosis for life expectancy, in which case the benefits shall continue at the same
rate for one additional benefit period. No insurer shall be required to provide
coverage for more than three benefit periods to any individual.
(C) Benefits for Hospice Care Services
2. The policy or certificate may contain a dollar limitation on hospice benefits. Services
available to the insured will be negotiated at a hospice per diem rate with the hospice provider.
Any policy offered shall provide a benefit of no less than $91 per day for any combination of the
following services which are planned, implemented and evaluated by the interdisciplinary team:
The total benefit for these services shall not be less than the per diem benefit multiplied
by ninety-one (91) days.
76
Section 10-16-201.5, C.R.S., Renewability of health benefit plans – modification of health benefit plans,
states:
(1) A carrier providing coverage under a health benefit plan shall not refuse to renew such plan
except for the following reasons:
(a) Nonpayment of the required premium;
(b) Fraud or intentional misrepresentation of material fact on the part of the plan sponsor with
respect to group health benefit plan coverage and the individual with respect to individual
coverage;
(d) The carrier elects to discontinue offering and nonrenew all of its individual, small group, or
large group health benefit plans delivered or issued for delivery in this state. In such case, the
carrier shall provide notice of the decision not to renew coverage to all policyholders and covered
persons and to the insurance commissioner in each state in which an affected individual is known
to reside at least one hundred eighty days prior to the nonrenewal of the health benefit plan by the
carrier. The carrier shall also discontinue and nonrenew all of its individual or small or large
group health benefit plans in Colorado. Notice to the insurance commissioner under this
paragraph (d) shall be provided at least three working days prior to the notice to the affected
individuals.
(4) An individual health benefit plan must clearly disclose in its contracts and marketing materials
the conditions of renewability which conform with the requirements of this section.
Exclusion: Dental treatment or care – Page 7
The requirement to provide hospitalization and general anesthesia coverage for dental procedures for
dependent children was effective for both new and renewal policies as of September 1, 1998. The
Company has indicated in its advertising brochures, captioned above, that Dental treatment or care is
excluded. Without an exception for dependent children and no provision for hospitalization and general
anesthesia for dental procedures reflected elsewhere, this general exclusion is more limiting than allowed
by Colorado insurance law.
Hospice Care – Page 4
The advertising brochures state that benefits are payable for a benefit period of six months. All benefits
are subject to a maximum of $91 per day and a maximum of $8,281 per benefit period with a maximum
of three benefit periods. This wording could be confusing since the brochures state that benefits are
payable for a benefit period of six months and all benefits are subject to a maximum of $91 per day and a
maximum of $8,281 per benefit period. The $8,281 per benefit period would apply to a three month
benefit period not the six month benefit period.
77
Renewability of Health Benefit Plans
The advertising material does not include the renewability wording required by Colorado law that states
that an individual health benefit plan must clearly disclose in its contracts and marketing materials the
conditions of renewability…
considered in violation of Sections 10-16-104, 10-16-201, 10-16-104, 10-16-201.5,10-16-202, C.R.S. and
Regulations 4-2-3 and 4-2-8. In the event the Company is unable to show such proof, it should provide
evidence to the Division of Insurance that it has established procedures to ensure that advertising and
solicitation material is not deceptive with the capacity to mislead.
78
Complaints Provident American Life & Health Insurance Company
COMPLAINT
FINDINGS
79
Issue C1: Failure to maintain a complete record of all consumer complaints received.
Section 10-3-1104(1)(i), C.R.S., Unfair methods of competition and unfair or deceptive acts or practices
in the business of insurance:, states:
Failure to maintain complaint handling procedures: Failing of any insurer to maintain a complete
record of all the complaints which it has received since the date of its last examination. This
record shall indicate the total number of complaints, their classification by line of insurance, the
nature of each complaint, the disposition of these complaints, and the time it took to process each
complaint. For purposes of this paragraph (i), “complaint” shall mean any written
communication primarily expressing a grievance.
In five (5) instances written communication from consumers was noted which appeared to fall under the
definition of a “complaint”, as expressed in Section 10-3-1104(1)(i), however these files were not on the
Company’s list of complaints received directly from consumers in 1999. Four (4) of these
communications were noted in the sample of cancellation files and one (1) was noted in the sample of
application files.
considered in violation of Section 10-3-1104(1)(i). In the event the Company is unable to show such
that all written communications primarily expressing a grievance are recorded as complaints.
80
Issue C2: Failure to include all required information in the complaint record.
Section 10-3-1104(1)(i), C.R.S., Unfair methods of competition and unfair or deceptive acts or practices,
states:
Failure to maintain complaint handling procedures: Failing of any insurer to maintain a complete
record of all the complaints which it has received since the date of its last examination. This record
shall indicate the total number of complaints, their classification by line of insurance, the nature of
each complaint, the disposition of these complaints, and the time it took to process each complaint .
[Emphasis added.] For purposes of this paragraph (i) “complaint” shall mean any written
communication primarily expressing a grievance.
Regulation 6-2-1, Complaint Record Maintenance, promulgated pursuant to Section 10-3-1110, C.R.S.,
states:
II Purpose
Failure to maintain a record of complaints, as specified therein, is declared to be an unfair trade practice 10-
3-1104(1)(i), C.R.S. The purpose of this regulation is to prescribe the minimum information required to be
maintained in such a record of complaints and to prescribe a format for such record which may be used by
any person subject to this Regulation.
III Content of complaint record
Attachment A of this Regulation sets forth the minimum information required to be contained in a person’s
complaint record in order for it to comply with the statute. Refinements and additions to the information
specified therein may, of course, be maintained in such complaint record. Attachment B of this Regulation
contains an explanation of the various headings, codes and other notations contained in Attachment A. The
codes are used in order to simplify both the identification of the action underlying the complaint and the
keeping of the records.
V Maintenance of record
The complaint record shall be kept on a calendar year basis and the number of complaints by line of
insurance, function, reason, disposition, and state of origin shall be compiled not less frequently than
annually. [Emphasis added.]
The Company did not track the final action or disposition during the period under examination.
81
Within 30 days the Company should provide documentation demonstrating why it should not be
considered in violation of Section 10-3-1104(1), C.R.S. and Regulation 6-2-1. In the event the Company
established procedures to maintain separate records of consumer complaints that include at least the
minimum information required by Colorado insurance law.
82
Producers Provident American Life & Health Ins urance Company
PRODUCER
FINDINGS
83
Issue D1: Failure to determine that all producers were properly licensed prior to solicitation
of insurance.
Section 10-2-103, C.R.S., Definitions, states:
(6) “Insurance producer” or “producer”, except as otherwise provided in section 10-2-105, means a
person who solicits, negotiates, effects, procures, delivers, renews, continues, or binds:
(a) Policies of insurance for risks residing, located, or to be performed in this state;
(7) “License” means a document issued by the commissioner which authorizes a person to act as an
insurance producer for the lines of insurance specified in such document. [Emphasis added.]….
Section 10-2-407(1), C.R.S., License – lines of insurance – authority, indicates:
(a) Life;
(b) Health coverage;
(c) Life and variable contracts;
(d) Property;
(e) Casualty;
(f) Bail bonds; …
Section 10-2-401, C.R.S., License required, states:
(1) No person shall act as or hold oneself out to be an insurance producer unless duly licensed as
an insurance producer in accordance with this article. Every insurance producer who solicits
or negotiates an application for insurance of any kind on behalf of an insurer shall be
regarded as representing the insurer and not the insured or any beneficiary of the insured in
any controversy between the insurer and such insured or beneficiary.
(2) No insurance producer shall make application for, procure, negotiate for, or place for others
any policies for any line or lines of insurance for which he or she is not then qualified and
licensed.
The population consisted of the number of different producers noted in the samples of Application and
Cancelled/Declined files. The same agent, although the producer on more than one file was only counted
once in the population. The applications submitted over the internet by HealthAxis were only counted
once in the population. The population comprised the sample. The three (3) exceptions involved two (2)
instances in which the agents signing applications in 1999 were not authorized for the health coverage
line of insurance being solicited and one (1) instance in which the agent did not have a Colorado
producer’s license on the date that the application for insurance was taken.
PRODUCERS IN SAMPLE OF APPLICATIONS AND CANCELLATIONS/DECLINATIONS

Population Sample Size Number of Exceptions Percentage to Sample
40 40 3 8%
84
considered in violation of Sections 10-2-103, 10-2-401 and 10-2-407, C.R.S. In the event the Company is
procedures to ensure that all producers are licensed and authorized for the lines of insurance being sold.
85
Underwriting – Policy Forms Provident American Life & Health Insurance Company
UNDERWRITING
POLICY FORM
FINDINGS
86
Issue E1: Failure to file an Annual Report of policy forms in 1999 and failure to file prior to use.
Section 10-16-107(2), C.R.S., Rate regulation – approval of policy forms – benefit certificates –
evidences of coverage – loss ratio guarantees – disclosures on treatment of intractable pain, states:
No policy of sickness and accident insurance or subscription certificate or membership certificate

or other evidence of health care coverage shall be delivered or issued for delivery in this state, nor
shall any endorsement, rider, or application which becomes a part of any such policy, contract, or
evidence of coverage be used, until the insurer has filed a certification with the commissioner that
such policy, endorsement, rider, or application conforms , to the best of the insurer’s good faith
knowledge and belief, to Colorado law pursuant to section 10-16-107.2 and copies of the rates
and the classification of risks or subscribers pertaining thereto are filed with the commissioner.
Section 10-16-107.2(1), C.R.S., Filing of health policies, states:
All sickness and accident insurers, health maintenance organizations, and nonprofit hospital and
health service corporations authorized by the commissioner to conduct business in Colorado shall
submit an annual report to the commissioner listing any policy form, endorsement, or rider for
any sickness, accident, nonprofit hospital and health service corporation, health maintenance
organization, or other health insurance policy, contract, certificate, or other evidence of coverage
issued or delivered to any policyholder, certificate holder, enrollee, subscriber, or member in
Colorado. Such listing shall be submitted by January 15, 1993, and not later than December 31 of
each subsequent year and shall contain a certification by an officer of the organization that each
policy form, endorsement, or rider in use complies with Colorado law. The necessary elements of
the certification shall be determined by the commissioner.
Section 10-16-107.2(2), C.R.S., Filing of health policies, states:
All sickness and accident insurers, health maintenance organizations, nonprofit hospital and
health service corporations, and other entities providing health care coverage authorized by the
commissioner to conduct business in Colorado shall also submit to the commissioner a list of any
new policy form, application, endorsement, or rider at least thirty-one days before using such
policy form, application, endorsement, or rider for any health coverage. Such listing shall also
contain a certification by an officer of the organization that each new policy form, application,
endorsement, or rider proposed to be used complies, to the best of the insurer’s good faith
knowledge and belief, with Colorado law. The necessary elements of the certification shall be
determined by the commissioner.
Section 10-16-201, C.R.S., Form and content of individual sickness and accident insurance policies,
states:
(1)(f) Each such form, including riders and endorsements, is identified by a form number in the
lower left-hand corner of the first page thereof.
87
Regulation 1-1-6, Concerning the Elements of Certification for Accident and Health Forms, Automobile
Private Passenger Forms, and Claims-Made Liability Forms, promulgated pursuant to Section 10-1-109,
10-4-419, 10-4-725, and 10-16-107.2, C.R.S., promulgated pursuant to Section 10-1-109, 10-4-419, 10-4-
725, and 10-16-107.2, C.R.S., states:
(III) Rules
(A) Definitions
(3) “Annual Report for health insurance” shall mean a list of all policy forms, endorsements
and riders for any sickness, accident, and/or health insurance policy, contract, certificate,
or other evidence of coverage currently in use and issued or delivered to any
policyholder, certificate holder, enrollee, subscriber, or member in Colorado, including
the titles of the programs or products affected by the forms.
(4) “Certification of Compliance” shall mean a certification form which contains elements of
certification as determined by the Commissioner, signed by a designated officer of the
entity.
(9) “Listing of New Policy Forms for health insurance” shall mean a list of any new policy
forms, endorsements and riders for any sickness, accident, and/or health insurance policy,
contract, certificate, or other evidence of coverage issued or delivered to any
policyholder, certificate holder, enrollee, subscriber, or member in Colorado and the title
of the program or product affected by the form, and the effective date the form will be
used.
B. Filing requirements
At least 31 days prior to using any new form, subject to the provisions of this regulation,
each entity must file in a format prescribed by the Commissioner, a Listing of New
Policy Forms including a fully executed certificate of compliance. Any such listing and
the applicable certificate of compliance must be prepared individually for each program.
Not later than July 1 of each year, each private passenger automobile insurer and claims-
made liability insurer must file an Annual Report of policy forms including a fully
executed certificate of compliance. Not later than December 31 of each year, each entity
providing health care coverages must file an annual report of policy forms including a
fully executed certificate of compliance. [Emphasis added.]
(C) Elements of Certification
The elements of certification as determined by the Commissioner which must

be included in the Colorado Health Coverage Certification Forms, the
Colorado Automobile Private Passenger Insurance Certification Form, and the
Colorado Claims-Made Liability Insurance Certification Form are as follows:
[Emphasis added.]
88
1. The name of the entity;
2. A statement that the officer signing the certification form is knowledgeable of

accident and health insurance or health care benefits, automobile private passenger
insurance, or claims-made liabilit y insurance, whichever is being certified.
3. A statement that the officer signing the certification form has carefully reviewed
the policy forms, subscription certificates, membership certificates or other
evidences of health care coverage identified on the Listing of New Policy Forms
or Annual Report; [Emphasis added.]
4. A statement that the officer signing the certification form has read and
understands each applicable law, regulation and bulletin;
5. A statement that the officer signing the certification form is aware of applicable
penalties for certification of a noncomplying form;
6. A statement that the officer signing the certification form certifies:
b. For Annual Reports of health insurance, that the documents identified on the
listing provide all applicable mandated coverages and are in full compliance with
all Colorado Insurance Laws and Regulations;
7. The name and title of the officer signing the certification form and the date the
certification form is signed.
8. The actual signature of the officer. Signature stamps or signature on behalf of the
officer are not acceptable.
It appears that the Company did not file in 1999 the required annual report of policy forms that
is to be filed and accompanied by a fully executed certificate of compliance.
In response to the request in the pre-exam letter from the Colorado Division of Insurance to provide a
numbered list of all forms used for individuals and groups, including riders, endorsements and
amendments in use during the period of the examination, the Company furnished a list that reflected the
following:
New Policy Form filings filed March 2, 1998
Colorado Health Coverage Certification Form – Certificate Form A(3-1-96 ed.)

Individual Comprehensive Major Medical Policy: PAL997IMM-CO, et al
New Forms:
89
Description Form Number
Individual Outline of Coverage PAL997IMM-OC-CO

Individual Replacement Notice PAL997IMM-IND RPL NOT-CO
Health Insurance Portability and
Accountability Act (HIPAA) Rider PAL997IMM-HIPAA
New Policy Form filings filed November 18, 1997
Colorado Health Coverage Certification Form – Certificate Form A(3-1-98 ed.)

Individual Comprehensive Major Medical Policy: PAL997IMM-CO, et al
New Forms
Description Form Number
Individual Health Policy PAL997IMM-CO

Application MK-79701-APP-Individual-CO
Health Plan Description PAL997IMM-HPD-CO
Life Insurance and Accidental Death
And Dismemberment Insurance Rider PAL997IMM-LIFE/ADD
Dental Benefit Rider PAL997IMM-DENT
Normal Pregnancy Rider PAL997IMM-MAT
Pregnancy Benefit Rider PAL997IMM-MAT-2
Supplemental Accident Rider PAL997IMM-SUPP/ACC
Exclusion Endorsement PAL997IMM-EXCLUSION
Amendment Rider PAL997IMM-PREMIUM
Amendment Rider PAL997IMM-INCENTIVE
Amendment Rider PAL997IMM-AMENDMENT
Endorsement PAL997IMM-ENDORSEMENT
During the review of the Cancelled/Non-renewed files, it was noted that the following forms, used in
1999, did not appear to have been filed with the Commissioner along with the appropriate certification.
1. NOTICE TO SELF EMPLOYED INDIVIDUALS No Form Number
2. HealthAxis (Internet) Application MK-79701-APP-Individual-CO
Although this is the same Form No. for the application submitted as a new form filing on November 18,
1997, this application is different in that there is no provision for an applicant’s signature, the Form
Number is not in the lower left hand corner of the first page of the application, and there are numerous
formatting differences.
3. Medical Information Questionnaire No Form Number

(Under/Over/Weight)
90
4. Children Underwriting Questionnaire UN-150-CO
5. Exclusion Endorsement PALHIC-COMBO EXCL-96
6. General Medical Information Questionnaire No Form Number
7. Respiratory Disorder Questionnaire No Form Number
8. Exclusion Endorsement(reflects a group policy no.) No Form Number
9. Headache Questionnaire No Form Number
10. Exclusion Endorsement 30030/M023
11. Back/Neck Questionnaire No Form Number
12. Avocation Questionnaire LUW/AVO(A)-Q)
13. Notice to Applicant Regarding Replacement of Accident and Sickness Insurance –

PALHIC – IND RPL-98. This form number is in the right-hand corner of the form and is a
different form number than the one filed by the Company on March 2, 1998.
14. Exclusion Endorsement Form No. 00034/EE17
15. Exclusion Endorsement Form No. 00034/GU18

Both of the form numbers for the exclusion endorsements are different from the one filed by
the Company on November 18, 1997.
During the review of the New Business Applications, the forms listed below, used in 1999, did not appear
to have been filed with the Commissioner by Provident American Life & Health Insurance Company.
16. Application Form No. 115496P

The Company indicated this was a Provident Indemnity Life form although it was
being used with Provident American business.
17. Employer Disclosure Form No. MK-180-ED (Rev. 7/95)
18. Endorsement Form No. P1697GMM-Endorsement

The Company indicated this form had been filed by Provident Indemnity Life Insurance
Company and although being used with Provident American business, the form reflected
a Company name of Provident Indemnity.
19. Aviation Questionnaire No Form No.
20. Mental/Nervous Questionnaire No Form No.
91
considered in violation of Section 10-16-107.2, C.R.S. and Regulation 1-1-6. In the event the Company
established procedures to ensure that it files an annual report of policy forms, accompanied by the
required certificate of compliance, with the Colorado Division of Insurance.
92
Issue E2: Failure to clearly and correctly disclose the required conditions of renewability.
Section 10-16-201.5, C.R.S., Renewability of health benefit plans – modific ation of health benefit plans,
states:
(a) Nonpayment of the required premium;
(b) Fraud or intentional misrepresentation of material fact on the part of the plan sponsor
with respect to group health benefit plan coverage and the individual with respect to
individual coverage;
(d) The carrier elects to discontinue offering and nonrenew all of its individual, small group,
or large group health benefit plans delivered or issued for delivery in this state. In such
case the carrier shall provide notice of the decision not to renew coverage to all
policyholders and covered persons and to the insurance commissioner in each state in
which an affected individual is known to reside at least one hundred eighty days prior to
the nonrenewal of the health benefit plan by the carrier. The carrier shall also discontinue
and nonrenew all of its individual or small or large group health benefit plans in
Colorado. Notice to the insurance commissioner under this paragraph (d) shall be
provided at least three working days prior to the notice to the affected individuals. . . .
(4) An individual health benefit plan must clearly disclose in its contracts and marketing
materials the conditions of renewability which conform with the requirements of this
section.
The Company was informed in December, 1999 that review of the following policy was being transferred
to the market conduct section in order to prevent a duplication of effort during the upcoming market
conduct examination. The Company has indicated that this Policy was not marketed in Colorado in 1999,
however the policy did cover Colorado insureds during 1999 and any policies in force during that time
would be subject to Colorado law.
Policy Form No-PALHIC-INDMM-POL-96 CO
From a review of this Policy, it appears that the following statements concerning Renewability are
misleading and/or incorrect:
Cover Sheet “Renewable at the option of the Company”. This statement is misleading in that
the Company may refuse to renew only for certain reasons, specifically described in Colorado insurance
law.
93
Page 5, “RENEWAL PROVISION” The introductory paragraph of this provision states: This policy
may be renewed at the applicable rate at the option of the company to age 65, subject to the Maximum
Lifetime Benefit Amount”. Colorado insurance law does not allow nonrenewal of coverage solely at the
option of the Company, but only for specific reasons.
The following was noted concerning the list of five (5) instances in this provision:
1. the insured reaches age 65 and becomes eligible for Medicare: [Emphasis added]
This is in contradiction with Item 3, Page 13, Termination, which states: “The date the insured reaches
age 65 and becomes covered under Medicare” [Emphasis added]. Colorado insurance law does not allow
when an insured becomes eligible for Medicare as reason for non-renewal.
The following policy was the one form sold to Colorado insureds in 1999. The Company used one policy
form with different schedules of benefits to distinguish the plan types.
Policy PAL9971MM-CO
From a review of this policy it appears the following statements concerning Renewability are misleading
and/or incorrect:
The “Renewal Provision” on Pages 46 and 47 states:
This policy may be renewed at the applicable rate at our option to age 65 or when
you become eligible for Medicare, subject to lifetime maximum. We may cancel
or refuse to renew this policy as of a premium due date when any premium due is
not received by the end of the 31-day grace period; on the date that you, your
covered spouse or your covered dependent become eligible for Medicare; when
terminating all policies with this plan number issued in the state in which you live
on the policy effective date; or when terminating all policies in your state of
residence. Additionally, we may only cancel or refuse to renew if you, your
spouse or your dependents commit an act of fraud or material misrepresentation
with regard to this policy or its benefits. We will provide you with the appropriate
prior notice of our intent not to renew this policy.
The first sentence of this provision indicates the policy may be renewed at the applicable
rate at our option to age 65 or when you become eligible for Medicare, subject to lifetime
maximum [Emphasis added.] Colorado insurance law allows nonrenewal of health benefit
plans for only a limited number of reasons. These reasons do not include (1) solely at the
option of the Company, or (2) when an insured becomes eligible for Medicare nor when
the covered spouse or dependent becomes eligible for Medicare.
The last sentence of this provision does not appear to meet the requirement for a health
benefit plan to clearly disclose in its contracts the conditions of renewability in that it does
not state the required number of days for prior notification of the decision not to renew.
94
Within 30 days the Company should provide documentation demonstrating why it should not be
considered in violation of Section 10-16-201.5, C.R.S. In the event the Company is unable to show such
proof, it should provide evidence to the Division of Insurance that it has revised its policy forms to ensure
they reflect clear and correct conditions of renewability as required by Colorado insurance law.
95
Issue E3: Failure to allow benefits for attempted suicide or self-inflicted injuries sustained
by an insane person.
The prevailing view in Colorado courts is that broad exclusions for self-inflicted injuries or suicide
attempts may not be applied in instances in which the insured or member was “insane” at the time of
injury in sickness and accident policies written in Colorado. See e.g. Continental Casualty Co. v.
Maguire, 471 P.2d 636 (Colo. Ct. App. 1970); Metropolitan Life Insur. Co. v. Wright, 480 P.2d 597
(Colo. Ct. App. 1971); Mass. Protective Ass’n v. Daugherty, 288 P. 888 (Colo. 1930) (life insurance
policy). The reasoning applied by these courts is that injuries sustained in such circumstances are
“accidents,” not “intentional” acts, since an individual who is insane is incapable of forming the requisite
intent.
Bulletin 8-99, Suicide Exclusions And Exclusions For Intentionally Self-Inflicted Injuries In Health
Insurance Policies, states:
Section 1: Background and Purpose
The Division of Insurance (“Division”) has received consumer complaints concerning some health
insurance carriers’ usage and interpretations of suicide exclusions and exclusions for intentionally self-
inflicted injuries in their policies. Some carriers are using exclusions to deny coverage for intentionally
self-inflicted injuries, including suicide or attempted suicide, even where the injury, suicide or suicide
attempt may be the result of sickness, accident or illness, which is covered under the policy. The
exclusions at issue use language the same or substantially similar to the following: “benefits are excluded
for treatment as a result of attempted suicide or suicide or intentionally self-inflicted injury, whether sane
or insane.” The purpose for this bulletin is to clarify the Division’s position on this issue.
Section 2: Applicability and Scope
The subject matter of this bulletin concerns all health insurance carriers that use exclusions for
intentionally self-inflicted injuries, including suicide and suicide attempts in their policies.
Section 3: Division Position
The Division adheres to the opinion of the Colorado courts that suicide, attempted suicide or other acts of
self-destruction committed while insane are an accident. Those performing the above acts while insane
are incapable of formulating the intent necessary to categorize the act as intentional. Therefore, insurance
policies that provide coverage for sickness, accidents and illness, either as may be required by law (such
as for mental illness) or otherwise, may not deny coverage for intentional acts committed while insane.
Such exclusions are contrary to law and are void as against public policy. Accordingly, carriers are
advised to amend policy language and interpret existing policy language accordingly.
96
Policy PAL997IMM-CO
Exclusions
Exclusion 27, Page 32 states:
Expenses resulting from suicide or attempted suicide, whether sane or insane;
Health policies cannot exclude benefits based on suicide attempts or self-inflicted injuries if the
circumstances are such that the covered person was unable to form intent for those actions. An example
being if a person was unable to control his/her actions due to severe mental illness, attempts to harm
themselves would be accidental, not intentional. Case law has supported this position of requiring intent
in order to apply exclusions for self-inflicted injury.
considered in violation of Colorado law. In the event the Company is unable to show such proof, it
should provide evidence to the Division of Insurance that it has revised its policy forms to ensure that
insane individuals have access to treatment for suicide attempts or self-inflicted injuries.
97
Issue E4: Failure to adequately disclose benefits for hospital and anesthesia for dental
procedures for dependent children.
(12) Hospitalization and general anesthesia for dental procedures for dependent children.
(a) All individual and all group sickness and accident insurance policies that are delivered or
issued for delivery within the state by an entity subject to the provisions of part 2 of this
article and all individual and group health care service or indemnity contracts issued by an
entity subject to the provisions of part 3 or 4 of this article except supplemental policies that
cover a specific disease or other limited benefit shall provide coverages for general
anesthesia, when rendered in a hospital, outpatient surgical facility, or other facility licensed
pursuant to section 25-3-101, C.R.S., and for associated hospital or facility charges for dental
care provided to a dependent child, as dependant is defined in section 10-16-102 (14), of a
covered person. Such dependent child shall, in the treating dentist’s opinion, satisfy one or
more of the following criteria:
(I) The child has a physical, mental, or medically compromising condition; or

(II) The child has dental needs for which local anesthesia is ineffective because of acute
infection, anatomic variations, or allergy; or
(III) The child is an extremely uncooperative, unmanageable, anxious, or uncommunicative
child or adolescent with dental needs deemed sufficiently important that dental care
cannot be deferred; or
(IV) The child has sustained extensive orofacial and dental trauma.
(c) The provisions of this subsection (12) shall not apply to treatment rendered for temporal
mandibular joint (TMJ) disorders.
The requirement to provide hospitalization and general anesthesia coverage for dental procedures for
dependent children was effective for both new and renewal policies as of September 1, 1998.
A review of this policy did not reveal any description of this mandated coverage available to insured
dependent children and additionally the policy reflected the following exclusion:
Exclusions And Limitations Section-Page 20
11. Any charges for physician’s services or x-ray examinations involving any of the teeth, their
surrounding tissue or structure, unless covered by rider or unless the charges are:
a. in connection with the treatment or removal of malignant tumors.

b. for services provided within 90 days of an injury and as a result of injury to whole
natural teeth without dental invasion while this policy is in force.
98
A review of the “Dental Benefit Rider”, Form No. PAL9971MM-DENT, indicates:
No benefits will be payable (nor will such benefits count toward meeting the deductible) for:
1. any procedure, service or supplies which are included as covered medical expenses under any
medical care plan;
10. general anesthesia, unless administered in conjunction with bony impaction, prescribed drugs,
premedication or analgesia;
The policy is not in compliance with Colorado insurance law as the exclusion on Page 20 would exclude
and limit this benefit unless covered by rider. The Dental Benefit Rider, on Page 6 excludes any
procedure, service or supplies to be covered under the policy and on Page 7 limits coverage for general
anesthesia to certain circumstances. The policy appears to be incomplete and misleading because of the
exclusions and limitations and no exception mentioned for the mandated benefit available for
hospitalization and general anesthesia for dental procedures for dependent children.
Policy PAL997IMM-CO
A review of this policy did not reveal any description of the mandated coverage of hospitalization and
general anesthesia coverage for dental procedures for dependent children and additionally the policy
reflected the following:
Exclusions
Page 32, Item 30. - Dental treatment or care;
A review of the optional Dental Benefit Rider revealed the following:
Exclusions and Limitations, Page 7, Item 10.- general anesthesia, unless administered in
conjunction with bony impaction, prescribed drugs, premedication or analgesia;
The policy does not appear to be in compliance with Colorado insurance law as it excludes dental
treatment or care and does not provide for this particular coverage associated with dental care provided
for a dependent child. The optional Dental Benefit Rider also excludes this mandated benefit.
99
proof, it should provide evidence to the Division of Insurance that it has revised its forms to include the
mandatory coverage for hospitalization and general anesthesia for dental procedures for dependent
children.
100
Issue E5: Failure to include complete mandated coverages available for diabetics.
(13) Diabetes
(a) Any health benefit plan, except supplemental policies covering a specified disease or
other limited benefit, that provides hospital, surgical, or medical expense insurance shall
provide coverage for diabetes that shall include equipment, supplies, and outpatient self-
management training and education, including medical nutrition therapy if prescribed by
a health care provider licensed to prescribe such items pursuant to Colorado law, and, if
coverage is provided through a managed care plan, such qualified provider shall be a
participating provider in such managed care plan.
(b) Diabetes outpatient self-management training and education when prescribed shall be
provided by a certified, registered, or licensed health care professional with expertise in
diabetes.
(c) The benefits provided in this subsection (13) are subject to the same annual deductibles
or copayments established for all other covered benefits within a given policy.
(d) Private third-party payors shall not reduce or eliminate coverage due to the requirements
of this subsection (13).
A review of the above referenced policy revealed the following:
Benefit Provisions-Page 18
13. Other services and supplies. Charges for:
i. diabetic supplies (insulin covered as a prescription drug or through the pharmacy card
benefit);
This description of benefit provisions does not appear to be complete as it does not mention the mandated
benefits of outpatient self-management training and education nor does it mention medical nutrition
therapy. Colorado insurance law mandated these additional benefits for diabetics effective July 1, 1998.
Policy PAL997IMM-CO
A review of the above referenced policy revealed no mention of any coverage for diabetes. This is not in
compliance with Colorado insurance law as this is a mandated coverage.
101
Additionally the following was noted:
On Page 36, under Prescription Drug Card Benefit, it states:
Prescription Drug Card Benefits will not be paid for:
8. Services or appliances; therapeutic devices including hypodermic needles; syringes; support

garments; other non-medical items, regardless of their intended use;
This statement appears to exclude the mandated coverage for diabetes equipment/supplies.
proof, it should provide evidence to the Division of Insurance that it has revised its forms to reflect the
complete mandated coverage for diabetes as described in Colorado insurance law.
102
Issue E6: Failure to correctly define the requirements to qualify as a dependent.
Section 10-16-201, C.R.S., Form and content of individual sickness and accident insurance policies,
states:
(1) No such policy shall be delivered or issued for delivery in this state unless:
(c) It purports to insure only one person, except as provided in sections 10-16-214 and 10-16-
215, and except that a policy or contract may be issued upon the application of an adult
member of a family, who shall be deemed the policyholder, covering members of any one
family, including husband, wife, dependent children or any children under the age of
nineteen, and other dependents living with the family; and . . .
Policy PAL977IMM-CO
The “Disabled Dependent” heading on Page 9 states:
A covered dependent who is all of the following:
• Incapable of self-sustaining employment by reason of disability (including mental retardation,

nervous or mental disorder, and/or physical handicap other than pregnancy) which came into
existence prior to age 19 (or age 25 in the case of a full-time student);
The Company’s definition of a “disabled dependent” appears to be more restrictive than allowed by law
in the following way:
• There is no requirement as to when the disability occurs for a disabled dependent. Also, a disabled
child may be able to work in self-sustaining employment but nevertheless be dependent upon the
parent.
considered in violation of Sections 10-16-104 and 10-16-201, C.R.S. In the event the Company is unable
to show such proof, it should provide evidence to the Division of Insurance that it has revised its forms to
indicate the correct requirements to meet the definition of a disabled dependent.
103
Issue E7: Failure to include complete mandated Preventive Child Health Supervision
Service benefits.
Section 10-16-104(11), C.R.S., Child health supervision services, states:
Child health supervision services. (a) For purposes of this subsection (11), unless the
context otherwise requires, "child health supervision services" means those preventive
services and immunizations required to be provided in basic and standard health benefit
plans pursuant to section 10-16-105(7.2), to dependent children up to age thirteen. Such
services shall be provided by a physician or pursuant to a physician's supervision or by a
primary health care provider who is a physician's assistant or registered nurse who has
additional training in child health assessment and who is working in collaboration with a
physician.
Amended Regulation 4-6-5, Implementation of Basic and Standard Health Benefit Plans, promulgated
pursuant to Sections 10-1-109, C.R.S., 10-16-105(7.2), C.R.S., and 10-16-108.5(8), C.R.S., states:
Attachment 1
Covered Preventive Services
Age 0-12 months 1 newborn home visit during first week of life if newborn
released from hospital less than 48 hours after delivery.
A review of the following rider used with the above referenced policy reflected the following:
Preventive Child Health Supervision Services Rider

PALHIC-IND PCHSS Rider-96-CO
“The policy provides benefits for covered dependent children for the following preventive child health
supervision services from birth until age 13:”
Immunizations as recommended by the American Academy of Pediatrics

Five well child visits and 1 PKU between age 0 – 12 months
Two well child visits between age 13 – 35 months
Three well child visits between ages 3 – 6 years
Three well child visits between age 7 – 12 years
This listing of covered benefits does not appear to be complete in that it does not include:
1 newborn home visit during first week of life if newborn released from hospital less than 48 hours after
delivery – Age 0-12 months
104
proof, it should provide evidence to the Division of Insurance that it has revised its forms to include a
complete description of the mandated coverage for child health supervision services.
105
Issue E8: Failure to state correctly, clearly or completely the extent of coverage for Hospice
Care.
Section 10-16-104, Mandatory coverage provisions, states:
(8) Availability of hospice care coverage.
(d) The commissioner, in consultation with the department of public health and environment,
may establish by rule and regulation requirements for standard policy and plan provisions
which state clearly and completely the criteria for and extent of insured coverage for
home health services and hospice care. Such provisions shall be designed to facilitate
prompt and informed decisions regarding patient placement and discharge.
Regulation 4-2-8, Required Health Insurance Benefits For Home Health Services and Hospice Care,
promulgated under the authority of 10-1-109 and 10-16-104(8)(d), C.R.S., states:
(II) Basis and purpose
The purpose of this regulation is to establish requirements for standard policy provisions which
state clearly and completely the criteria for and extent of coverage for home health services and
hospice care and to facilitate prompt and informed decisions regarding patient placement and
discharge.
(V) Requirements for hospice care
(A) Definitions
4. A “patient/family” is one unit of care consisting of those individuals who are closely
linked with the patient, including the immediate family, the primary care giver and
individuals with significant personal ties.
10. “Homemaker services” means services provided the patient which include:
(a) General Household Activities including the preparation of meals and routine
household care; and
(b) Teaching, demonstrating and providing patient/family with household

management techniques that promote self-care, independent living and good nutrition.
20. A “benefit period” for hospice care services is a period of three months, during
which services are provided on a regular basis.
(B) General Provisions Pertaining to Hospice Care
2. The policy offering shall provide that benefits are allowed only for individuals who
are terminally ill and have a life expectancy of six months or less, except that
106
benefits may exceed six months should the patient continue to live beyond the
prognosis for life expectancy, in which case the benefits shall continue at the same rate
for one additional benefit period. No insurer shall be required to provide coverage for
more than three benefit periods to any individual.
(C) Benefits for Hospice Care Services
2. The policy or certificate may contain a dollar limitation on hospice benefits.

Services available to the insured will be negotiated at a hospice per diem rate with the
hospice provider. Any policy offered shall provide a benefit of no less than $91 per
day for any combination of the following services which are planned, implemented
and evaluated by the interdisciplinary team:
(a) Intermittent and 24 hour on-call professional nursing services provided by or under the
supervision of a Registered Nurse;
(b) Intermittent and 24 hour on-call social/counseling services;
(c) Certified nurse aide services or nursing services delegated to other persons pursuant to
Section 12-38-132, C. R. S;
(d) Therapies including physical, occupational and speech; and
(e) Nutritional counseling by a nutritionist or dietician.
The total benefit for these services shall not be less than the per diem benefit multiplied
by ninety-one (91) days.
3. The policy offering shall include the following benefits which are exclusive of and
shall not be included in the dollar limitation for hospice care benefits as specified in 2
above.
(a) Bereavement support services for the family of the deceased person during
the three month period following death, and in no event shall this total benefit be
less than $1077.[Emphasis added.]
(c) Medical supplies;
(d) Drugs and biologicals;
(e) Prosthesis and orthopedic appliances
(f) Oxygen and respiratory supplies;
(g) Diagnostic testing;
(h) Rental or purchase of durable medical equipment
107
(i) Transportation; and
(j) Physician services.
A review of the above referenced policy reflected the following:
Benefit Provisions-Page 17
11. Hospice benefit
e. Bereavement counseling services for the immediate family (spouse, children and parents) within three
months following the covered person’s death, up to a maximum of $1,077 [Emphasis added.]
This statement of who is entitled to bereavement counseling services appears to be more restrictive than
allowed by Colorado insurance law. The definition of family as stated in Regulation 4-2-8, also includes
in addition to the immediate family, the primary care giver and individuals with significant personal ties
to the patient.
Also, the following was noted in the Definitions Section, Page 10 of the policy:
Immediate Family
Immediate Family means the insured, the insured’s spouse, and respective parents, brothers, sisters,
children, grandchildren and siblings. This definition is in conflict with the definition of “immediate
family” used on Page 17.
Policy Form No-PAL997IMM-CO
Item 21., “hospice care” on pages 26 and 27 states:
This benefit will cover charges incurred for a benefit period of six months, subject to a maximum
of $91 per day and a maximum of $8,281 per benefit period per covered person. If a terminally
ill covered person lives beyond the prognosis for life expectancy, benefits will continue at the
same rate for an additional benefit period. In no event will coverage be provided for more than
three benefit periods. Covered expenses include charges incurred for the following hospice
services:
The above description of the “hospice care” benefit provided appears to be incorrect as the policy
provides for a possible 3 benefit periods of six months each. Colorado insurance law requires 3 benefit
periods of three months each. Also being subject to a maximum of $91 per day per benefit period, the
maximum of $8,281, shown in the policy for every six months is not correct in that the maximum of
108
$8,281 is available every three months. A nine month period would have a possible maximum benefit of
$24,843 ($8,281 X 3) whereas the company’s benefit for nine month would maximize at $16,562 ($8,281
X 2).
On Page 27, the following sentence is reflected:
Bereavement counseling services by a licensed clinical social worker, pastoral counselor, or

counselor for an immediate family member are covered for up to a period of three months after
the covered person’s death, up to a maximum of $1,077.
This statement of who is entitled to bereavement counseling services appears to be more restrictive than
allowed by Colorado insurance law. The definition of family as stated in Regulation 4-2-8, also includes
in addition to the immediate family, the primary care giver and individuals with significant personal ties
to the patient.
Item 21 on Page 27 states under the heading of “hospice care”:
Covered expenses include charges incurred for the following hospice services:
There does not appear to be any mention of the homemaker services required by Regulation 4-2-8.
Additionally on Page 30 the “Exclusions” Section states:
The following exclusions are applicable to all Health Insurance Benefits.
On Page 33, Item 47., states: services or supplies for personal comfort or convenience, including
custodial care or homemaker services;
Covered expenses include charges incurred for the following hospice services:
There does not appear to be any mention of the required benefit of certified nurse aide services or nursing
services delegated to other persons pursuant to section 12-38-132, C.R.S.
• physical, respiratory or speech therapy;
109
This does not appear to be a complete description of the required benefits as there is no mention of
“occupational” therapy.
There does not appear to be a description of the following required benefits in the policy:
(1) Oxygen and respiratory supplies

(2) Diagnostic testing
(3) Rental or purchase of durable medical equipment
(4) Transportation
(5) Physician services
unable to show such proof, it should provide evidence to the Division of Insurance that it has revised its
forms to correctly, clearly and completely state the extent of coverage provided for hospice care.
110
Issue E9: Failure to indicate correct requirements and benefits for home health care
services.
(8) Availability of hospice care coverage
(d) The commissioner, in consultation with the department of public health and
environment, may establish by rule and regulation requirements for standard policy
and plan provisions which state clearly and completely the criteria for and extent of
insured coverage for home health services and hospice care. Such provisions shall
be designed to facilitate prompt and informed decisions regarding patient placement
and discharge.
Regulation 4-2-8, Required Health Insurance Benefits for Home Health Services and Hospice Care,
promulgated under the authority of 10-1-109 and 10-16-104(8)(d), C.R.S., states:
(IV) Requirements for home health services
(B) General Provisions Pertaining to Home Health Care
(1) The policy offering shall provide that home health services are to be covered when
such services are necessary as alternatives to hospitalization or in place of hospitalization.
Prior hospitalization shall not be required.[Emphasis added.]
(C) Benefits for Home Health Care Services
(2) The policy offered shall include benefits for the following services:
(d) Occupational therapy;
A review of the above referenced policy reflected the following:
Definitions-Page 9
Home Health Care
Home health care means a formal program of care and treatment which is performed in the home of
patients discharged from a hospital or extended care facility, …
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The statement defining “Home Health Care” as being available for patients discharged from a hospital or
extended care facility does not appear to be in compliance with Colorado insurance law in that there is no
requirement for being discharged from an extended care facility before home health care may take place
and prior hospitalization is specifically excluded as a requirement.
Policy Form No. PAL9971MM-CO
Section II-Health Insurance Benefits
Covered Expenses
Item 20. Home health care.
Page 26 states:
• Physical, respiratory or speech therapy performed for rehabilitative treatment.
This statement does not include the required occupational therapy.
forms to correctly reflect requirements for and to include all required coverages for home health care
benefits.
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Issue E10: Failure to have correct and/or approved different wording in required and
optional provisions.
Section 10-16-202(1), C.R.S., Required provisions in individual sickness and accident policies, states:
Except as provided in section 10-16-204, each such policy delivered or issued for delivery to any
person in this state shall contain the provisions specified in this section in the words in which the
same appear in this section; except that the insurer, at its option, may substitute for one or more of
such provisions corresponding provisions of different wording approved by the commissioner
which are in each instance not less favorable in any respect to the insured or the beneficiary. Such
provisions shall be preceded individually by the caption appearing in this section or, at the option
of the insurer, by such appropriate individual or group captions or subcaptions as the
commissioner may approve.
(2) A provision as follows: “Entire contract-----changes: This policy, including the endorsements
and the attached papers, if any, constitutes the entire contract of insurance. No change in this
policy shall be valid until approved by an executive officer of the insurer and unless such
approval be endorsed hereon or attached hereto. No agent has authority to change this policy
or to waive any of its provisions.”
(3) Provisions as follows: “Time limit on certain defenses:” (a) After two years from the date of
issue of this policy no misstatements, except fraudulent misstatements, made by the applicant
in the application for such policy shall be used to void the policy or to deny a claim for loss
incurred or disability (as defined in the policy) commencing after the expiration of such two-
year period.”
(c) If this is an individual disability income insurance policy then no claim for loss incurred or
disability, as defined in this individual disability income insurance policy, commencing after
two years from the date of issue of the policy shall be reduced or denied on the ground that a
disease or physical condition not excluded from coverage by name or a specific description
effective on the date of loss had existed prior to the effective date of coverage of this policy.
(4)(a) A provision as follows; “Grace period: A grace period of ……..(insert a number not less
than ‘7’ for weekly premium policies, ‘10’ monthly premium policies, and ‘31’ for all other
policies) days will be granted for the payment of each premium falling due after the first
premium, during which grace period the policy shall continue in force.”
(b) A policy in which the insurer reserves the right to refuse any renewal shall have, at the
beginning of the provision referred to in paragraph (a) of this subsection (4), “Unless not less
than thirty days prior to the premium due date the insurer has delivered to the insured or has
mailed to the insured’s last address as shown by the records of the insurer written notice of its
intention not to renew this policy beyond the period for which the premium has been
accepted,”.
(5)(a) A provision as follows: “Reinstatement: If any renewal premium is not paid within the
time granted the insured for payment, a subsequent acceptance of premium by the insurer
113
or by any agent duly authorized by the insurer to accept such premium, without requiring in
connection therewith an application for reinstatement, shall reinstate the policy. If the
insurer or such agent requires an application for reinstatement and issues a conditional
receipt for the premium tendered, the policy will be reinstated upon approval of such
application by the insurer or, lacking such approval, upon the forty-fifth day following the
date of such conditional receipt unless the insurer has previously notified the insured in
writing of its disapproval of such application. The reinstated policy shall cover only loss
resulting from such accidental injury as may be sustained after the date of reinstatement
and loss due to such sickness as may begin more than ten days after such date. In all other
respects the insured and insurer shall have the same rights thereunder as they had under the
policy immediately before the due date of the defaulted premium, subject to any provisions
endorsed hereon or attached hereto in connection with the reinstatement. Any premium
accepted in connection with a reinstatement shall be applied to a period for whic h premium
has not been previously paid, but not to any period more than sixty days prior to the date of
reinstatement.” [Emphasis added.]
(8) A provision as follows: “Proofs of loss: Written proof of loss must be furnished to the
insurer at its said office in case of claim for loss for which this policy provides any periodic
payment contingent upon continuing loss within ninety days after the termination of the
period for which the insurer is liable and in case of claim for any other loss within ninety
days after the date of such loss. Failure to furnish such proof within the time required shall
not invalidate nor reduce any claim if it was not reasonably possible to give proof within such
time, if such proof is furnished as soon as reasonably possible and in no event, except in the
absence of legal capacity, later than one year from the time proof is otherwise
required.”[Emphasis added.]
(10)(a) A provision as follows: “Payment of claims: Indemnity for loss of life will be payable in
accordance with the beneficiary designation and the provisions respecting such payment
which may be prescribed herein and effective at the time of payment. If no such
designation or provision is then effective, such indemnity shall be payable to the estate of
the insured. Any other accrued indemnities unpaid at the insured’s death may, at the
option of the insurer, be paid either to such beneficiary or to such estate. All other
indemnities will be payable to the insured.”
(12) A provision as follows: “Legal actions: No action at law or in equity shall be brought to
recover on this policy prior to the expiration of sixty days after written proof of loss has
been furnished in accordance with the requirements of this policy. No such action shall be
brought after the expiration of three years after the time written proof of loss is required to
be furnished.”
(13)(a) A provision as follows: “Change of beneficiary: Unless the insured makes an

irrevocable designation of beneficiary, the right to change of beneficiary is reserved to
the insured and the consent of the beneficiary or beneficiaries shall not be requisite to
surrender or assignment of this policy or to any change of beneficiary or beneficiaries, or
to any other changes in this policy.”
114
(b) The first clause of this provision, relating to the irrevocable designation of beneficiary, may
be omitted at the insurer’s option.
Section 10-16-201.5, C.R.S., Renewability of health benefit plans – modification of health benefit plans,
states:
(d) The carrier elects to discontinue offering and nonrenew all of its individual, small group, or
large group health benefit plans delivered or issued for delivery in this state. In such case the
carrier shall provide notice of the decision not to renew coverage to all policyholders and
covered persons and to the insurance commissioner in each state in which an affected
individual is known to reside at least one hundred eighty days prior to the nonrenewal of the
health benefit plan by the carrier. The carrier shall also discontinue and nonrenew all of its
individual or small or large group health benefit plans in Colorado. Notice to the insurance
commissioner under this paragraph (d) shall be provided at least three working days prior to
the notice to the affected individuals. [Emphasis added.]
Section 10-16-203(1), C.R.S., Optional provisions in individual sickness and accident insurance policies,
states:
Except as provided in section 10-16-204, no individual sickness and accident insurance policy
delivered or issued for delivery to any person in this state shall contain provisions respecting the
matters set forth below unless such provisions are in the words in which the same appear in this
section; except that the insurer may, at its option, use in lieu of any such provision a
corresponding provision of different wording approved by the commissioner which is not less
favorable in any respect to the insured or the beneficiary. Any such provision contained in the
policy shall be preceded individually by the appropriate caption appearing in this section or, at the
option of the insurer, by such appropriate individual or group captions or subcaptions as the
commissioner may approve.
(3) A provision as follows: “Misstatement of age: If the age of the insured has been misstated,
all amounts payable under this policy shall be such as the premium paid would have
purchased at the correct age.”
(9) A provision as follows: “Conformity with state statutes: Any provision of this policy which,
on its effective date, is in conflict with the statutes of the state in which the insured resides on
such date is hereby amended to conform to the minimum requirements of such statutes.”
Section 10-16-204,C.R.S., Inapplicable or inconsistent provisions in individual policies of sickness and

accident insurance, states:
If any provision of part 1 of this article or this part 2 is in whole or in part inapplicable to or
inconsistent with the coverage provided by a particular form of policy, the insurer, with the
approval of the commissioner, shall omit from such policy any inapplicable provision or part of a
provision and shall modify any inconsistent provision or part of the provision in such manner as
115
to make the provision as contained in the policy consistent with the coverage provided by the
policy. [Emphasis added.]
General Policy Provisions -Page 22
Entire Contract
The contract consists of the following items:
1. This policy.
2. Any amendments or endorsements.
3. The individual application(s) and health statements of the covered persons.
Any statements made by a covered person will, in the absence of fraud, be deemed representations and
not warranties. Only written statements signed by the insured or the covered person will be used in
defense of a claim. A copy of such written statements, if applicable, will be furnished to the insured or
the covered person or his/her beneficiary, if any, if a claim is denied based upon such a statement.
Amendment and Changes
The policy may be amended by PALHIC, but without prejudice to any loss incurred prior to the effective
date of the amendment. To be valid, any change or waiver attached to the policy must be: (1) in writing;
(2) approved by an officer of PALHIC; (3) acknowledged by the insured; and (4) made a part of the
policy. No agent has the authority to change the policy or waive any of its provisions, extend
time for payment of premiums, waive any of our rights or requirements, and no representations by an
agent or any other person shall be binding on the company unless such representation is reduced to
writing and signed by an officer of the company.
The Company has substituted what appear to be corresponding provisions of different wording and also
substituted captions for the “Entire contract-changes” provision. This is allowed only if approved by the
commissioner
Grace Period
If PALHIC does not give notice in writing that the policy is to be terminated, the insured is granted a
grace period of 31 days for the payment of any premium falling due after the first premium. During the
grace period the policy coverage remains in force. Eligible claims incurred during the grace period will
be payable upon receipt of the premium due. The policy and all coverage thereunder automatically
116
terminates on the last premium due date if the premium is not received during the grace period. If we
refuse to renew all policies of this kind in the state in which the policy was issued or in your class, we
will notify you in writing 30 days in advance of the premium due date at your la st known address in our
file. In this event there is no 31-day grace period. [Emphasis added.]
The Company has substituted what appear to be corresponding provisions of different wording. This is
allowed only if approved by the commissioner. The state ment indicating 30 days advance notice of
nonrenewal is not in compliance with Colorado insurance law.
Reinstatement
If a premium is not received within the time granted you for payment, a later acceptance of premium by
us or an authorized agent, without a reinstatement application, shall reinstate the policy. If we require a
reinstatement application and give you a conditional receipt for the premium, the policy will be reinstated
as of the date of such conditional receipt, unless we notify you of our disapproval within 45 days of that
date.
We and you shall have the same rights as before the date of the defaulted premium subject to any
endorsements on or riders attached to the policy in connection with the reinstatement. Any premium
accepted shall be applied to a period for which premium has not previously been paid, but not to any
period more than 60 days prior to the reinstated date. We reserve the right to change the premium mode
in connection with any reinstate ment. [Emphasis added.]
The Company has substituted what appear to be corresponding provisions of different wording that are
not less favorable to the insured or beneficiary and has also added additional wording concerning the right
to change the premium mode in the “Reinstatement” provision. This provision is also incomplete in that
it does not mention the time frames for the reinstated policy to cover loss from injury and sickness. This
is allowed only if approved by the commissioner.
How To File Claims -Page 21
Proof of Loss
Written proof of loss must be furnished to PALHIC at its Home Office or its Administrative Office within
90 days after the date of such loss. Failure to furnish such proof within the time required shall not void or
reduce any claim if it was not reasonably possible to give proof within such time, provided such proof is
furnished as soon as reasonably possible and in no event, except in the absence of legal capacity, later
than one year from the date of loss. [Emphasis added.]
The Company has used the words “from the date of loss” in this provision instead of “from the time proof
is otherwise required”. This would have the effect of changing the time frame allowed for submitting
proof of loss from the fifteen (15) months allowed by Colorado insurance law to twelve (12) months.
117
Legal Action
No legal action may be brought to obtain benefits under the policy:
1. for at least 60 days after proof of loss has been furnished; or
2. after the expiratio n of the applicable statute of limitations from the time written proof of loss
is required to have been furnished. [Emphasis added.]
The Company has substituted what appear to be corresponding provisions of different wording in the
“Legal action” provision. This is allowed only if approved by the commissioner.
Change of Beneficiary
The “Change of beneficiary” provision was not found in the policy. If the Company intended to omit this
provision, it would need the approval of the commissioner to do this.
Policy No-PAL997IMM-CO
“Entire Contract” on Page 45 states:
The policy and any attached riders or endorsements constitutes the entire contract of insurance
between you and us. The rights and duties under the policy of us, you and each covered person
are established by the terms and conditions of the policy. You may act on behalf of each
covered person concerning coverage provided under the policy. Each act by, agreement with, or
notice given to you will bind each covered person.
Any statements made by a covered person will be deemed representations and not warranties.
Only written statements signed by you or a covered person will be used in defense of a claim. A
copy of such written statement, if applicable, will be furnished to you or the covered person or
his/her beneficiary, if any, if a claim is based upon such a statement.
“How Changes to this Policy can be Made” on Page 46 states:
A change in the terms and conditions of the coverage provided under the policy will be evidenced
by an amendment. Your consent, or the consent of a covered person or beneficiary, is not
required prior to the amendment becoming effective. Only our executive officers may give
consent on our behalf. No agent has authority to waive a complete answer to any question on a
written application; pass on a person’s insurability; or make, alter, or waive any provision of the
policy.
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The Company has substituted what appear to be corresponding provisions of different wording. This is
allowed only if approved by the commissioner.
“Time Limit on Certain Defenses: on Page 48 states:
• We cannot void a benefit or deny a claim which begins two years after the covered person’s effective
date because of misstatements on the application for this policy, unless such misstatements were
fraudulent; and
• We cannot reduce a benefit or deny a claim because a condition duly disclosed in the application was
present before the covered person’s effective date, unless a rider to the policy contains an exclusion
for that condition.
The Company has substituted what appears to be a corresponding provision of different wording and also
included an additional provision with different wording. This is allowed only if approved by the
commissioner.
“Notice of Claim” on Page 41 states:
We must be notified of a claim in writing and receive proof of loss within 90 days after the start
of a claim, or as soon as reasonably possible and in no event, except in the absence of legal
capacity, later than one year from the time proof is otherwise required. Notification of claim
should include the following:
• your name and social security number;
• policy number;
• home address; and
• the physician or hospital bill.
If a claim is made for a covered spouse and/or covered dependent, his/her name and age should be
included.
Send notification of a claim to:
The Provident
Claims Department
P.O. Box 31499
Tampa, FL 33631-3499
119
The Company has substituted what appears to be corresponding provisions of different wording and failed
to include that “notice given by or on behalf of the insured or the beneficiary to any authorized agent of
the insurer, with information sufficient to identify the insured, shall be deemed notice to the insurer. The
different wording is allowed only if approved by the commissioner and failing to include wording in these
required provisions is not in compliance with Colorado insurance law.
“Notice of Claim” on Page 41 states:
We must be notified of a claim in writing and receive proof of loss within 90 days after the start
of a claim, or as soon as reasonably possible and in no event, except in the absence of legal
capacity, later than one year from the time proof is otherwise required. …
It appears the Company has incorporated the wording of the “Proofs of loss” provision under the caption
“Notice of Claim.” This is allowed only if approved by the commissioner.
“Facility of Payment” on Page 43 states:
If any benefit is payable to the estate of a person, or to a person, who is a minor or otherwise not
competent to give a valid release, we may pay the benefit, up to an amount not exceeding $1,000,
to any relative by blood or connection by marriage of the person who is deemed by us to be
equitably entitled to the benefit. The amounts so paid will be deemed to be benefits paid under
the policy and to the extent of such payments, we will be fully discharged from liability under the
policy.
The benefits that are payable in accordance with this provision will be charged against any
applicable maximum payment or benefit of the policy rather than the amount payable in the
absence of this provision.
It appears the Company has substituted what appears to be corresponding provisions of different wording
and also substituted captions for the “Payment of claims” caption. Also, the reference to a beneficiary is
not reflected and it appears this would be an applicable provision in view of the automatic life coverage of
$7,500 on the primary insured with the option of purchasing for the spouse. It appears the required policy
provision with the caption of “Change of beneficiary” should be in the policy for the same reason,
however it could not be located. The different wording is allowed only if approved by the commissioner
and omitting an applicable required provision is not in compliance with Colorado insurance law.
“Legal Actions are Limited” on Page 48 states:
A lawsuit to recover on a claim cannot be brought against us until at least 60 days, but no later
than three years, after proof of loss is required to be filed.
120
It appears the Company has substituted wording that has the result of changing the requirement of this
provision. The use of limiting the time in which a lawsuit can be brought to 60 days after proof of loss is
required to be filed instead of 60 days after written proof of loss has been furnished would require 150
days. If a proof of loss was furnished earlier than 90 days, the time in which a lawsuit could be brought
could be much less than 150 days. This provision is not in compliance with Colorado insurance law.
“Correcting Misstatements” on Page 45 states:
If any relevant fact about the covered person has been misstated, the true facts will be used to
determine whether insurance is inforce. If the age of any covered person has been misstated, an
adjustment in premium or benefits, or both, will be made based on the true facts. No
misstatement of age will continue insurance otherwise terminated or terminate insurance
otherwise inforce.
It appears the Company has used a corresponding optional provision and caption of different wording
which is not less favorable in any respect to the insured. [Emphasis added.] This is allowed only if
approved by the commissioner.
“Policy will Conform with State Laws” on Page 45 states:
Any provision of the policy which does not agree with the laws of the state in which you reside
on the policy effective date, is automatically changed to agree with the minimum requirements of
those laws.
It appears the Company has used a corresponding optional provision and caption of different wording
which is not less favorable in any respect to the insured. [Emphasis added.] This is allowed only if
approved by the commissioner.
considered in violation of Sections 10-16-201.5, 10-16-202 and 10-16-204, C.R.S. In the event the
Company is unable to show such proof, it should provide evidence to the Division of Insurance that it has
revised its forms to contain the required and optional provisions as worded in the statute or obtain
approval from the commissioner to either omit or use corresponding provisions with different wording.
121
Issue E11: Failure to reflect in the application the correct type of plan being offered over the
Internet.
Section 10-3-1104(1)(b), C.R.S., Unfair methods of competition and unfair or deceptive acts
or practices states:
False information and advertising generally: Making, publishing, disseminating,

circulating, or placing before the public, or causing, directly or indirectly, to be made,
published, disseminated, circulated, or placed before the public, in a newspaper,
magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or
poster, or over any radio or television station, or in any other way, an advertisement,
announcement, or statement containing any assertion, representation, or statement
with respect to the business of insurance, or with respect to any person in the conduct
of his insurance business, which is untrue, deceptive, or misleading;
The Company’s Application Form MK-79701-APP-Individual-CO, used in Colorado in 1999 to apply for
the HealthAxis plan offered over the internet, has an incorrect description of the plan of insurance being
offered. Provident American did not market any group plans in Colorado in 1999. On the sixth page of
this application, under the “AGREEMENT” (Standard Disclaimer) section, the last sentence states:
I understand that this group insurance plan is not an employer/employee benefit plan and
therefore is not subject to COBRA requirements. [Emphasis added.]
This statement does not appear to be correct and therefore could be misleading to any person applying for
the HealthAxis individual plan of insurance that is offered over the internet.
should provide evidence to the Division of Insurance that it has revised its internet application to indicate
that this is an individual insurance plan instead of a group insurance plan.
122
Issue E12: Failure to reflect correct type of plan on policy coversheet for indemnity plans.
Section 10-3-1104(1)(b), C.R.S., Unfair methods of competition and unfair or deceptive acts
or practices states:
False information and advertising generally: Making, publishing, disseminating,

circulating, or placing before the public, or causing, directly or indirectly, to be made,
published, disseminated, circulated, or placed before the public, in a newspaper,
magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or
poster, or over any radio or television station, or in any other way, an advertisement,
announcement, or statement containing any assertion, representation, or statement
with respect to the business of insurance, or with respect to any person in the conduct
of his insurance business, which is untrue, deceptive, or misleading;
The Company has indicated that Policy Form PAL997IMM-CO, the only policy form used in Colorado in
1999, was used for both Traditional Indemnity and PPO Plans. The Schedule of Benefits pages used
distinguished the type of plan used for HealthAxis Internet Plans, HealthQuest Plus, Solution Plus and
HealthEdge with Traditional Indemnity and PPO Plans being issued under each of these four (4) Plans.
The only Cover Sheet used for the policy appears to be misleading in the following way:
1. It is titled PREFERRED PROVIDER PLAN OF INSURANCE which would not be a correct

description of the Indemnity Plans.
proof, it should provide evidence to the Division of Insurance that it has revised its policy coversheets to
correctly identify those that are indemnity plans.
123
Issue E13: Failure to indicate the correct entity responsible for obtaining any necessary
preauthorization.
Section 10-16-705, C.R.S., Requirements for carriers and participating providers, states:
(1) In addition to any other applicable requirements of this part 7, a carrier offering a managed
care plan shall satisfy all the requirements of this section.
(14) Every contract between a carrier or entity that contracts with a carrier and a participating
provider for a managed care plan that requires preauthorization for particular services,
treatments, or procedures shall include:
(a) A provision that clearly states that the sole responsibility for obtaining any necessary
preauthorization rests with the participating provider that recommends or orders said
services, treatments, or procedures, not with the covered person;
Policy PAL997IMM-CO
Page 3, “Introduction to Your Coverage” states:
The policy also requires precertification authorization for certain services. A precertification
penalty will be assessed if precertification authorization is not obtained before a covered person
receives certain covered expenses. The provider may be willing to obtain precertification,
however, the covered person is ultimately responsible for obtaining precertification. Please refer
to the Precertification of Care section for more information.
Page 34, “Precertification of Care” states:
It is the covered person’s responsibility to precertify. Precertification is required each time a

covered person expects to incur an expense for one of the above listed items. The covered
person’s provider may be willing to obtain precertification for the covered person, however, the
covered person is ultimately responsible for obtaining precertification. To precertify, the covered
person should call the telephone number listed on the back of your identification card or in the
provider directory.
These statements in the policy appear to be in direct contradiction of Colorado insurance law that
indicates the sole responsibility for obtaining any necessary preauthorization rests with the participating
network provider recommending or ordering services, not with the covered person.
124
proof, it should provide evidence to the Division of Insurance that it has revised its forms to indicate that
the sole responsibility for obtaining any necessary preauthorization rests with the participating provider
that recommends or orders said services, treatments, or procedures.
125
Issue E14: Failure to correctly define coverage for complications of pregnancy.
(2) Complications of pregnancy and childbirth
(a) Any sickness and accident insurance policy providing indemnity for disability due to sickness
issued by an entity subject to the provisions of part 2 of this article and any individual or
group service or indemnity contract issued by an entity subject to part 3 of this article shall
provide coverage for a sickness or disease which is a complication of pregnancy or childbirth
in the same manner as any other similar sickness or disease is otherwise covered under the
policy or contract. Any sickness and accident insurance policy providing indemnity for
disability due to accident shall provide coverage for an accident which occurs during the
course of pregnancy or childbirth in the same manner as any other similar accident is covered
under the policy
(b) Any sickness and accident insurance policy providing coverage for sickness on an expense-
incurred basis shall provide coverage for a sickness or disease which is a complication of
pregnancy or childbirth in the same manner as any other similar sickness or disease is
otherwise covered under the policy.
Regulation 4-2-6, Concerning The Definition Of The Term “Complications of Pregnancy” For Use In
Accident And Health Insurance Contracts And Certificates, promulgated under the authority of Sections
10-1-108, 10-1-109, et seq., and 10-3-1101 et. seq., C.R.S., states:
III. Rule
All insurers marketing sickness and accident insurance within the State of Colorado shall employ
in each insurance policy or certificate of insurance issued covering a resident of the State of
Colorado a definition of the term “complications of pregnancy” no more restrictive than that
which follows:
“Complications of pregnancy” means any disease, disorder or condition whose diagnoses

are distinct from pregnancy but are adversely affected by pregnancy or are caused by
pregnancy, and (a) require physician prescribed supervision; and (b) result in a loss or
expense which would, if not related to pregnancy, be covered by the applicable indemnity
or expense incurred provisions of the contract.
Policy PAL997IMM-CO
Section 1-Definitions
Complications of Pregnancy and Childbirth
Page 6, Item 1 states:
126
Complications of pregnancy and childbirth include:
conditions requiring hospital confinement (when the pregnancy is not terminated) whose
diagnoses are caused by pregnancy or are distinct from pregnancy but are adversely affected by
pregnancy, which require physician prescribed supervision, and which result in loss or experience
which would, if not related to pregnancy, be covered by the provisions of this policy. These
conditions include, but are not limited to:
Page 6, Item 2 states:
Complications of pregnancy and childbirth shall not include conditions which do not require
hospital confinement nor conditions associated with the management of a difficult pregnancy,
including but not limited to:
These definitions of “Complications of Pregnancy and Childbirth” appear to be more restrictive than what
is allowed by Colorado insurance law. To limit coverage to conditions requiring hospital confinement is
not providing coverage in the same manner as any other similar sickness or disease that is otherwise
covered under the policy.
forms to reflect the correct definition of the coverage mandated by Colorado insurance law for
complications of pregnancy.
127
Issue E15: Failure to allow for life benefits in the event of suicide, as required by Colorado
insurance law.
Section 10-7-109, C.R.S., Suicide no defense for nonpayment., states:
The suicide of a policyholder after the first policy year of any life insurance policy issued by any
life insurance company doing business in this state shall not be a defense against the payment of a
life insurance policy, whether said suicide was voluntary or involuntary, and whether said
policyholder was sane or insane. [Emphasis added.] …
Rider PAL997IMM-LIFE/ADD is a Life Insurance And Accidental Death And Dismemberment (AD&D)
Insurance Benefit Rider used by the Company. Life insurance is automatically provided for the Primary
Insured with the option of purchasing for the Spouse.
Under the heading: “Benefit Limitation Applicable to Life Insurance Benefits” on Page 2, the
following is stated:
If a covered person should die by suicide within two years following his/her effective date of
coverage, our liability shall be limited to the amount of premiums paid for his/her life insurance
without interest. [Emphasis added.]
should provide evidence to the Division of Insurance that it has revised this Rider to be in compliance
with Colorado insurance law.
128
Underwriting – Rating Provident American Life & Health Insurance Company
UNDERWRITING
RATING
FINDINGS
129
Issue F1: Failure to apply a risk modification plan as it was filed with the Division of
Insurance.
Section 10-16-107(1), C.R.S., Rate regulation – approval of policy forms – benefit certificates –
evidences of coverage – loss ratio guarantees – disclosures on treatment of intractable pain, states:
Rates for any sickness, accident, or health insurance policy, contract, certificate, or other evidence
of coverage issued or delivered to any policyholder, enrollee, subscriber, or member in Colorado,
by an insurer subject to the provisions of part 2 of this article or an entity subject to the provisions
of part 3 or 4 of this article shall not be excessive, inadequate, or unfairly discriminatory. To
assure compliance with the requirements of this section that rates are not excessive in relation to
benefits, the commissioner shall promulgate rules and regulations to require rate filings and, as
part thereof, may require the submission of adequate documentation and supporting information
including actuarial opinions or certifications and set loss ratios for loss ratio guarantees.
Regulation 4-2-11, Individual and Group Health Insurance Rate Filings, promulgated under the authority
of Sections 10-1-109, 10-16-107 and 10-16-109, states:
II. Basis and purpose
The purpose of this regulation is to provide and implement rules for the proper filing of rates by
individual and group health insurers, nonprofit hospital and health service corporations, and health
maintenance organizations licensed to conduct business in Colorado.
III. Rules
A. Definitions
2. “Colorado Health Rate Filing Form” means a form prescribed by the Commissioner which
must accompany all individual and group health rate filings submitted to the Colorado Division of
Insurance.
6. “Premium” means the amount of money charged a policyholder for an insurance policy.
11. “Risk modification plan” means any rating plan, system or formula whereby a base rate is
adjusted or modified based on past loss experience, benefits provided, deductibles applied, and
various risk characteristics or conditions. Modification factors may be expressed as flat amounts
or percentages including ranges of debits or credits for particular categories. The effect of the
modification factors is to increase or decrease the base rate.
B. Rate Filing Requirement
1. Every health carrier, except medicare supplement, long term care and credit health and
disability carriers, providing individual and group health insurance benefits is required to file the
rates which is proposes to use. Such filings must state the proposed effective date thereof,
projected duration of the rates and must indicate the type and the extent of the benefits provided.
130
In the review of the Application-Renewal files, it was noted in six (6) files that the 10% surcharge for
smokers was applied to the entire family’s rates instead of just the smoker. This results in the premium
being higher than it should be. The Company’s filing for Policy PALHIC-INDMM-96 reflects that the
10% surcharge is to be applied to the tobacco user’s rate only.
Applications-Renewal Files
743 50 6 12%
considered in violation of Section 10-16-107 and Regulation 4-2-11. In the event the Company is unable
to show such proof, it should provide evidence to the Division of Insurance that it has established
procedures to ensure that the smoker surcharge is applied as it was filed. It is also recommended that the
Company work with the Division of Insurance in recalculating the premiums for all instances in which
only one insured was a tobacco user and the surcharge was applied to the entire family’s rates.
131
Issue F2: Failure to use rates that are not excessive in relation to benefits and failure to use
rates that are non-discriminatory.
Section 10-16-107(1) C.R.S., Rate regulation - approval of policy forms – benefit certificates – evidences
of coverage – loss ratio guarantees – disclosures on treatment of intractable pain, states:
Rates for any sickness, accident, or health insurance policy, contract, certificate, or other evidence
of coverage issued or delivered to any policyholder, enrollee, subscriber, or member in Colorado,
by an insurer subject to the provisions of part 2 of this article or an entity subject to the provisions
of part 3 or 4 of this article shall not be excessive, inadequate, or unfairly discriminatory. To
assure compliance with the requirements of this section that rates are not excessive in relation to
benefits, the commissioner shall promulgate rules and regulations to require rate filings and, as
part thereof, may require the submission of adequate documentation and supporting information
including actuarial opinions or certifications and set loss ratios for loss ratio guarantees.
Section 10-3-1104, C.R.S., Unfair methods of competition and unfair or deceptive acts or practices,
states:
(1) The following are defined as unfair methods of competition and unfair or deceptive acts or
practices in the business of insurance:
(f)(II) Making or permitting any unfair discrimination between individuals of the same class or
between neighborhoods within a municipality and of essentially the same hazard in the
amount of premium, policy fees, or rates charged for any policy or contract of insurance,
or in the benefits payable thereunder, or in any of the terms or conditions of such
contract, or in any other manner whatever;
The Company has identified in its rate filings and in marketing material, an initial 12 month rate
guarantee factor of 1.07 that could be purchased as an optional rider. It appears that prior to 11/1/97, the
12 month initial rate guarantee was automatic and there was no additional charge. The Company is now
applying this factor of 1.07 to the premium for the life of the policy although it is only the initial term that
has this option available. After that, there are only six month premium guarantees. The Company is
charging consumers an excessive rate by continuing to charge an additional 7% for a benefit no longer
being provided. This also appears to be unfair discrimination as one consumer is being penalized for
his/her initial decision to take advantage of the offer of an initial rate guarantee while another is not, yet
both are, at each renewal, receiving an automatic 6 month rate guarantee.
132
considered in violation of Sections 10-3-1104 and 10-16-107, C.R.S. In the event the Company is unable
to show such proof, it should provide evidence to the Division of Insurance that it has established
procedures to ensure that the 12 month rate guarantee factor of 1.07 is applied only for the period, the
initial term, that there is a 12 month rate guarantee. It is also recommended that the Company work with
the Division of Insurance in recalculating the premiums for all instances in which this rate guarantee
factor has been incorrectly applied to renewal policies.
133
Underwriting – Applications Provident American Life & Health Insurance Company
UNDERWRITING
APPLICATIONS
FINDINGS
134
Issue G1: Failure to determine if individual policies were being sold to business groups of
one.
Section 10-8-601.5(1)(c)(I), C.R.S., Applicability and scope, states:
Effective October 1, 1997, the provisions of this article and article 16 of this title concerning
small employer carriers and small group plans shall not apply to an individual health benefit plan
newly issued to a business group of one that includes only a self-employed person who has no
employees, or a sole proprietor who is not offering or sponsoring health care coverage to his or
her employees, together with the dependents of such a self-employed person or sole proprietor if,
pursuant to rules adopted by the commissioner, all of the following conditions are met:
(A) As part of the application process, the carrier determines whether or not the
applicant is a self-employed person who meets the definition of a business group
of one pursuant to section 10-8-602 (2.5).
(E) As part of its application form, an individual carrier requires a business group of
one self-employed person purchasing an individual health benefit plan pursuant
to this subparagraph (I) to read and sign a disclosure form stating that, by
purchasing an individual policy instead of a small group policy, such person
gives up what would otherwise be his or her right to purchase a business group of
one standard, basic, or other health benefit plan from a small employer carrier for
a period of three years after the date the individual health benefit plan is
purchased, unless a small employer carrier voluntarily permits such person to
purchase a business group of one policy within such three-year period. The
disclosure form shall also briefly describe the factors used to set rates for the
individual policy being purchased in comparison with the factors used to set rates
for a business group of one small group policy. The individual carrier shall
provide to the business group of one self-employed applicant a copy of the health
benefit plan description form for the Colorado standard health benefit plan in
addition to the description form for the individual plan being marketed. The
disclosure form may be included within any other certification form that the
carrier uses for the plan. The division of insurance shall make available a
standard plan description form to individual carriers upon request.
(F) The application to be filled out by the business group of one self-employed
person includes the following certification to be signed and filled out by a
representative of the carrier “I, [name of representative], acting on behalf of
[name of carrier], certify that the marketing and sale of this individual health
benefit plan complies with all of the provisions of section 10-8-601.5 (1) (c) (I),
Colorado Revised Statutes, concerning the sale of individual coverage to a
business group of one. If this is not the case, I understand that this plan may be
regulated as a small group health plan.”. (Deleted by amendment, L. 99, p. 1032,
Section 1, effective August 4, 1999.)
135
Regulation 4-2-19, Concerning Individual Health Benefit Plans Issued To Self-Employed Business
Groups Of One, promulgated pursuant to Sections 10-1-109(1), 10-8-601.5(1)(c)(I) and (3), 10-16-
108.5(8), and 10-16-109, C. R. S., states:
II. Basis and Purpose
The purpose of this regulation is to establish and implement rules concerning health benefit plans
marketed and/or newly issued to self-employed business groups of one on or after October 1, 1997. In
some cases such plans are exempt from Colorado’s small group guarantee issue laws, pursuant to House
Bill 97-1323 and codified in Section 10-8-601.5(1)(c)(I) to (II), and (3), C.R.S.
III. Applicability and Scope
This regulation shall apply to individual health benefit plans marketed and/or newly issued to self-
employed business groups of one on or after October 1, 1997.
IV. Definitions
A. “Self-employed business group of one” means, pursuant to Section 10-8-

601.5(1)(c)(I), C.R.S., that type of business group of one that includes only a self-
employed person who has no employees, or a sole proprietor who is not offering or
sponsoring health care coverage to his or her employees.
V. Rules
A. An individual health benefit plan marketed and/or newly issued on or after October 1, 1997,
to a self-employed business group of one, together with the dependents of the self-employed
business group of one, shall be regulated as an individual health benefit plan instead of a
small group health plan if the carrier issuing such policy, the policy itself, and the application
for coverage meet all the following conditions:
1. Pursuant to Section 10-8-601.5(1)(c)(I)(A), C.R.S., the carrier issuing the policy shall
determine whether or not the applicant is a self-employed business group of one. A
carrier shall meet this requirement by having applicants fill out the “Determination of
Self-Employed Business Group of One Form” in Appendix A. A copy of the
completed form shall be kept on file with each application. Applicants answering
“yes” to all the questions in the form meet the test of a self-employed business group
of one. An applicant who does not meet this test falls into one of two categories.
Either:
a) The applicant is a small employer that is not a self-employed business group of

one and thus any plan sold to such person is subject to the small group laws of
Colorado, pursuant to Section 10-8-601.5(1)(a); or
b) The applicant is neither a small employer, nor a self-employed business group of
one, nor any other person covered by the small group laws of Colorado (see
Section 10-8-601.5(1), C.R.S.) and thus any plan sold to such person is not
136
subject to this regulation but is subject to the other laws of Colorado relating to
individual health benefit plans.
5. The individual carrier, as part of its application form shall require each self-employed
business group of one to read and sign a disclosure form, as required by Section 10-
8-601.5(1)(c)(I)(E), C.R.S.
a. The form shall include the following statement:
“I, (name of applicant), meet the definition of a self-employed business group of

one as atteste d to on the accompanying Determination of Self-Employed
Business Group of One Form. I understand that by purchasing an individual
policy instead of a small group policy I give up what would otherwise be my
right to purchase a business group of one Standard, Basic, or other small group
health benefit plan from a small employer carrier for a period of three (3) years
after the effective date of the individual health benefit plan for which I am
applying. I understand that this will be the case unless a small employer carrier
voluntarily permits me to purchase a small group policy within such three (3)
year period.
“I have read the attached comparison of benefits form which shows how the
benefits of the plan for which I am applying differs from the Colorado Standard
Health Benefit Plans and how the rates differ.”
b. The comparison of benefits disclosure form shall be the same as the

Colorado Standard Health Benefit Plan (“Standard Plans”) benefit grid
shown in Regulation 4-6-5, including all three Standard Plans, with the
following modifications:
1. Individual health benefit plans that have network benefits (e.g., health
maintenance organizations, preferred provider plans, point of service
plans) shall add two columns to the form and use those two columns to
indicate how the coverage under the individual health benefit plan being
marketed compares with each of the benefits under the three Standard
Plans. The first column shall be labeled “In-Network Benefits” and the
second labeled “Out-of-Network Benefits.” All boxes in the last two
columns must be filled in.
2. Individual health benefit plans that do not distinguish between in-and

out-of-network benefits (e.g., traditional indemnity plans) shall add one
column to the form and use that additional column to indicate how the
coverage under the individual health benefit plan being marketed
compares with each of the benefits under the three Standard Plans. All
boxes in the last column must be filled in.
137
3. A last row shall be added to the forms described in Section V.A.5.b.

above and labeled “Factors that Determine Plan Cost.”
(i) For the three Standard Plans, the boxes shall be filled in as follows: “On
and after January 1, 1998, rates may only be based on plan design,
geographic location of the employer, family composition and age of the
self-employed policyholder, and health care cost trend.”
(ii) For each individual health benefit plan being marketed to self-employed
business groups of one, the statement shall include any and all factors
which may affect rates (e.g., ages of each covered person, geographic
location, smoker/nonsmoker, actual claims experience, health status,
length of time on the policy, gender, pre-existing conditions, health care
cost trend, administrative costs).
6. The application for coverage shall include the following certification, as required by
Section 10-8-601.5(1)(c)(I)(F), C.R.S.:
“I, [name of representative] , acting on behalf of [name of carrier]

certify that the marketing and sale of this individual health benefit plan complies with
all of the provisions of Section 10-8-601.5(1)(c)(I), C.R.S., concerning the sale of
individual coverage to a business group of one. If this is not the case, I understand
that this plan may be regulated as a small group health plan.”
B. Material failure by a carrier or its representative to comply with the requirements

of Part A of Section V of this regulation will result in policies being sold to self-
employed business group of one becoming subject to Colorado’s small group
laws.
Amended Regulation 4-2-19, Concerning Individual Health Benefit Plans Issued To Self-Employed
Business Groups Of One, promulgated pursuant to Sections 10-1-109(1), 10-8-601.5(1)(c)(I) and (3), 10-
16-108.5(8), and 10-16-109, C.R.S.
II. Basis and Purpose
The purpose of this regulation is to establish and implement rules concerning health benefit plans
marketed and/or newly issued to self-employed business groups of one on or after October 1, 1997. In
some cases such plans are exempt from Colorado’s small group guarantee issue laws, pursuant to Section
10-8-601.5(1)(c), (c.5) and (3), C.R.S. The purpose of the 1999 amendments to this regulation is to bring
the regulation into compliance with new statutory provisions contained in Senate Bills 99-69 and 99-114,
and House Bill 99-1371.
III. Applicability And Scope
This amended regulation shall apply to individual health benefit plans marketed and/or newly issued to
self-employed business groups of one on or after November 1, 1999.
138
IV. Rules
A.1. Pursuant to Section 10-8-601.5(1)(c)(I)(A), C.R.S., the carrier issuing the policy shall
determine whether or not the applicant is a self-employed business group of one. A carrier shall
meet this requirement by having applicants fill out the “Determination of Self-Employed
Business Group of One Form” in Appendix A. A copy of the completed form shall be kept on
file with each application. In addition, pursuant to Section 10-16-102(6)(c), C.R.S., a carrier may
require all business group of one applicants to supply certain tax and withholding documents in
order to determine if an applicant meets the definition of a business group of one. Applicants
who answer “yes” to all the questions in the Appendix A form and, if required by the carrier, who
can document their answers shall be considered to have met the test of a self-employed business
group of one. An applicant who does not meet this test falls into one of two categories. Either:
…
5. The individual carrier, as part of its application form shall require each
self-employed business group of one to read and sign a disclosure form, as
required by Section 10-8-601.5(1)(c)(I)(E), C.R.S.
a) The form shall include the following statements:
“Please read and sign the following disclosure required by

Colorado law:
I, (name of applicant) meet the definition of a self-

employed business group of one as attested to on the
accompanying Determination of Self Employed Business Group
of One Form. I understand that by purchasing an individual
policy instead of a small group policy I give up what would
otherwise be my right to purchase, during open enrollment
periods as specified by law, a business group of one Standard,
Basic, or other small group health benefit plan from a small
employer carrier for a period of three (3) years after the effective
date of the individual health benefit plan for which I am
applying. I understand that this will be the case unless a small
employer carrier voluntarily permits me to purchase a small
group policy within such three (3) year period.
I understand that the factors used to set new and renewal rates
for the individual policy I want to purchase consist of [NOTE:
CARRIERS ENTER FACTORS HERE]. By comparison, the
rating factors that would apply if I purchased a small group
business group of one policy are limited to plan design, my age,
overall cost and utilization trends (“index rate’), my family size,
and a factor that reflects the cost of care where I live.
139
I have been given a health plan benefit description form showing

the benefits under Colorado’s small group Standard Health
Benefit Plans. I have also been given a Colorado Health Plan
Description Form for the plan for which I am applying.”
b) Individual carriers may obtain from the Division of Insurance a

Colorado Health Plan Description Form for the state’s Standard
Health Benefit Plans. Carriers may reproduce and distribute this
form in order to comply with the provisions of Section 10-8-
601.5, (1)(c)(I)(E), C.R.S., and paragraph (5)(a) of Section V of
this regulation.
A sample of fifty (50) Application files (New Business) was systematically selected for review. One (1)
of these files could not be located by the Company, reducing the sample to forty-nine (49).
(1) None of the forty-nine (49) files contained any documentation of a determination by the Company as
to whether or not the applicant was a self-employed person meeting the definition of a business group
of one.
(2) None of the forty-nine (49) files contained any documentation of a disclosure form provided by the
Company to be signed by the applicant.
(3) None of the forty-nine (49) files contained documentation that a health benefit plan description form
for the Colorado standard health benefit plan had been provided to any applicant.
(4) Documentation of the certification by the Company’s representative was required until August 4,
1999. Twenty-five (25) of the forty-nine (49) files had applications dated prior to August 4, 1999
NEW BUSINESS APPLICATION FILES (ITEMS 1 THROUGH 3)

354 49 49 100%
NEW BUSINESS APPLICATION FILES (ITEM 4)

354 49 25 51%
considered in violation of Section 10-8-601.5 and Regulation 4-2-19 and Amended Regulation 4-2-19.
In the event the Company is unable to show such proof, it should provide evidence to the Division of
Insurance that it has established procedures to determine if any applicants for individual policies are self-
employed persons meeting the definition of a business group of one. Procedures should also be
established to comply with all requirements of Colorado law in those applicable instances.
140
Cancellations/Non-renewals/Declinations Provident American Life & Health Insurance Company
UNDERWRITING
CANCELLATIONS/NON-RENEWALS/DECLINATIONS
FINDINGS
141
Issue H1: Failure to reflect the correct number of days allowed for a break in coverage on
Certificates of Creditable Coverage.
Section 10-16-118, C.R.S., Limitations on preexisting condition limitations, states:
(1) A health coverage plan that covers residents of this state:
(b) Shall waive any affiliation period or time period applicable to a preexisting condition
exclusion or limitation period for the period of time an individual was previously covered
by creditable coverage if such creditable coverage was continuous to a date not more than
ninety days prior to the effective date of the new coverage….[Emphasis added.]
Regulation 4-2-18, Concerning The Method of Crediting and Certifying Creditable Coverage For Pre-
Existing Conditions, promulgated by the Commissioner under the authority granted in Sections 10-1-
109(1), 10-16-109 and 10-16-118(1)(b), C.R.S., as amended by Senate Bill 97-54, states:
This rule shall apply to all health coverage plans which are issued or renewed on or after
October 30, 1997.
Note: Originally issued as Emergency Regulation 97-E-6, effective July 31, 1997.
V. Rules
A. Application of federal laws concerning creditable coverage
1. The method for crediting and certifying creditable coverage for determining pre-
existing condition limitations, as required by Section 10-16-118(1)(b), C.R.S., shall
be as set forth in federal regulations promulgated pursuant to HIPAA, with the
following exceptions:
b. Where Colorado law exists on the same subject and has different
requirements that are not pre-empted by federal law, Colorado law shall
prevail.
B. Exception: Minimum ninety (90) day gap for creditable coverage
Colorado law requires health coverage plans to waive any exclusionary time periods
applicable to a pre-existing condition exclusion or limitation period for the period of time
an individual was previously covered by creditable coverage if such creditable coverage
was continuous to a date not more than ninety (90) days prior to the effective date of the
new coverage. [Emphasis added.] Colorado law prevails over the federal regulations.
The population consisted of all individual plans terminated in 1999. A systematically selected sample
142
of fifty (50) files was chosen for review. The Company automatically generates and mails a Certificate of
Prior Coverage when a plan of insurance is terminated. This form reflects the following:
7. If the individual(s) identified in items 2 and 4 has at least 18 months of creditable coverage
(disregarding period of coverage before a 63-day break,) check here and skip items 8 and 9.
Colorado law prevails over the federal regulations and indicates creditable coverage may be credited and
certified if such creditable coverage was continuous to a date not more than ninety (90) days prior to the
effective date of the new coverage.
INDIVIDUAL PLANS TERMINATED IN 1999

104 50 50 100%
procedures to ensure that Certificates of Creditable Coverage reflect correct information concerning the
number of days allowed for a break in coverage under Colorado insurance la w.
143
Issue H2: Failure to send Certificates of Creditable Coverage within the time frame allowed
by the Division of Insurance.
Senate Bill 97-054, Section 1. Legislative declaration, states:
The general assembly hereby finds, determines, and declares that the intent of this legislation
is solely to bring Colorado statutes into compliance with the provisions of the federal “Health
Insurance Portability and Accountability Act of 1996”, where Colorado laws do not already meet or
exceed the minimum requirements of the federal act…:
Regulation 4-2-18, Concerning The Method of Crediting and Certifying Creditable Coverage
For Preexisting Conditions, promulgated by the Commissioner under the authority granted in
Sections 10-1-109(1), 10-16-109, and 10-16-118(1)(b), C.R.S., as amended by Senate Bill
97-54, states:
This rule shall apply to all health coverage plans which are issued or renewed on or
after October 30, 1997.
V. Rules
A. Application of federal laws concerning creditable coverage
1. The method for crediting and certifying creditable coverage for

determining pre-existing condition limitations, as required by Section 10-
16-118(1)(b), C.R.S., shall be as set forth in federal regulations
promulgated pursuant to HIPAA, with the following exceptions:
a. Those exceptions specifically enumerated in this regulation; and
b. Where Colorado law exists on the same subject and has different
requirements that are not pre-empted by federal law, Colorado
law shall prevail.
2. The federal regulations found in 45 C.F.R. 146.113(a)(3), (b) and (c); 45

C.F.R. 146.115; 45 C.F.R. 146.117; 45 C.F.R. 146.119(b); and 45 C.F.R.
146.125 (a)(3), (b), (d) and (e) adopted by the Department of Health and
Human Services are hereby incorporated by reference, and shall have the
force of Colorado law, in accordance with Section 24-4-103(12.5),
C.R.S. These federal regulations concern methods of counting creditable
coverage, requirements concerning a health plan’s duty to provide
certificates of creditable coverage to insureds, special enrollment periods,
the effective dates for certification requirements, transition rules for
counting creditable coverage, and transition rules for certificates of
creditable coverage.. This rule does not include la ter amendments to, or
editions of, the above-referenced regulations.
144
Interested parties are encouraged to refer to the summary and

supplementary information concerning the incorporated regulations
which begins in Volume 62, number 67, page 16894 of the Federal
Register, April 8, 1997, for assistance in interpreting the federal
regulations.
The population consisted of all individual plans terminated in 1999. A systematically

selected sample of fifty (50) files was selected for review. The seven (7) exceptions represent
instances in which the Certificates of Creditable Coverage were not sent within the required
time frame after termination.
INDIVIDUAL PLANS TERMINATED IN 1999

104 50 7 14%
considered in violation of Regulation 4-2-18. In the event the Company is unable to show such proof, it
should provide evidence to the Division of Insurance that it has revised its procedures to ensure that
Certificates of Creditable Coverage are sent within the time frame allowed by the Colorado Division
of Insurance.
145
Issue H3: Failure to advise of eligibility for Colorado Uninsurable Health Insurance Plan to
applicants declined for coverage because of medical conditions or history.
Section 10-8-503, C.R.S., Definitions, As used in this part 5, unless the context otherwise requires:
(16) “Plan” means the Colorado uninsurable health insurance plan created by this part 5.
Section 10-8-513, C.R.S., Eligibility for coverage under the plan
(1) Except for those individuals who meet the criteria set forth in subsection (2) of this section, any
individual who is a resident of this state and who has been residing in the United States under the
color of law for at least six months, including children who have been placed for adoption, as
defined in section 10-16-104 (16.5) or are under the legal guardianship of a resident of Colorado,
shall be eligible for coverage under the plan, if such individual is able to provide evidence
satisfactory to the administering carrier that such individual meets one of the following
conditions:
(a) Such individual has applied to a carrier for a health benefit plan and:
(I) Such application has been rejected or refused because of the health or medical condition of the
applicant; or
(II) Such application has been accepted, but at a premium rate exceeding the rate available through
the plan; or
(III) Such application was accepted with a reduction or exclusion of coverage for a pre-existing
medical or health condition for a period exceeding six months.
(b) Such individual has a history of any medical or health condition that is on the list, if any, adopted
by the board pursuant to section 10-8-506(1) (g.5).
(c) Such individual has had a health benefit plan involuntarily terminated by a carrier in this state for
any reason other than nonpayment of a premium or premiums.
Section 10-8-521, Notice to residents, states:
If any individual who is a resident of this state applies to a carrier for a health benefit plan and the carrier
responds to such application as described in section 10-8-513(1)(a), the carrier shall give the individual
written notice that the individual may be eligible for coverage under the plan, including information about
available benefits, exclusions, and premium subsidies, and the name, address, and telephone number of
the plan.
Amended Regulation 4-6-3, Concerning Colorado Uninsurable Health Insurance Plan Standardized
Notice Form and Eligibility Requirements, promulgated by the Commissioner of Insurance under the
authority of Sections 10-1-109 and 10-8-520, C.R.S., states:
III. Rules
B. Notification Requirements for Individuals with Adverse Underwriting Decisions
146
In order to comply with Section 10-8-521, C.R.S., all insurers giving notice to an applicant or insured of
one or more of the following adverse underwriting determinations shall be required to give notice to the
applicant or insured that he or she may be eligible for coverage under the Colorado Uninsurable Health
Insurance Plan. The adverse underwriting decisions which require the insurer to notify the
applicant/insured are:
1. The applicant is rejected for insurance because of the medical condition or history of the
applicant; or
2. The premium rate for insurance exceeds the rate available through the Colorado Uninsurable
Health Insurance Plan; or
3. Coverage will be reduced by a restrictive rider or by the exclusion of coverage for a pre-existing
condition for longer than six months.
Insurers shall be required to complete the Uninsurable Health Plan Notice Form for every adverse
underwriting determination listed above. Insurers may print the Uninsurable Health Plan Notice Form on
their own stationery but shall use the order, format and content of the Uninsurable Health Plan Notice
Form, as prescribed by the Commissioner of Insurance.
The insurer shall attach a copy of the Uninsurable Health Plan Notice Form to the notice of adverse
underwriting determination sent to an applicant for insurance. The insurer shall attach a copy of the
Notice Form to a copy of the policy and endorsement when it is sent to the insured in the case of an
individual being accepted for health insurance coverage but at a premium rate exceeding the rate available
through the CUHIP plan.
C. Elements of the Uninsurable Health Plan Notice Form:
The elements of notification as determined by the Commissioner which must be given to individuals with
adverse underwriting decisions:
1. Applicant/Insured’s Name
2. Policy # (if applicable)
3. Reasons for notice: rejection of coverage, health rate higher than the rate available through
CUHIP or coverage that will be reduced by a restrictive rider or by excluding coverage for a pre-
existing condition longer than six months.
4. Name, address, contact person and phone number of CUHIP Administering Carrier to whom
interested persons should be referred.
5. Name and phone number of underwriter or other contact at the insurer’s office.
6. You may receive information about the available cuhip benefits and exclusions by contacting the
cuhip administering carrier.
147
The population consisted of all the applications that had been declined by the Company in 1999. A
systematic sample of fifty (50) files was chosen for review. The Company was unable to locate six (6) of
the files, thereby reducing the sample to forty-four (44) files. These files were all declined because of the
medical condition or history of the applicant and none of the files contained the required notification
requirement for individuals with adverse underwriting decisions.
Individual Applicants Declined Coverage in 1999

118 44 44 100%
considered in violation of Section 10-8-521, C.R.S. and Amended Regulation 4-6-3. In the event the
Company is unable to show such proof, it should provide evidence to the Division of Insurance that it has
revised its procedures to ensure notification of eligibility under the Colorado Uninsurable Health
Insurance Plan in applicable instances.
148
Issue H4: Failure to notify declined Business Groups of One of the availability of coverage
under a small group policy.
Section 10-8-601.5(1)(c) C.R.S., Applicability and scope, states:
Effective October 1, 1997, the provisions of this article and article 16 of this title concerning
small employer carriers and small group plans shall not apply to an individual health benefit plan
newly issued to a business group of one that includes only a self-employed person who has no
employees, or a sole proprietor who is not offering or sponsoring health care coverage to his or
her employees, together with the dependents of such a self-employed person or sole proprietor if,
pursuant to rules adopted by the commissioner, all of the following conditions are met:
(A) As part of the application process, the carrier determines whether or not the applicant is a
self-employed person who meets the definition of a business group of one pursuant to section
10-8-602 (2.5).
(B) If the applicant is a business group of one self-employed person, the carrier accepts or rejects
such person and, if such person is applying for family coverage, accepts or rejects the entire
family unless the applicant waives coverage for a family member who has other coverage in
effect.
(C) For at least the first three years after the initial effective date of the policy, the percentage
increase in rates upon renewal for plans sold to business groups of one remains the same as
the average percentage increase in rates upon renewal for an individual health carrier's entire
book of individual health benefit plans sold to business groups of one in Colorado, excluding
changes attributable to demographics.
(D) If the carrier rejects an application for a business group of one self-employed person and the
carrier does business in both the individual and small group markets, the carrier shall notify
the applicant of the availability of coverage through the small group market and of the
availability of small group coverage through the carrier.
(E) As part of its application form, an individual carrier requires a business group of one self-
employed person purchasing an individual health benefit plan pursuant to this subparagraph
(I) to read and sign a disclosure form stating that, by purchasing an individual policy instead
of a small group policy, such person gives up what would otherwise be his or her right to
purchase a business group of one standard, basic, or other health benefit plan from a small
employer carrier for a period of three years after the date the individual health benefit plan is
purchased, unless a small employer carrier voluntarily permits such person to purchase a
business group of one policy within such three-year period. The disclosure form shall also
briefly describe the factors used to set rates for the individual policy being purchased in
comparison with the factors used to set rates for a business group of one small group policy.
The individual carrier shall provide to the business group of one self-employed applicant a
149
copy of the health benefit plan description form for the Colorado standard health benefit
plan in addition to the description form for the individual plan being marketed. The
disclosure form may be included within any other certification form that the carrier uses for
the plan. The division of insurance shall make available a standard plan description form to
individual carriers upon request.
Regulation 4-2-19, Concerning Individual Health Benefit Plans Issued To Self-Employed Business
Groups of One, promulgated pursuant to Sections 10-1-109(1), 10-8-601.5(1)(c)(I) and (3), 10-16-
108.5(8), and 10-16-109, C.R.S., states:
This regulation shall apply to individual health benefit plans marketed and/or newly issued to self-
employed business groups of one on or after October 1, 1997.
IV. Definitions
A. “Self-employed business group of one” means, pursuant to Section 10-8-601.5(1)(c)(I),

C.R.S., that type of business group of one that includes only a self-employed person who has
no employees, or a sole proprietor who is not offering or sponsoring health care coverage to
his or her employees.
V. Rules
A. An individual health benefit plan marketed and/or newly issued on or after October 1,
1997 to a self-employed business group of one, together with the dependents of the self-employed
business group of one, shall be regulated as an individual health benefit plan instead of a small
group health plan if the carrier issuing such policy, the policy itself, and the application for
coverage meet all the following conditions:
1. Pursuant to Section 10-8-601.5(1)(c)(I)(A), C.R.S., the carrier issuing the policy shall
determine whether or not the applicant is a self-employed business group of one. A carrier
shall meet this requirement by having applicants fill out the “Determination of Self-
Employed Business Group of One Form” in Appendix A. A copy of the completed form
shall be kept on file with each application. Applicants answering “yes” to all the questions
in the form meet the test of a self-employed business group of one. An applicant who does
not meet this test falls into one of two categories. Either:
a) The applicant is a small employer that is not a self-employed business group of one and
thus any plan sold to such person is subject to the small group laws of Colorado, pursuant to
Section 10-8-601.5(1)(a), C.R.S.;
2. Pursuant to Section 10-8-601.5(1)(c)(I)(B), C.R.S., the carrier issuing the individual

health benefit plan coverage shall accept or reject a self-employed business group of one who
applies for coverage and, if such person is applying for family coverage, his/her entire family
(all dependents), unless the applicant waives coverage for a family member who has other
coverage in effect. A carrier shall meet this family coverage requirement by:
150
a) Asking each self-employed business group of one applicant requesting coverage

for himself/herself and one or more dependents for the names of all his/her dependents;
b) Where the applicant waives coverage for a family member, keeping on file with
the application a signed statement from the applicant that he/she is waiving coverage for a
dependent because that person already has other coverage in effect and shall state what that
coverage is and when it became effective; and
c) Where a self-employed business group of one is rejected for individual coverage

because one or more family members fail to meet normal and actuarially-based underwriting
criteria, the carrier shall clearly state this as part of the reason for the denial and shall notify
the applicant in writing of the availability of coverage for his/her whole family under a small
group policy.
3. If, pursuant to Part V.A.2 of this regulation, a carrier rejects a self-employed business
group of one for coverage under an individual plan, and if that same carrier sells coverage in
both the individual and small group markets, then the carrier shall make small group coverage
available to those self-employed business groups of one it rejects for individual coverage, as
required by Section 10-8-601.5(1)(c)(I)(D), C.R.S. This offer shall be in writing and shall be
included as part of the denial of individual coverage letter. A copy of the denial letter and the
offer of small group coverage shall be maintained by the carrier on file with the original
application.
4. A carrier issuing an individual health benefit plan to a self-employed business group of

one shall abide by the rating restrictions described in Section 10-8-601.5(1)(c)(I)(C), C.R.S.
Accordingly:
a. All self-employed business groups of one holding individual policies issued by the same
carrier shall, during the first three years after the effective date of coverage, receive the same
annual percentage rate increase upon renewal, adjusted for changes in demographic
characteristics of covered self-employed business groups of one. This shall apply regardless
of the particular policy purchased by such individuals, the date the policy was issued, or the
actual claims experience on the plan of a particular self-employed business group of one.
b. To calculate a renewal rate increase for a self-employed business group of one covered
by an individual health benefit plan, a carrier shall calculate an annual average of the renewal
rate percentage increases for all the individual health benefit plans sold to self-employed
business groups of one as of the date of this calculation. The average shall be based on the
total number of policyholders (both self-employed business groups of one and others covered
by the same plan) on each plan as of the date of this calculation and the annual percentage
rate increase each policyholder received, excluding increases attributable to changes in
demographics.
c. Renewal rate restrictions shall be applied on an annualized basis.
151
5. The individual carrier, as part of its application form shall require each self-employed business
group of one to read and sign a disclosure form, as required by Section 10-8-601.5(1)(c)(I)(E),
C.R.S.
a. The form shall include the following statement:
“I, (name of applicant), meet the definition of a self-employed business group of one as
attested to on the accompanying Determination of Self-Employed Business Group of One
Form. I understand that by purchasing an individual policy instead of a small group
policy, I give up what would otherwise be my right to purchase a business group of one
Standard, Basic, or other small group health benefit plan from a small employer carrier
for a period of three (3) years after the effective date of the individual health benefit plan
for which I am applying. I understand that this will be the case unless a small employer
carrier voluntarily permits me to purchase a small group policy within such three (3) year
period.
“I have read the attached comparison of benefits form which shows how the benefits of
the plan for which I am applying differs from the Colorado Standard Health Benefit Plans
and how the rates differ.”
b. The comparison of benefits disclosure form shall be the same as the Colorado Standard
Health Benefit Plan (“Standard Plans”) benefit grid shown in Regulation 4-6-5, including
all three Standard Plans, with the following modifications:
1. Individual health benefit plans that have network benefits (e.g., health maintenance
organizations, preferred provider plans, point of service plans) shall add two columns to
the form and use those two columns to indicate how the coverage under the individual
health benefit plan being marketed compares with each of the benefits under the three
Standard Plans. The first column shall be labeled “In-Network Benefits” and the second
labeled “Out-of Network Benefits.” All boxes in the last two columns must be filled in.
2. Individual health benefit plans that do not distinguish between in and out-of-network
benefits (e.g., traditional indemnity plans) shall add one column to the form and use that
additional column to indicate how the coverage under the individual health benefit plan
being marketed compares with each of the benefits under the three Standard Plans. All
boxes in the last column must be filled in.
3. A last row shall be added to the forms described in Section V.A.5.b above and labeled
“Factors that Determine Plan Cost.”
(i) For the three Standard Plans, the boxes shall be filled in as follows: “On and after January 1,
1998, rates may only be based on plan design, geographic location of the emplo yer, family composition
and age of the self-employed policyholder, and health care cost trend.”
(ii) For each individual health benefit plan being marketed to self-employed business groups of
one, the statement shall include any and all factors which may affect rates (e.g., ages of each covered
person, geographic location, smoker/nonsmoker, actual claims experience, health status, length of time on
the policy, gender, pre-existing conditions, health care cost trend, administrative costs).
152
6. The application for coverage shall include the following certification, as required by Section
10-8-601.5(1)(c)(I)(F), C.R.S.:
“I, ____[name of representative]____, acting on behalf of_______[name of carrier]______,

certify that the marketing and sale of this individual health benefit plan complies with all of the
provisions of Section 10-8-601.5(1)(c)(I), C.R.S., concerning the sale of individual coverage to a
business group of one. If this is not the case, I understand that this plan may be regulated as a
small group health plan.”
Amended Regulation 4-2-19, Concerning Individual Health Benefit Plans Issued to Self-Employed
Business Groups Of One, promulgated pursuant to Sections 10-1-109(1), 10-8-601.5(1)(c)(I) and (3), 10-
16-108.5(8), and 10-16-109, C.R.S., states:
III. Applicability And Scope
This amended regulation shall apply to individual health benefit plans marketed and/or newly
issued to self-employed business groups of one on or after November 1, 1999.
V. Rules
(A)(1) Pursuant to Section 10-8-601.5(1)(c)(I)(A), C.R.S., the carrier issuing the policy
shall determine whether or not the applicant is a self-employed business group of one. A carrier
shall meet this requirement by having applicants fill out the “Determination of Self-Employed
Business Group of One Form” in Appendix A. A copy of the completed form shall be kept on
file with each application. In addition, pursuant to Section 10-16-102(6)(c), C.R.S., a carrier may
require all business group of one applicants to supply certain tax and withholdin g documents in
order to determine if an applicant meets the definition of a business group of one. Applicants
who answer “yes” to all the questions in the Appendix A form and, if required by the carrier, who
can document their answers shall be considered to have met the test of a self-employed business
group of one. An applicant who does not meet this test falls into one of two categories. ….
5. The individual carrier, as part of its application form shall require each self-employed
business group of one to read and sign a disclosure form, as required by Section 10-8-
601.5(1)(c)(I)(E), C.R.S.
a) The form shall include the following statements:
Please read and sign the following disclosure required by Colorado law:
I, ___(name of applicant)___, meet the definition of a self-

employed business group of one as attested to on the
accompanying Determination of Self-Employed Business Group
of One Form. I understand that by purchasing an individual
policy instead of a small group policy I give up what would
otherwise be my right to purchase, during open enrollment
periods as specified by law, a business group of one Standard,
153
Basic, or other small group health benefit plan from a small

employer carrier for a period of three (3) years after the effective
date of the individual health benefit plan for which I am
applying. I understand that this will be the case unless a small
employer carrier voluntarily permits me to purchase a small
group policy within such three (3) year period.
I understand the factors used to set new and renewal rates for the
individual policy I want to purchase consist of [NOTE:
CARRIERS ENTER FACTORS HERE]. By comparison, the
rating factors that would apply if I purchased a small group
business group of one policy are limited to pla n design, my age,
overall cost and utilization trends (“index rate”), my family size,
and a factor that reflects the cost of care where I live.
I have been given a health plan benefit description form showing

the benefits under Colorado’s small group Standard Health
Benefit Plans. I have also been given a Colorado Health Plan
Description Form for the plan for which I am applying.”
b) Individual carriers may obtain from the Division of Insurance a

Colorado Health Plan Description Form for the state’s Standard Health Benefit
Plans. Carriers may reproduce and distribute this form in order to comply with
the provisions of Section 10-8-601.5,(1)(c)(I)(E), C.R.S., and paragraph (5)(a) of
Section V of this regulation.
As there were no disclosure forms to determine if the applicants in any of the forty-four (44) declined
files was a self-employed business group of one. It appears that the Company did not make this
determination as required by Colorado insurance law. This failure to make the determination is addressed
in the Application Section of the examination. All of the applicants were rejected for individual coverage
because one or more family members were uninsurable due to medical history. It is apparent from the
occupations listed on the applications that some of the applicants were self-employed business groups of
one and when rejected for individual coverage should have been notified of the availability of coverage
under a small group policy. There is no evidence of notification in any of the files. As there is no
documentation as to how many of the applicants were self-employed business groups of one, it was not
possible to develop an error percentage.
considered in violation of Section 10-8-601.5 and Regulation 4-2-19 and Amended Regulation 4-2-19. In
the event the Company is unable to show such proof, it should provide evidence to the Division of
Insurance that it has revised its procedures to ensure that business groups of one, declined because one or
more family members fail to meet normal and actuarially-based underwriting criteria, are notified of the
availability of coverage under a small group policy.
154
Claims Provident American Life & Health Insurance Company
CLAIMS
FINDINGS
155
Issue J1: Failure to accurately determine the number of days utilized for processing claims.
Section 10-3-1110(2), C.R.S., Regulations, states:
The commissioner may, after notice and hearing, as provided in article 4 of title 24, C.R.S.,
promulgate rules and regulations with respect to the payment of benefits under group and
individual contracts of accident and sickness coverage and under group and individual contracts
for property or casualty coverage, except for property and casualty coverage provided pursuant to
the “Colorado Auto Accident Reparations Act”, part 7 of article 4 of this title, issued by
organizations authorized to do business in this state under the provisions of articles 4 and 8 and
parts 1, 3, and 4 of article 16 of this title. Such rules and regulations may establish a penalty
payable to the claimant on benefit payments which are delayed more than sixty days after a valid
and complete filing of the claim unless there is a reasonable dispute between the parties
concerning such claim. Such penalty shall not exceed twenty dollars on claims of less than one
hundred dollars or interest at a rate of eight percent annually on claims above one hundred
dollars. In addition to such penalties payable to the claimant, the commissioner, after notice and
hearing, may assess a civil penalty against any insurer of one hundred dollars per day for each
day benefit payments are delayed more than sixty days after a valid and complete filing of the
claim unless there is a reasonable dispute between the parties concerning such claim.
Regulation 4-2-7, Concerning the payment of Monetary Penalties by Commercial Insurance Companies,
Nonprofit Hospital and Health Service Corporations, Health Maintenance Organizations and Property and
Casualty Insurance Companies for Failure to Promptly Pay Claims for Services, promulgated under the
authority of 10-1-108(8), 10-1-109 and 10-3-1110, C.R.S., states:
IV. Penalty
A. Whenever it is brought to the attention of the Division of Insurance whether by

written complaint, investigation, examination or other means, that any insurer has failed to pay a
claim under any sickness and accident and property and casualty insurance policy within 60 days
after the date a valid and complete claim has been received by the insurer, and unless there is a
reasonable dispute between the insurer and the insured concerning the claim, the Commissioner
may impose a monetary penalty to be paid by the insurer to the insured. Such penalty shall be no
more than $20.00 in the case of claims of $100. or less. In the case of claims of $100. or more,
the amount of such penalty shall be 8 percent annual interest on the amount of the claim, from the
date a valid and complete claim has been received by the insurer until the date the claim is paid
by the insurer. For the purpose of imposing a penalty under this regulation, a claim shall be
considered to have been received:
1. On the date the claim is logged in by the insurer, if the insurer has a regular practice of
logging in claims as they are received, or
2. An earlier date if the insured can offer credible evidence that the claim was received
by the insurer on an earlier date than indicated in (1) above. Any penalty imposed
under this regulation will be applied to the portion of the claim ultimately owed
which is not paid within the 60 day time limit.
156
V. General Provisions
C. In order to comply with this regulation, the insurer must mail or otherwise, deliver the
benefit check to the insured or the provider, within the 60 day time period. If a benefit
check is issued but not mailed or delivered within the 60 day time period, the insurer will
be deemed to be in violation of this regulation.
The data being entered into the Company’s claim system and used for computing the days from receipt of
a claim until the check is mailed to the claimant (processing time) is producing an incorrect number of
days. Any information provided by this system in response to an inquiry to determine if any claims
exceeded the required sixty (60) days to process would produce incorrect information.
If the claim is initially received by a repricing entity, the Company calculates the claim processing time,
using the date the repricing sheet is actually received at the Company to the date the adjuster has reached
a determination of the claim and released the benefit or denial of benefit. The check prints the day of
release and is mailed the following day. The Company uses the date the check is printed for calculation
of the processing days instead of using the date mailed. This would always be short by one day and by
two days if on the day before a holiday and three days if the determination was entered on a Friday with a
holiday on Monday. Additionally the system is excluding non-working days from the calculation and
Colorado insurance law requires that calendar days be used for this computation. The procedures
described above result in an inability to accurately track the number of days utilized for payment of
claims and to determine those on which late payment penalties would apply.
Carriers cannot avoid their statutory obligations regarding the amount of time allowed for processing
claims without a penalty being due when an intermediary repricer is the entity initially receiving the
claim.
considered in violation of Section 10-3-1110(2), C.R.S. and Regulation 4-2-7. In the event the Company
is unable to show such proof, it should provide evidence to the Division of Insurance that it has revised its
procedures to ensure the actual days used to pay a claim can be determined from information entered into
its system.
157
Issue J2: Failure to process claims within the required sixty (60) days.
Section 10-3-1104, C.R.S., Unfair methods of competition and unfair or deceptive acts or practices states:
(1) The following are defined as unfair methods of competition and unfair or deceptive acts or
practices in the business of insurance:
(f)(II) Unfair discrimination: Making or permitting any unfair discrimination between

individuals of the same class or between neighborhoods within a municipality and of
essentially the same hazard in the amount of premium, policy fees, or rates charged for any
policy or contract of insurance, or in the benefits payable thereunder, or in any of the terms or
conditions of such contract, or in any other manner whatever;
(h) Unfair claim settlement practices: Committing or performing, either in willful violation
of this part 11 or with such frequency as to indicate a tendency to engage in a general
business practice, any of the following:
(V) Failing to affirm or deny coverage of claims within a reasonable time after proof of
loss statements have been completed;
Section 10-3-1110(2), C.R.S., Regulations, states:
The commissioner may, after notice and hearing, as provided in article 4 of title 24, C.R.S.,
promulgate rules and regulations with respect to the payment of benefits under group and
individual contracts of accident and sickness coverage and under group and individual
contracts for property or casualty coverage, except for property and casualty coverage
provided pursuant to the “Colorado Auto Accident Reparations Act” part 7 of article 4 of this
title, issued by organizations authorized to do business in this state under the provisions of
articles 4 and 8 and parts 1, 3, and 4 of article 16 of this title. Such rules and regulations may
establish a penalty payable to the claimant on benefit payments which are delayed more than
sixty days after a valid and complete filing of the claim unless there is a reasonable dispute
between the parties concerning such claim. Such penalty shall not exceed twenty dollars on
claims of less than one hundred dollars or interest at a rate of eight percent annually on claims
above one hundred dollars. In addition to such penalties payable to the claimant, the
commissioner, after notice and hearing, may assess a civil penalty against any insurer of one
hundred dollars per day for each day benefit payments are delayed more than sixty days after
a valid and complete filing of the claim unless there is a reasonable dispute between the
parties concerning such claim.
Regulation 4-2-7, Concerning the payment of Monetary Penalties by Commercial Insurance Companies,
Nonprofit Hospital and Health Service Corporations, Health Maintenance Organizations and Property and
Casualty Insurance Companies for Failure to Promptly Pay Claims for Services, promulgated under the
authority of Sections 10-1-108(8), 10-1-109 and 10-3-1110, C.R.S., states, in part:
(II) PURPOSE AND SCOPE
Under 10-3-1104(1)(h), C.R.S., all persons as defined in 10-3-1102(3) C.R.S. are obligated to
158
promptly pay claims under insurance policies. 10-3-1110(2) C.R.S. authorizes the commissioner
to promulgate rules and regulations with respect to the payment of benefits under group and
individual contracts of sickness and accident coverage and to first party claims under individual
contracts for property or casualty coverage, except for property and casualty coverage provided
pursuant to the “Colorado Auto Accident Reparations Act’, issued by organizations authorized to
do business in this state under the provisions of Articles 4, 8, 16, and 17 of Title 10, C.R.S. That
section further provides that the Commissioner may impose against such organizations which fail
to pay claims within 60 days, monetary penalties payable to the insured of up to $20.00 in case of
a claim of less than $100.00 and 8 percent interest per annum in claims over $100. The purpose
of this regulation is to describe the procedure and the circumstances under which such penalties
will be imposed.
(III) DEFINITIONS
As used in this rule, unless the context otherwise requires:
(1) “Insurer” means those organizations which are authorized to do business in this state
under the provisions of Articles 4,8,16, and 17 of Title 10, C.R.S.
(IV) PENALTY
(A) Whenever it is brought to the attention of the Division of Insurance whether by

written complaint, investigation, examination or other means, that any insurer has failed
to pay a claim under any sickness and accident and accident and property and casualty
insurance policy within 60 days after the date a valid and complete claim has been
received by the insurer, and unless there is a reasonable dispute between the insurer and
the insured concerning the claim, the Commissioner may impose a monetary penalty to
be paid by the insurer to the insured. Such penalty shall be no more than $20.00 in the
case of claims of $100.00 or less. In the case of claims of $100.00 or more, the amount
of such penalty shall be 8 percent annual interest on the amount of the claim, from the
date a valid and complete claim has been received by the insurer until the date the claim
is paid by the insurer. For the purpose of imposing a penalty under this regulation, a
claim shall be considered to have been received:
1. On the date the claim is logged in by the insurer, if the insurer has a regular practice of
logging in claims as they are received, or
2. An earlier date if the insured can offer credible evidence that the claim was received by
the insurer on an earlier date than indicted in (1) above. Any penalty imposed under this
regulation will be applied to the portion of the claim ultimately owed which is not paid
within the 60 day time limit.
(V) GENERAL PROVISIONS
(C) In order to comply with this regulation, the insurer must mail or otherwise deliver
the benefit check to the insured or the provider, within the 60 day time period. If a
benefit check is issued but not mailed or delivered within the 60 day time period, the
159
insurer will be deemed to be in violation of this regulation. All claims must be paid
promptly. The fact that a claim is paid within 60 days does not necessarily establish that
the claim has been paid promptly or within a reasonable time as required by 10-3-
1104(1)(h)(V) and (VI), C.R.S.
A systematically selected sample of 100 paid claims and 100 denied/closed-out claims was selected for
review. Five (5) of the paid claims could not be located which reduced this sample to ninety-five (95).
The sample of denied/closed claims consisted of sixty-seven (67) denied files and thirty-three (33) closed-
out files. Three (3) of the closed-out files could not be located which reduced this sample to ninety-seven
(97) files.
Nineteen (19) paid claim files had a turnaround time that exceeded sixty (60) days after receipt of a valid
and complete claim. The date of receipt used by the examiners was the earliest date of (1) the imprinted
receipt date by Sloans Lake on the claim form (if legible) or (2) the date entered by Sloans Lake on the
Claim Cover Sheet, or (3) the receipt date stamp of Provident American Life & Health Insurance
Company, or (4) the date entered on the Araz repricing sheet. An additional day was added to the
calendar day calculation and if the final action date was on a Friday, two (2) additional day(s) were added
to the calendar day calculation. This was done because the Company has indicated that the checks were
mailed the next business day after the final (last action) date. During the course of the examination the
Company made all applicable interest payments and provided documentation of this to the examiners.
The nineteen (19) paid claim exceptions represent files in the following categories:
1. System reflected processing time in excess of 60 days and no interest paid-7 Files
2. System reflected processing time in excess of 60 days and no interest due as payment
applied to the deductible -1 file.
3. System reflected processing time of less than 60 days that exceeded 60 days when using
correct method of calculation with no interest paid-11 files
PAID CLAIMS PROCESSED IN 1999

17,961 95 19 20%
Seven (7) denied claim exceptions represent files in the following category:
1. System reflected processing time of less than 60 days that exceeded 60 days when using
correct method of calculation.
One (1) closed-out claim exception represents a file in the following category:
1. The time elapsed between the Company’s initial receipt of the claim and the date
of the first request to the provider for additional information exceeded 60 days.
160
DENIED CLAIMS PROCESSED IN 1999

9,554 97 8 8%
considered in violation of Sections 10-3-1104, 10-3-1110, C.R.S. and Regulation 4-2-7. In the event
the Company is unable to show such proof, it should provide evidence to the Division of Insurance
that it has implemented procedures to ensure that valid and complete claims are affirmed or denied
within the time frame established by Colorado insurance law. Procedures should also be established
to ensure that the processing of requests for additional information necessary to adjudicate the claim
are requested within the time frame established by Colorado insurance law.
161
Issue J3: Failure to process claims accurately in all instances.
Sections 10-3-1104, C.R.S., Unfair methods of competition and unfair or deceptive acts or practices,
states:
(1)(f)(II) Making or permitting any unfair discrimination between individuals of the same class or
between neighborhoods within a municipality and of essentially the same hazard in the amount of
premium, policy fees, or rates charged for any policy or contract of insurance or in the benefits
payable thereunder, or in any of the terms or conditions of such contract, or in any other manner
whatever;
(11) Child health supervision services
(a) For purposes of this subsection (11), unless the context otherwise requires, “child health
supervision services” means those preventive services and immunizations required to be provided
in basic and standard health benefit plans pursuant to section 10-16-105 (7.2), to dependent
children up to age thirteen. ….
(b) An individual, small group, or large group health benefit plan issued in Colorado or covering
a Colorado resident that provides coverage for a family member of the insured or subscriber, shall
as to such family member’s coverage, also provide that the health insurance benefits applicable to
children include coverage for child health supervision services up to the age of thirteen. Each
such plan shall, at a minimum, provide benefits for preventive child health supervision services.
A plan described in this paragraph (b) may provide that child health supervision services rendered
during a periodic review shall only be covered to the extent such services are provided during the
course of one visit by or under the supervision of a single physician, physician’s assistant, or
registered nurse.
(c) Benefits for child health supervision services shall be exempt from a deductible or dollar limit
provision in any individual, small group, or large group health benefit plan issued in Colorado or
covering a Colorado resident and such exemption shall be explicitly stated in such a plan. Any
copayment or coinsurance applicable to the benefits received during the course of one visit
pursuant to paragraph (b) of this subsection (11) shall not exceed the copayment or coinsurance
payment applicable to a physician visit. ….
Regulation 4-6-5, promulgated pursuant to Sections 10-1-109, C.R.S., 10-16-105(7.2), C.R.S., and 10-16-
108.5(8), C.R.S., states:
CURRENT RECOMMENDATIONS FOR ROUTINE IMMUNIZATION OF INFANTS AND

CHILDREN IN THE UNITED STATES
162
Recommended Immunizations
Age
4-6 years DTP, Polio

DTaP may be used
4-20 years MMR
PAID CLAIMS PROCESSED IN 1999

17,961 95 5 5%
A systematically selected sample of ninety-five (95) paid claim files was reviewed. The five (5)
exceptions shown represent the following instances in which it appears claims were not processed
accurately:
1. An overpayment of $6.45 occurred as a result of the claims examiner paying on the $60.00
amount charged for an office visit instead of the repriced amount of $53.55
2. The claims examiner considered a physical therapy benefit in the amount of $10.00 under
chiropractic benefit (limited to 3 modalities/services per day) and denied the charge as being excluded by
the policy. During the examination the Company sent the claimant a letter and corrected EOB reflecting the
$10.00 amount being applied to the claimant’s deductible.
3. An overage of $14.90 was applied to this claimant’s deductible as a result of the claims examiner
not entering the network discount for the charge on the processing screen. The charged amount of $63.00
was applied instead of the repriced amount of $48.10.
4. The claims examiner entered an amount of $13.00 to be applied to the deductible, instead of the
correct amount of $42.50. The Company corrected this on July 17, 2000 and issued an adjustment.
5. The claims examiner entered the place of service as “physician’s office” instead of the correct
“independent laboratory”. For this plan, the repriced amount of $41.93 was subject to the deductible if lab
and diagnostic tests were performed and/or billed outside the physician’s office. This resulted in a payment
of $41.93 made to the claimant instead of being applied to the deductible.
considered in violation of Sections 10-3-1104 and 10-16-104, C.R.S. In the event the Company is
unable to show such proof, it should provide evidence to the Division of Insurance that it has
established procedures to ensure equitable payment of claims as stated in its insurance plans and as
mandated by Colorado insurance law.
163
Utilization Review Provident Ame rican Life & Health Insurance Company
UTILIZATION REVIEW
FINDINGS
164
Issue K1: Failure to provide, in all instances, written or electronic notification of

certification or adverse determinations for utilization review decisions.
Section 10-16-112(2), C.R.S., Private utilization review – health care coverage entity responsibility,
states:
Any private utilization review organization providing services to an insurance carrier, nonprofit
hospital and health care service corporation, or health maintenance organization regulated
pursuant to the provisions of this article is the direct representative of the insurance carrier,
nonprofit hospital and health care service corporation, or health maintenance organization. Any
insurance carrier, nonprofit hospital and health care service corporation, or health maintenance
organization is responsible for the actions of any private utilization review organization acting
within the scope of any contract and on its behalf within the scope of any contract which result in
any violation of this title or any rules or regulations promulgated by the commissioner.
Regulation 4-2-17, Prompt Investigation of Health Plan Claims Involving Utilization Review,
promulgated pursuant to Sections 10-1-109, 10-3-1107, 10-3-1110, and 10-16-109, C.R.S., states:
Section 6. Procedures For Review Decisions
B. For prospective review determinations, a health carrier shall make the determination within
two (2) working days of obtaining all necessary information regarding a proposed admission,
procedure or service requiring a review determination. For purposes of this section, “necessary
information” includes the results of any face-to-face clinical evaluation or second opinion that
may be required.
1) In the case of a determination to certify an admission, procedure or service, the

carrier shall notify the provider rendering the service by telephone within one (1)
working day of making the initial certification; and shall provide written or electronic
confirmation of the telephone notification to the covered person and/or the provider
within two (2) working days of making the initia l certification.
2) In the case of an adverse determination, the carrier shall notify the provider
rendering the service by telephone within one (1) working day of making the adverse
determination; and shall provide written or electronic confirmation of the telephone
notification to the covered person and the provider within one (1) working day of
making the adverse determination.
C. For concurrent review determinations, a health carrier shall make the determination within
one (1) working day of obtaining all necessary information.
1) In the case of a determination to certify an extended stay or additional

services, the carrier shall notify by telephone the provider rendering the service
within one (1) working day of making the certification; and shall provide written or
electronic confirmation to the covered person and/or the provider within one (1)
working day after the telephone notification. The written notification shall include
165
the number of extended days or next review date, the new total number of days or
services, approved, and the date of admission or initiation of services.
2) In the case of an adverse determination, the carrier shall notify by telephone the
provider rendering the service within one (1) working day of making the adverse
determination; and shall provide written or electronic notification to the covered
person and the provider within one (1) working day of the telephone notification.
The service shall be continued without liability to the covered person until the
covered person and the provider rendering the service have been notified of the
determination.
D. For retrospective review determinations, a health carrier shall make the determination within
thirty (30) working days of receiving all necessary information.
1) In the case of a certification, the carrier may notify in writing the covered person and
the provider rendering the service.
2) In the case of an adverse determination, the carrier shall notify in writing the
provider rendering the service and the covered person within five (5) working days of
making the adverse determination.
It was noted in seven (7) files in which Utilization Review was performed for Provident American Life &
Health Insurance Company, that no notification letters of certification or adverse determination were sent.
These files involved both certifications and adverse determinations.
Colorado insurance law requires written or electronic notification in all cases of certification and adverse
determinations.
considered in violation of Section 10-16-112 and Regulation 4-2-17. In the event the Company is unable
to show such proof, it should establish procedures to ensure that notification is sent in all cases of
utilization review certification and adverse determinations.
166
Summary of Issues/Rec's. Locator Provident American Life & Health Insurance Company
SUMMARY OF ISSUES AND RECOMMENDATIONS
ISSUES Rec. Page

No. No.
COMPANY OPERATIONS/MANAGEMENT – FINDINGS
Failure to maintain an access plan document containing or describing all rights 1 19
and responsibilities required by law.
Failure to include all required provisions in contracts between 2 31
carriers/intermediaries/providers.
Failure to file a summary of anti-fraud efforts in 1999 with annual report. 3 32
Failure to maintain all records necessary for a market conduct examination. 4 35
Failure to respond in all instances to written requests for information, material or 5 38
comment forms within the time period required by Colorado insurance law.
Failure to file documentation of compliance and data on number of Business 6 39
Groups of One that were covered.
Failure to maintain copies of all intermediary health care subcontracts. 7 40
MARKETING AND SALES - FINDINGS
Failure to display on marketing materials a notice advising of the availability of 8 43
the Colorado Comprehensive Health Benefit Plan Description Form.
Failure to disclose availability of an access plan in marketing material. 9 44
Failure to use correct format and complete information in Colorado 10 70
Comprehensive Health Plan Description Forms.
Failure to use sufficiently clear content in internet advertising to avoid a 11 74
tendency to be misleading.
Failure to use sufficiently clear content in marketing brochures to avoid a 12 78
tendency to mislead.
COMPLAINTS - FINDINGS
Failure to maintain a complete record of all consumer complaints received. 13 80
Failure to include all required information in the complaint record. 14 82
PRODUCERS - FINDINGS
Failure to determine that all producers were properly licensed prior to 15 85
solicitation of insurance.
UNDERWRITING - POLICY FORMS - FINDINGS
Failure to file an Annual Report of policy forms in 1999 and failure to file prior 16 92
to use.
Failure to clearly and correctly disclose the required conditions of renewability. 17 95
Failure to allow benefits for attempted suicide or self-inflicted injuries sustained 18 97
by an insane person.
Failure to adequately disclose benefits for hospital and anesthesia for dental 19 100
procedures for dependent children.
Failure to include complete mandated coverages available for diabetics. 20 102
Failure to correctly define the requirements to qualify as a dependent. 21 103
Failure to include complete mandated child health supervision services. 22 105
Failure to state correctly, clearly or completely the extent of coverage for 23 110
Hospice Care.
Failure to indicate correct requirements and benefits for home health care 24 112
services.
167
Summary of Issues/Rec's. Locator Provident American Life & Health Insurance Company
ISSUES Rec. Page

No. No.
Failure to have correct and/or approved different wording in required and 25 121
optional provisions.
Failure to reflect in the application the correct type of plan being offered over 26 122
the Internet.
Failure to reflect correct type of plan on policy coversheet for indemnity plans. 27 123
Failure to indicate the correct entity responsible for obtaining any necessary 28 125
preauthorization.
Failure to correctly define coverage for complications of pregnancy. 29 127
Failure to allow for life benefits in the event of suicide, as required by Colorado 30 128
insurance law.
UNDERWRITING – RATING - FINDINGS
Failure to apply a risk modification plan as it was filed with the Division of 31 131
Insurance.
Failure to use rates that are not excessive in relation to benefits and failure to use 32 133
rates that are non-discriminatory.
UNDERWRITING - APPLICATION FILES - FINDINGS
Failure to determine if individual policies were being sold to business groups of 33 140
one.
UNDERWRITING - CANCELLATIONS/NON-RENEWALS5
DECLINATIONS – FINDINGS
Failure to reflect the correct number of days allowed for a break in coverage on 34 143
Certificates of Creditable Coverage.
Failure to send Certificates of Creditable Coverage within the time frame 35 145
allowed by the Division of Insurance.
Failure to advise of eligibility for Colorado Uninsurable Health Insurance Plan 36 148
to applicants declined for coverage because of medical conditions or history.
Failure to notify declined Business Groups of One of the availability of coverage 37 154
under a small group policy.
CLAIMS – FINDINGS
Failure to accurately determine the number of days utilized for processing 38 157
claims.
Failure to process claims within the required sixty (60) days. 39 161
Failure to process claims accurately in all instances. 40 163
UTILIZATION REVIEW – FINDINGS
Failure to provide, in all instances, written or electronic notification of 41 166
certification or adverse determinations for utilization review decisions.
168
Submission Page Provident American Life & Health Insurance Company
Independent Market Conduct Examiners
Contracting with
The Colorado Division of Insurance
participated in this examination and in the preparation of this report.
169

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MARKET CONDUCT EXAMINATION REPORT

PROVIDENT AMERICAN LIFE & HEALTH INSURANCE COMPANY

NAIC Group Code 1200

EXAMINATION PERFORMED BY INDEPENDENT CONTRACTORS FOR

COLORADO DEPARTMENT OF REGULATORY AGENCIES

Sarah S. Malloy, CIE, AIRC, PAHM

Independent Market Conduct Examiners

PROVIDENT AMERICAN LIFE & HEALTH INSURANCE COMPANY

Sarah S. Malloy, CIE, AIRC, PAHM

Independent Contract Examiners

August 18, 2000

The Honorable Willia m J. Kirven III

Sarah S. Malloy, CIE, AIRC, PAHM

Sandra J. Rich, AIE, ALHC

II. PURPOSE AND SCOPE OF EXAMINATION .................................................. 7

III. EXAMINERS' METHODOLOGY...................................................................... 8

IV. EXAMINATION REPORT SUMMARY .......................................................... 11

V. FACTUAL FINDINGS ...................................................................................... 16

A. Company Operations/Management .............................................................. 17

VI. SUMMARY OF ISSUES AND RECOMMENDATIONS ............................... 167

VII. EXAMINATION REPORT SUBMISSION...................................................... 169

PURPOSE AND SCOPE OF EXAMINATION

The examination included review of the following:

Company Operations / Management

Marketing and Sales

Most frequently sold Indemnity and PPO Policy PAL997IMM-CO

Policy transferred from DOI to market conduct section PAHHIC-INDMM-POL-96-CO

Amendatory endorsements and riders

First Health Entire year for a piece of the Colorado business

EXAMINATION REPORT SUMMARY

1. Failure to maintain and disclose the existence of an access plan.

2. Failure to include all required provisions in carrier/intermediary and provider contracts.

3. Failure to file a summary of anti-fraud efforts in 1999.

4. Failure to maintain all records necessary for market conduct purposes.

5. Failure to provide responses within the required time period.

6. Failure to file documentation and data on business groups of one.

7. Failure to maintain copies of intermediary health care subcontracts.

1. Plans required to be maintained are complete.

1. Failure to disclose availability of Colorado Health Plan Description Form in marketing

2. Failure to disclose availability of an access plan in marketing material.

5. Failure to accurate ly describe coverage in printed advertising brochures.

1. Failure to maintain a complete record of all consumer complaints received.

2. Failure to include required information in complaint record.

2. Failure to clearly and correctly state the conditions of renewability.

• Incomplete home health care benefits reflected.

4. Failure to use correct definitions in the policies as indicated below:

• Adopted child-Coverage required placement in the residence of the insured.

7. Failure to use a correctly titled policy coversheet for indemnity plans.

• Rating: Examiners identified two (2) areas of concern.

• Cancellations/Non-Renewals/Declinations: There were four (4) areas of concern identified during

3. Failure to advise of CUHIP eligibility when declining coverage.

3. Failure to consistently process claims accurately.

1. Failure to provide written/electronic notification of certification or adverse determinations

MARKET CONDUCT EXAMINATION REPORT

PROVIDENT AMERICAN LIFE & HEALTH INSURANCE

COMPANY OPERATIONS / MANAGEMENT

Section 10-16-704(9), C.R.S., Network adequacy, states:

Section 10-16-702, C.R.S., Legislative declaration, states:

(a) To incorporate consumer protections in the creation and maintenance of provider

Section 10-16-706, C.R.S., Intermediaries, states:

IV.(B) Clarification of Terms

“Intermediary” is defined in Section 10-16-102(25.5), C.R.S. An intermediary must be