colorado Department of regulatory agencies	 
Division of Insurance
3 ccr 702-2
Corporate Issues
Amended  Regulation 2-1-9
CONCERNING THE LICENSURE OF LIMITED SERVICE LICENSED PROVIDER NETWORKS
Section 1	Authority
Section 2	Background Scope and Purpose
Section 3	Definitions
Section 4	Applicability and Scope
Section 5	Licensure Options for Provider Networks Transacting The Business of Insurance
Section 6	Application for a License as an LSLPN
Section 7	Standards of Operation for an LSLPN
Section 8	Statutory Deposit
Section 9	Fidelity Bond
Section 10	Annual Reporting and Licensing Procedures
Section 11	Requirements of LSLPN Health Coverage Plans
Section 12	Evidence of Coverage
Section 13	Complaint System
Section 14	Filing of Policy Forms, Rates and Charges
Section 15	Other Provisions Applicable to LSLPNs
Section 16	Suspension/Revocation of an LSLPN's License
Section 17	Enforcement
Section 18	Severability
Section 19	Effective Date
Section 20	History
Section 1	Authority
This regulation is promulgated under the authority of § § 6-18-302(1)(b), 10-1-108(16)(a) and (e)10-1-108(13)(a) , 10-1-109(1), and 10-16-109, C.R.S., et seq.
Section 2	Background Scope and pPurpose
In 1994, the Colorado General Assembly passed HB 94-1193 which authorized the commissioner through regulation to set forth standards and requirements specific to “licensed provider networks”  (i.e., provider networks engaged in the business of insurance) concerning their solvency and operational capacity or the performance of services consistent with the extent of risk being accepted by the licensed provider network.
Provider networks desiring to provide only a limited health service, in-patient hospital services, or home health care, and only assume the level of risk commensurate with the provision of these limited benefits, shall be licensed as limited service licensed provider networks pursuant to standards and requirements established by this regulation.
The intent and purposes of this regulation are to establish requirements for licensure as a limited service licensed provider network, and to clarify the application of health benefit mandates and Title 10 requirements to limited service licensed provider network health coverage plans.
Section 3	Definitions
As used in this regulation, unless the context otherwise requires, the following definitions shall apply:
A.	“Capitation”  means an arrangement whereby the amount of money paid to the provider network is based upon the agreement to provide certain health care services to covered persons but does not vary on the basis of the number or type of services actually rendered.
B.	“Carrier” shall have the same meaning as in § 10-16-102(8) C.R.S.
C.	“Covered Person” shall have the same meaning as in § 10-16-102(13.5), C.R.S.
D.	“Employee assistance program” shall mean a worksite-focused program designed to assist (1) work organizations in addressing productivity issues and (2) employee clients in identifying and resolving personal concerns (including, but not limited to health, marital, family, financial, alcohol, drug, legal, emotional, stress, or other personal issues) which may affect job performance.
E.	“Health Care Coverage Plan” shall have the same meaning as in § 10-16-102(22.5), C.R.S.
F.	“Home health care services”  shall mean the following services when provided to a covered person in his/her place of residence: skilled nursing services; home health aide services; provision of medical supplies, equipment, and appliances suitable for use in the home; and physical therapy, speech and hearing therapy, or occupational therapy.
G.	“Incidental services” include fees only for x-rays, laboratory services, medications, and other services as approved by the commissioner.
H.	“Inpatient hospital services” shall mean services provided by a licensed hospital to anyone requiring twenty-four (24) hours or more of continuous care in the facility.
I.	“Limited service licensed provider network”  (LSLPN) means a provider network that offers to contract directly with a consumer(s) (e.g., individual, group, employer, etc.) or their representative(s), to provide health care services restricted to (i) a narrowly defined health specialty (e.g., substance abuse, radiology, mental health, pediatrics, pharmacology, etc.) or (ii) services narrowly limited to a single type of licensed health facility (e.g., inpatient hospital, birth center, long term care facility, hospice, etc.), or (iii) home health care services delivered in the covered person's residence only. The services provided by the LSLPN must be limited in scope and must be significantly less than the basic health care services offered by a health maintenance organization or under a comprehensive or major medical policy. An LSLPN must be licensed as an insurance company pursuant to this regulation. Family Practitioners, Independent Practice Associations (IPAs) consisting of providers licensed in more than one specialty, or other similar medical/health collaborations do not meet the definition of a narrowly defined health specialty and therefore may not seek licensure under this limited license.
J.	“Limited service licensed provider network health coverage plan”  (LSLPN health coverage plan) means a contract, policy, certificate, or agreement entered into or issued by an LSLPN that agrees to assume the risk for specific, limited health care expenses and/or provide delivery of such services.
K.	“Producer” shall have the same meaning as in § 10-2-103(6), C.R.S.
L.	“Provider Network” shall have the same meaning as in § 6-18-102(16)6-18-301.5(3), C.R.S.
M.	“Risk assumption”  or “risk sharing”  means a transaction whereby the chance of loss, including the expenses for the delivery of service, with respect to the health care of a person is transferred to or shared with another entity (e.g., Carrier, including an LSLPN), in return for a consideration. Examples include, but are not limited to, full or partial capitation agreements, withholds, risk corridors, and indemnity agreements. For the purposes of this regulation, fee-for-service, per diem payments, diagnostic-related group payment agreements, and employee assistance programs (EAPS) are not considered to be risk assumption or risk sharing arrangements.
N.	“Risk based Capital (RBC)” is a formula which quantifies the assets, liabilities, size and risk profile of a regulated entity in order to determine the minimum amount of capital and surplus required to be maintained by a company. The RBC formula provides an elastic means of setting the capital and surplus requirement, in which the degree of risk taken by the entity is the primary determinate.
Section 4	Applicability and Scope
The provisions of this regulation apply to:
A.	Entities licensed as, or required to be licensed as, a sickness and accident insurance company; a nonprofit hospital, medical-surgical, and health service corporation; or a health maintenance organization that contracts with provider networks for the delivery or provision of health care services;
B.	Entities required to be licensed as a limited service licensed provider network (LSLPN); and
Section 5.   Licensure Options for Provider Networks Transacting the Business of Insurance
A.	 A provider network shall not issue any contract of insurance, including risk assumption or risk sharing agreements, nor shall it accept or assume all or part of the risk inherent in a contract issued by another entity, other than from a licensed carrier or with another entity that contracts with licensed carriers as allowed by this regulation, without first receiving a license from the commissioner.
B.	Provider networks may apply to the Division of Insurance for a license to transact the business of insurance as follows:
1.	A provider network may apply for licensure as a sickness and accident insurance company; a nonprofit hospital, medical-surgical, and health service corporation; or a health maintenance organization, if the provider network meets the applicable terms and conditions for such licensure. Once licensed, the provider network shall be subject to all the statutory requirements of the Insurance Code under which it was licensed.
2.	A provider network may apply for licensure as an LSLPN as provided by this regulation.
a.	In order to be eligible to make such application for this license, a provider network must be legally bound and obligated to provide health care through an LSLPN as defined in Section 3 of this regulation.
b.	The provider network must agree that in the event a member of the network is not able or willing to provide services to a consumer (e.g., individual, group, employer, etc.) under contract with the network, or any of its employees, the network will be obligated to continue providing such services.
c.	The LSLPN may enter into contractual arrangements for incidental services with other entities subject to the following:
i.	The LSLPN shall only contract for health services which are incidental, but necessary to the performance of the LSLPN health coverage plans offered by the LSLPN. Payments made for these incidental services shall not exceed ten percent (10%) of total capitation fees/premiums received annually by the LSLPN.
ii.	The contract(s) for incidental service(s) shall contain a hold harmless provision as outlined in § 10-16-705(3), C.R.S.
3.	A provider network that meets the definition of a health maintenance organization, or in the commissioner's opinion offers services which do not differ significantly from the basic services offered by an HMO, or that provides, either directly or through contractual or other arrangements with other hospitals and/or physicians, comprehensive or major medical services to enrollees shall not be eligible for licensure as an LSLPN.
C.	The commissioner may refuse to issue an LSLPN license for which a provider or provider network has applied if, in the opinion of the commissioner, the applicant qualifies as a licensed carrier under another licensure category.
Section 6.   Application for a License as an LSLPN
A.	A provider network may apply for a license as an LSLPN on a form prescribed by the commissioner, if it is eligible to make such application pursuant to the provisions of Section 5.B.(2) of this regulation by filing one copy of the following:
1.	An application to be licensed as a LSLPN. Such application shall clearly disclose the type of authority being requested; (e.g., a limited service license to provide home health care services, or inpatient hospital services, etc.) shall be accompanied by a non-refundable filing fee of five hundred dollars ($500.00); and shall be signed by an officer or authorized representative of the applicant. If an applicant qualifies for licensure as an LSLPN, the applicant shall receive a certificate of authority limiting its right to insure only those health services requested on its application form. If the LSLPN discontinues providing any of these limited services, its certificate of authority shall be amended to include only those services that the LSLPN has the capacity, ability and legal authority to provide.
2.	A detailed summary of its proposed business plan with respect to its current business operations and its proposed plan as an LSLPN. This business plan shall include, but not be limited to, the type of service to be provided; the network's form of ownership, including the name and the percentage of ownership interest of all members; its capital structure; a quantitative measurement of its capacity to provide contracted services; a detailed description of the procedures to be established to provide protection for the consumer (i.e., grievance procedures, peer review, case utilization procedures, etc.); a description of the network's geographical service area; and an explanation of the techniques to be implemented to ensure continuity of care for all covered persons should the LSLPN incur a change in its providers, geographical area or financial solvency.
3.	Biographical sketches of all proposed officers, directors, owners and organizers, and information providing confirmation of their background and experience in the management or delivery of the services to be delivered through the LSLPN. Such biographical information shall be submitted on the NAIC form (available upon request), along with a complete fingerprint set, as may be secured from local law enforcement sources which the commissioner shall forward to the Colorado Bureau of Investigation for the purpose of conducting a state and national fingerprint based criminal history record check in accordance with  § 10-3-112, C.R.S. Any person who has managerial involvement or control of a company that underwent any adverse state administrative action shall include information about the adverse administrative action. Submission of the fingerprint set may be waived by the commissioner where deemed appropriate.
4.	A current audit, certified by an independent certified public accountant, of its financial condition, or current financial information attested to by an officer of the LSLPN applicant. In addition, three (3) years of financial projections, including balance sheets, income statements and cash flow statements must be provided. The projections shall contain projected per member per month enrollment at fiscal year end and a concise summary of all assumptions used to generate the projections.
5.	A copy of the LSLPN'S proposed LSLPN Health Coverage Plan(s), contracts, arrangements, marketing and advertising material, and a complete listing of its producers.
6.	A copy of the LSLPN's organizational documents, (e.g. articles of incorporation, partnership agreements, etc.) including any contracts between providers. Copies of the forms used for all contractual arrangements with providers of incidental services are also included in this requirement. The commissioner retains the right to review and approve or disapprove the actual contractual arrangement between the LSLPN and the provider of incidental services to determine whether such arrangement is contrary to the best interests of the public.
7.	A copy of any management or administrative contract(s) entered into, or to be entered into, by the LSLPN.
8.	A list of the providers comprising the LSLPN'S provider network, including each provider's medical designation, field of practice or specialty, licensure category, and a description of the LSLPN'S procedures for determining on an on-going basis that each provider is duly licensed.
9.	Information with regard to the measures and protections in place to ensure the financial solvency of the provider network. Such measures and protections may include business interruption insurance, stop-loss insurance, access to additional capital, etc.
10.	A copy of the LSLPN'S plan to coordinate benefits with respect to workers' compensation, personal injury protection benefits, third-party recovery and subrogation rights.
11.	Confirmation that the LSLPN uses standardized codes, billing processes and formats.
12.	Confirmation that the applicant has the capability to satisfactorily manage the health care coverage issued. This confirmation is to include a detailed description of the LSLPN's procedures established and implemented to ensure the maintenance of all books and records necessary to meet all reporting requirements. This requirement can be met through a third party management or administration agreement.
13.	Schedule of rates or charges, including all co-payments, deductibles, premiums and incidental fees. This information shall include the basis for calculation (e.g., use of usual, customary, and reasonable (UCR) costs).
14.	Any other information deemed necessary by the commissioner in evaluating the application.
B.	Prior to implementing any material changes in its operations, or in the coverage offered by the LSLPN, and in no less than thirty (30) days prior to the anticipated change, the LSLPN shall submit to the commissioner a written description of any material modification to its plan of operation, or a written explanation of any material changes to the information submitted in accordance with Section 6 A.
Section 7	Standards of Operation for an LSLPN
All LSLPNs shall be responsible for meeting the following standards of operation both at the time of initial licensure, in the evaluation of their application, and continuously thereafter:
A.	Maintain an unqualified annual audited financial report certified by an independent certified public accountant (CPA), performed in accordance with Generally Accepted Auditing Standards (GAAS), and based upon Generally Accepted Accounting Principles (GAAP). All CPA reports must provide separate detail for income and expenses derived from:
1.	Risk sharing and risk assumption arrangements between the LSLPN and licensed carriers; and
2.	The LSLPN health coverage plans issued by the licensed LSLPN.
B.	Demonstrate financial stability to the commissioner and maintain a minimum net worth. Minimum net worth, excluding any goodwill or other intangible assets, must be equal to the greatest of (i) one hundred thousand dollars ($100,000), (ii) 2 (two) times the authorized control level of the most recent risk based capital calculation, or (iii) such other amount as may be determined by the commissioner and commensurate with the risk assumed by the LSLPN.
C.	Demonstrate its capacity to administer the health plans being offered, and its ability to achieve, monitor, and evaluate the quality and cost effectiveness of care being provided by its health care providers, and adequacy of its provider network and third-party agreements in assuring reasonable access to care. This requirement shall be met by certification by an independent reviewer and subject to acceptance by the commissioner.
D.	Provide for the collection of capitation fees/premium payments from the individual, employer, or group, on a monthly basis only, unless otherwise approved by the commissioner.
E.	Provide an annual certification by an executive officer of the LSLPN warranting the following:
All LSLPN health coverage plan(s), contracts or agreements or a combination thereof are not being offered and marketed as substitute for comprehensive or major medical insurance coverage.
F.	Assure that all administrative and management agreements include: a provision that the contract may not restrict the LSLPN governing body from appointing, removing or changing officers or employees of the LSLPN; a clear statement of the responsibilities and ownership of all books and records, assets, liabilities and compensation under the contract, where applicable; and if the LSLPN contracts for electronic data processing (EDP) and/or management information systems (MIS), a provision providing appropriate access to the system upon examination by the commissioner, and a mechanism under which the system is available to the LSLPN or its successor upon insolvency of the LSLPN, or termination or cancellation of the contract.
G.	Provide a written notice of cancellation to the commissioner within sixty (60) days prior to canceling any administrative or management agreement.
Section 8 .   Statutory Deposit
A.	Each LSLPN shall deposit securities, acceptable to the commissioner, in an amount based on enrollment levels achieved on the last day of the LSLPN's fiscal year according to the following schedule.
1.	$300,000 for enrollment of less than 60,000
2.	$350,000 for enrollment of 60,000 but less than 100,000
3.	$400,000 for enrollment of more than 100,000 or more
B.	The deposit shall be in a manner provided pursuant to § 10-3-210, C R S. and Colorado Insurance Regulations 3-1-6 (3 CCR 702-3) and 3-2-6 (3 CCR 702-3), and subject to the joint control of the commissioner for the protection of Colorado contractholders. The securities must be in marketable securities and should, at all times, be of top quality, readily marketable, and equal to the amount required.
Section 9	Fidelity Bond
The funds received from enrollees must be treated in a fiduciary capacity. In order to protect the LSLPN contractholders from misuse of contractholder funds, an LSLPN licensed in Colorado shall maintain a fidelity bond covering the officers, directors, and employees who have access to the LSLPN funds. The fidelity bond must be issued by an insurance company holding a certificate of authority in this state and meet the requirements of Colorado Insurance Regulation 3-1-1 (3CCR 702-3).
Section 10	Annual Reporting and Licensing Procedures
A.	The license shall expire on June 30 each year and shall be renewed annually if the LSLPN has continued to comply with this regulation. Every license shall automatically be extended until such time as the commissioner refuses to renew the license of such LSLPN.
B.	An LSLPN shall be deemed relicensed if it is in compliance with the provisions of Sections 5.B.2, 7, 8, 9 and does all of the following:
1.	Remits an annual filing fee of five hundred dollars ($500.00) by June 30.
2.	Remits annually by June 30 September 1 the greater of one hundred dollars ($100.00) or an amount equivalent to five cents ($0.05) per person enrolled in the LSLPN program as of the immediately preceding fiscal year end.
3.	Files an annual audited financial report: All LSLPNs shall have an annual audit by an independent certified public accountant and shall file the audited financial report with the commissioner no later than one hundred fifty (150) days following the LSLPN's fiscal year end. See Appendix A for Guidelines for Filing of Annual Audited Financial Reports.
4.	The annual audited financial report shall include the amount of all capitation fees/premiums collected during the fiscal year; the amounts actually paid/allocated during such year for health care and incidental services for the covered persons; the amounts established in claim and policyholder reserve liabilities, including incurred but not yet paid/performed, unreported and unbilled cases, retroactive cost adjustments and unearned premium; all other liabilities and obligations required of such LSLPN; number of members and member months; and such other information relating to the performance of the LSLPN as is necessary to enable the commissioner to carry out his/her duties.
5.	The annual audited financial report shall be accompanied by a completed Risk Based Capital report for the same period of time.
C.	Any late filings shall be subject to a penalty up to one hundred dollars ($100) per day for each day late and/or shall result in suspension or revocation of the license.
D.	Any other information or reports requested by the commissioner.
Section 11	Requirements Of LSLPN Health Coverage Plans
A.	All LSLPN health coverage plans, contracts, policies, and agreements shall be subject to all provisions of Title 10 that apply to health policies, plans, or contracts issued on a group basis as provided for in Section 15 of this regulation, except as provided herein:
1.	LSLPN health coverage plans shall only be required to comply with those mandatory coverage provisions enumerated in  § 10-16-104, C.R.S., that relate directly to the type of medical care or health service benefit (e.g. mental health care, hospital care, etc.) contractually provided for by the LSLPN health coverage plan as allowed by this regulation.
2.	LSLPN health coverage plans shall not contain any provision which would provide coverage for a covered person for services received outside of the LSLPN.
B. 	All LSLPN health coverage plans shall prominently disclose on the front page of the plan the type of medical specialty benefits and/or limited health care service being provided, and shall state that the plan is being provided by an LSLPN. Such plan must clearly be labeled as a “Limited Service Licensed Provider Network Health Coverage Plan.” 
C.	All LSLPN health coverage plans shall prominently disclose, in large type, in any written agreement, certificate, contract, plan, or policy issued by such LSLPN the following notice:
“NOTICE” 
“This health coverage plan is issued by your Limited Service Licensed Provider Network. This plan is subject to some but not to all of the insurance laws and regulations of Colorado, and is not a substitute for comprehensive or major medical coverage. Colorado insurance guaranty funds are not available for your Limited Service Licensed Provider Network Health Coverage Plan in the event of an insolvency of this plan.” 
Section 12.   Evidence Of Coverage
A.	Every contractholder/enrollee shall be issued an evidence of coverage, which shall contain a clear and complete statement of:
1.	The limited health service to which each contractholder/enrollee is entitled;
2.	Any limitation of the service, kinds of service or benefits to be provided, and exclusions, including any deductible, co-payment or other charges;
3.	Where, and in what manner, information is available as to where and how services may be obtained; and
4.	The method for resolving complaints.
B.	Any amendment to the evidence of coverage shall be provided to the subscriber in a separate document at least thirty (30) days prior to the effective date of the amendment.
Section 13	Complaint System
Pursuant to § 10-3-1104(1)(i), C.R.S. a complaint system shall be maintained by all LSLPNs. The complaint system shall include a complaint record which provides at least the minimum information as required in Colorado Insurance Regulation 6-2-1, (3 CCR 702-6).
Section 14	Filing of Policy Forms, Rates and Charges
A.	Policy forms shall be certified in accordance with § 10-16-107.2, C.R.S. and Colorado Insurance Regulation 1-1-6 (3 CCR 702-1).
B.	The rates and charges shall be reasonable in relation to the service provided. No schedule of charges or rates shall be used by an LSLPN unless a copy of such schedule of charges or rates, or amendments thereto, has been filed with the commissioner prior to use. Rate filings are to include an actuarial certification that the rates are not excessive, inadequate or unfairly discriminatory. Rates and premiums for products issued by an LSLPN are to be determined on a fixed prepayment basis. Therefore, no LSLPN product may be issued on a cost plus or retrospective rating basis. An LSLPN may require co-payments, co-insurance or deductible payments of enrollees as a condition for the receipt of specific health service unless otherwise prohibited by law. Such payments for service shall be shown in the contract as a specified dollar amount or percentage. An annual certification, by a qualified actuary, to the appropriateness of the charges or rates, based on reasonable assumptions, shall accompany the annual rate filing along with adequate supporting information.
Section 15	Other Provisions Applicable To LSLPNS
A.	The provisions of Title 10 and appropriate regulations shall apply except as they are inconsistent or inapplicable to LSLPNs.
B.	It is the duty of all LSLPNs licensed pursuant to this regulation to comply with all other applicable state and federal regulations.
Section 16	Suspension/Revocation of an LSLPN's License
An LSLPN's license may be suspended or revoked by the commissioner for failure to comply with the provisions of this regulation, or with any other applicable state regulations and statutes, or if the commissioner determines that continued licensure would be detrimental to the covered individuals, insurance buying public, or the general public of this state.
Section 17	Enforcement
Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of any sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines, issuance of Cease and Desist Orders, and/or suspensions or revocation of license.
Section 18	Severability
If any provision of this regulation or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of this regulation shall not be affected.
Section 19	Effective Date
This regulation is hereby effective on November 1, 20038.
Section 20 .   History
Originally adopted November 1, 1996.
Amended effective November 1, 2003.
Amended effective November 1, 2008. 

APPENDIX A  Guidelines For Filing of Annual Audited Financial Reports
1.	Filing and extensions for filing of annual audited financial reports and related information
A.	All LSLPNs shall have an annual audit by an independent certified public accountant and shall file the audited financial report with the commissioner no later than one hundred twentyfifty(120)(150) days following the LSLPN's fiscal year end.
B.	Extensions of the filing date may be granted by the commissioner for thirty (30) day periods, upon a showing by the LSLPN and its independent certified public accountant of the reasons for requesting such extension and upon determination by the commissioner of good cause for an extension. The request for extension must be submitted in writing not less than ten (10) days prior to the due date in sufficient detail to permit the commissioner to make an informed decision with respect to the requested extension. “Press of business” or similar reasons shall not be grounds for an extension.
2.	Contents of annual audited financial report
The annual audited financial report shall be performed in accordance with generally accepted auditing standards and the financial position of the LSLPN as of the end of the most recent fiscal year and the results of its operations, cash flows and changes in net worth for the year then ended in conformity with generally accepted accounting principles.
The annual audited financial report shall include the following:
A.	Report of independent certified public accountant;
B.	Balance sheet reporting assets, liabilities and net worth;
C.	Statement of operations;
D.	Statement of cash flows;
E.	Statement of changes in net worth;
F.	Notes to financial statements. These notes shall also include a summary of ownership and relationships of the LSLPN network and all affiliated provider networks.
G.	The financial statements included in the audited financial report:
i.	Shall be comparative, presenting the amounts as of the current fiscal year end and the amounts as of the immediately preceding fiscal year end. However, in the first year in which an LSLPN is required to file an audited financial report, the comparative data may be omitted;
ii.	Amounts may be rounded to the nearest thousand dollars ($1,000), and immaterial amounts may be combined.
3.	Qualifications of independent certified public accountant
The commissioner shall not recognize as a qualified independent certified public accountant, and not accept any annual audited financial report, prepared in whole or in part by, any natural person who:
A.	Has been convicted of fraud, bribery, a violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Sections 1961-1968, or any dishonest conduct or practices under federal or state law;
B.	Has been found to have violated the Insurance Laws of Colorado with respect to any previous reports submitted under this regulation; or
C.	Has demonstrated a pattern or practice of failing to detect or disclose material information in previous reports filed under the provisions of this regulation
4.	Notification of adverse financial condition
The LSLPN shall require the independent certified public accountant to report, in writing within five (5) business days to the board of directors and its audit committee, any determination by the independent certified public accountant that the LSLPN has materially misstated its financial condition as reported to the commissioner as of the balance sheet date currently under audit or that the LSLPN does not meet the minimum net worth requirements under this regulation as of that date. The LSLPN which has received a report pursuant to this paragraph shall forward a copy of the report to the commissioner within five (5) business days of receipt of such report and shall provide the independent certified public accountant making the report with evidence of the report being furnished to the commissioner. If the independent certified public accountant fails to receive such evidence within the required five (5) business day period, the independent certified accountant shall furnish the commissioner a copy of its report within the next five (5) business days.
5.	Report on significant deficiencies in internal controls
In addition to the annual audited financial statements, each LSLPN shall furnish the commissioner with a written report prepared by the independent certified public accountant describing significant deficiencies in the LSLPN's internal control structure noted by the accountant during the audit. No report shall be issued if the accountant does not identify significant deficiencies. If significant deficiencies are noted, the written report shall be filed annually by the LSLPN with the Division within sixty (60) days after filing the annual audited financial statements. The LSLPN is required to provide a description of remedial actions taken or proposed to correct significant deficiencies, if such actions are not described in the accountant's report.
6.	Accountant's letter of qualifications
The accountant shall furnish to the LSLPN in connection with, and for inclusion in, the filing of the annual audited financial report, a letter stating:
A.	That the accountant is independent with respect to the LSLPN and conforms to the appropriate standards of the profession, including the code of professional ethics and pronouncements of the AICPA and the rules of professional conduct of the Colorado Board of Public Accountancy, or similar code, as then might be in effect.
B.	The background and experience in general, and the experience in audits of companies of the staff assigned to the engagement and whether each is an independent certified public accountant. Nothing within this regulation shall be construed as prohibiting the accountant from utilizing such staff as deemed appropriate where use is consistent with standards prescribed by generally accepted auditing standards.
C.	That the accountant understands the annual audited financial report and the opinion thereon will be filed in compliance with this regulation and that the commissioner will be relying on this information in the monitoring and regulation of the financial positions of LSLPNS.
D.	That the accountant consents and agrees to make available for review by the commissioner, or the designee or appointee of the commissioner, the workpapers as defined in Section 7. below, and that the workpapers will be retained for a period not to less than five (5) years.
E.	A representation that the accountant is properly licensed by an appropriate state licensing authority and is a member in good standing in the AICPA.
7.	Review and retention of workpapers and documents.
Every LSLPN required to file an audited financial report pursuant to this regulation shall require the accountant to make available for review by Division examiners, upon reasonable notice and during normal business hours, all workpapers prepared in the conduct of his/her audit, including any communication related to the audit between the accountant and the LSLPN. The accountant's workpapers shall be made available at the offices of the LSLPN, at the Division or at any other reasonable place designated by the commissioner. The LSLPN shall require that the accountant retain the audit workpapers including communication documents until the Division has filed a report on examination covering the period of the audit, but not less than five (5) years from the date of the audit report.
In the conduct of an examination by the Division examiners, it shall be agreed that photocopies of pertinent audit workpapers may be made and retained by the Division. All working papers including communications obtained shall be afforded the same confidentiality as other examination workpapers generated by the Division.
Notwithstanding the above, audit reports and workpapers are additionally subject to, and protected by, the provisions of Article 2 of Title 12, C.R.S.
8.	This regulation shall not prohibit, preclude or in any way limit the commissioner from ordering and/or conducting and/or performing examinations of LSLPNS under Colorado Laws and Regulations.