1. PEO ADVISOR
RISK MANAGEMENT
© Praxiom Risk Management August 2011
Features
The Importance of Transparency in Medical Bill Review
- Jason Beans, CEO, Rising Medical Solutions
Medical bill review can be a powerful tool in the claims management arsenal, if used properly. The savings achieved through a well
run program directly impacts the bottom line, reducing claims costs and increasing surplus. The process is much more technical
and complex than most people realize and, due to that, I see up to a 20% difference in overall program savings in many states. That
difference makes a huge impact on whether your program is performing or underperforming.
Data analytics can also dramatically impact your results, and this should be part of any good bill review program. Nowhere else can
such a wide array of data be produced that allows for comprehensive claims analysis and alerts. The capabilities of data analytics
are infinite and underutilized. Companies need to start doing a better job of flagging claims that need intervention, setting reserves
with predictive models, recognizing fraud and identifying the best treatment patterns.
The problem is that the optimal performance of a bill review program requires one critical component: “transparency.” However,
instant access to clear data is too often the exception, not the rule.
One area that frequently lacks transparency is the reporting of results. I often see data broken into micro-bites that hide or mislead
the client about their program’s overall results. The most important number to judge your bill review program by is not ROI, or
PPO penetration, or even the bill review program fee – it is the net savings (total savings less the bill review fees).
Let me give two scenarios: Would you rather have a $20 to $1 ROI or a $6.67 to $1 ROI? Sounds like a simple question, but the out-
comes are actually not what you’d expect.
In scenario A: Imagine a bill with $1,000 in charges, $200 in fee schedule discounts and a $10 bill processing fee (20 to 1 ROI). The
resulting bill cost is $810, with a net savings of 19%.
In scenario B: You get an additional $200 discount over fee schedule (e.g. PPO, nego-
tiations) at a 25% of savings rate, bringing the total savings to $400 for $60 in fees
($6.67 to $1 ROI). The resulting bill cost is $660, with a net savings of 34% – demon-
strating why it’s net savings that is really the key metric to give you the best indica-
tion of program performance. Continue Reading...
Avoiding Heat Illnesses
- John Conrad
Whether you are a worker or weekend warrior, hot and humid conditions can cause
heat illnesses. Each year, workers, home owners and athletes experience heat re-
lated illnesses that in some cases result in deaths. Confirmed heat related death sta-
tistics for workers average about twelve per year. During an eleven day period of 100 Professional Employer 2011 Conference
degree temperatures, July 16 through 27, 2006, heat was September 12-14, 2011
attributed to 86 deaths in California. JW Marriott Orlando Grande Lakes
4040 Central Florida Parkway
Those most affected are workers exposed to hot and humid
Orlando, FL 32837
conditions, especially those performing heavy work tasks or
using bulky protective clothing and equipment. Some work- www.napeo.org/PEM2011
ers might be at greater risk than others if they have not
built up a tolerance to hot conditions, are in poor physical condition, are older, or if
they have heart disease, high blood pressure, or are taking certain medications.
So, what are heat illnesses? There are three major forms of heat illnesses: heat cramps, heat exhaustion, and heat stroke, with
heat stroke being a life threatening condition.
Continue Reading...
© 2011 P rax iom Risk Management LLC www.prax iom-rm. com
Prax iom Risk Management is a Certified Risk Management and Safety P rofessional firm. 08/11

2. PEO
RISK MANAGEMENT
ADVISOR © Praxiom Risk Management
Free Webinar Schedule
The Certification Institute’s PEO WC Risk Management Webinar Series
www.certificationinstitute.org
The Certification Institute’s free webinar series returns in August with another full schedule. Participa-
tion in June and July was very high, with over 300 individuals representing 75+ PEOs. The webinars are
short, 1-hour courses that cover important tactical topics for PEO operators. The webinars also provide
access to resource material and industry operational statistics that won’t be found elsewhere.
While sponsored by the CI, the webinars are being hosted by Certified Risk Managers from the PEO
consulting firm of Praxiom Risk management.
New Webinar in August:
Underwriting Profitable PEO Clients
Tuesday, August 9th and 23rd: 2:00 to 3:00 (ET)
http://peounderwriting.eventbrite.com
At the conclusion of the webinar you will have an understanding of:
Obtaining the right underwriting data
Hazard Groupings and client classifications
When to pre-inspect
Loss Ratio and EMR impact on renewal pricing
Retention and Rate Level objectives
Returning Webinars
Workers Compensation Experience Mod for PEOs – Understanding the EMR Worksheet
Thursday, August 4th and 18th: 2:00 PM to 3:00 PM (ET)
The key components of the NCCI experience mod and calculation
Interpretation of codes and abbreviations
Recommendations for influencing a reduction in the EMR
Workers Compensation Experience Mod for PEOs – True Cost of Client Claims
Thursday, August 11th and 25th: 2:00 PM to 3:00 PM (ET)
Minimum and controllable EMR
Premium associated with controllable EMR
The ‘true” cost of a claim
A single client’s impact on EMR and premium
Measuring PEO WC Performance
Tuesday, August 16th and 30th: 2:00 to 3:00 (ET)
Requirements for data analysis
Ideal Risk Management Information System (RMIS) capabilities
Key WC metrics to monitor and timing
Best client level reports
Best PEO level reports
To view all the current webinars and register, follow the link below:
www.peoriskmanagement.eventbrite.com
© 2011 P rax iom Risk Management LLC www.prax iom-rm. com
Prax iom Risk Management is a Certified Risk Management and Safety P rofessional firm. 08/11

3. PEO
RISK MANAGEMENT
ADVISOR © Praxiom Risk Management
Measuring PEO Performance Evaluate your PEO’s practices vs CI
This section is dedicated to those PEOs that manage their Workers certification guidelines...
Compensation program through a Large Deductible or captive ar-
As we review the CI’s best practices for PEO risk management in each
rangement, and utilize positive results as a profit center.
of their 5 categories, evaluate how your PEO stacks up by answering
Premium these questions:
There are many definitions of WC premium that can be confusing
and are often times mixed up erroneously. Here is a good list of Risk Control Assessment
the most common premium definitions.
Manual Premium = (payroll/$100)/ manual rates Compliance with Risk Control Requirements—Have you established
written procedures for requiring the Client to comply with “critical”
Subject Premium = manual premium * increased limit charge (this recommendations? Do your procedures should include:
is also the premium that is “subject to” the EMR
Communication requirements to the client
Standard Premium = Subject premium * EMR (also called Modified Target dates for compliance
Premium) Taking appropriate action if Client fails to comply
Deductible Premium = Standard premium * deductible factor Documenting the action(s) taken
Discounted Premium = Standard premium * discount factor New Client Needs Assessment— Has the PEO established written
procedures for conducting a “needs assessment” of each new client?
Estimated Premium = Discounted premium + Taxes + assessments
Do you produce a service plan that is consistent with the needs as-
Final Premium = Premium determined after audit sessment? Do the Needs Assessment and Service Plan consider Cli-
Other forms of Premium used in Retrospective Plans include: ent requests for specific services and requirements included in the
CSA? Do the procedures include how the Service Plan will be docu-
Basic Premium = Standard premium * Basic factor (this is the por- mented and used?
tion of the retro plan that covers admin costs, overhead, profit, and
insurance charges) Providing Appropriate Risk Control Services— Has the PEO estab-
lished written procedures for delivering Risk Control services to Cli-
Minimum Premium = Standard premium * minimum factor (this ents consistent with Service Plans?
represents the least amount you potentially pay on a retro plan)
Accident Investigation— Have you established poli-
Maximum Premium = Standard premium * maximum factor (this cies requiring investigation of employee accidents
represents the most you potentially pay on a retro plan) when they result in a work related injury and subse-
quently reported as a claim? Do the policies describe
which accidents will be investigated (med only, lost
Workers Compensation Highlights time, specific injuries, etc)? Have you identified what
method will be used for investigation (telephone vs on-site) and the
The WC Benchmarking Analysis format of documenting the investigation results?
By John Keller, CRM ARM CIC AAI
Certificate Tracking Confirmation - Do you have a tracking process in
A Benchmarking Analysis is one of the most beneficial tools for place for clients with material contingent workers’ compensation
evaluating operational efficiencies, yet it is significantly underuti- exposure?
lized.
Background Investigations—Has the PEO required as part of the
When a Benchmarking Analysis is completed for a company’s service plan and CSA that the clients cooperate with the PEO in con-
Workers’ Compensation program, there are three primary areas of ducting pre-employment and/or post-employment background inves-
focus: Accident, Post-Injury Cost Management, and Organizational tigations? Is an MVR review, where applicable, a part of the back-
Procedures. Each of these three components can have numerous ground investigations?
ratios and statistics that can be used for comparison. Which ratios
Claims Review— Does the PEO review and document, at least
are used typically depends on the industry and the type of work
monthly, the claims experience and resulting recommendations for
being performed. Below is an outline of the most common statis-
clients with claims frequency or severity issues? Do you use the re-
tics used in each component of a Benchmark Analysis with a brief
sults of these reviews to implement client-specific corrective actions
description.
such as placement on the watch-list, providing risk control services,
The Accident Component and/or terminating the client?
Frequency Rate – is a measure of the number of claims (anything
>$0 paid) divided by a predetermined measure. Insurance compa-
nies most commonly express this as… Continue Reading
For more on CI requirements visit: www.certificationinstitute.org
© 2011 P rax iom Risk Management LLC www.prax iom-rm. com
Prax iom Risk Management is a Certified Risk Management and Safety P rofessional firm. 08/11

4. PEO
RISK MANAGEMENT
ADVISOR © Praxiom Risk Management
Benchmarking
The Benchmarking section is used to outline various industries in terms of their Workers Compensation risk factors, historical
claims statistics, and key loss sources. Benchmarking statistics are obtained from a variety of credible sources including the largest
WC insurance companies in the U.S. and The Bureau of Labor and Statistics. The statistics used are aggregated from all states and
averaged over a 5 year rolling period. All stats below are from claims incurred between 1/1/06—12/31/10.
This month we continue our look at hospitality services, with a review of SIC 5461—Retail Bakeries.
Bakeries SIC 5461 - Top 5 Loss Sources % Total
Incurred
Industry SIC: 5461 - Retail Bakeries
Machine All Other
As of: 4/30/2011 7% 17%
Material
Handling
Period: 1/1/06 - 12/31/2010 31%
Average Incurred $2,298 Struck
Average Paid $1,615 By/Against
8%
% claims > $10,000 5.3% Slip/Fall - Same
Slip/Fall -
% Incurred >$10,000 75.3% Elevated
Level
28%
% claims >$25,000 2.3% 9%
% Incurred >$25,000 56.2%
0 -3 4 - 10 11+
First Report Mean Median Days Days days
Timeliness 7.61 1.0 76.4% 13.2% 10.4%
Key Metrics - SIC 54xx Loss Sources Average Inc. % Inc % Claims
Frequency Rate 2.3 Material Handling $ 5,855 31.1% 12.2%
Loss Rate $0.88
Slip/Fall - Same Level $ 3,158 28.1% 20.4%
Slip/Fall - Elevated $ 8,603 9.6% 2.6%
NAIC 311811
Struck By/Against $ 821 8.0% 22.3%
BLS Stat 2006 2007 2008 2009
Machine $ 9,869 6.7% 1.6%
Recordable 1.8 2.9 2.8 1.6
All Other 16.7% 41.0%
DART 1.2 1.8 2.1 0.9
Rate Definitions:
Frequency Rate = # non $0 claims / payroll per $1M Recordable = # OSHA recordable incidents / 200,000 hours1
Loss Rate = Total Incurred $ / payroll per $100 DART = incidents w/ Days Away, Restricted duty or job Transfer / 200,000 hours1
1—200,000 hours represents the amount of time worked by 100 WSE in one year
© 2011 P rax iom Risk Management LLC www.prax iom-rm. com
Prax iom Risk Management is a Certified Risk Management and Safety P rofessional firm. 08/11

5. PEO
RISK MANAGEMENT
ADVISOR © Praxiom Risk Management
Benchmarking
The Benchmarking section is used to outline various industries in terms of their Workers Compensation risk factors, historical
claims statistics, and key loss sources. Benchmarking statistics are obtained from a variety of credible sources including the largest
WC insurance companies in the U.S. and The Bureau of Labor and Statistics. The statistics used are aggregated from all states and
averaged over a 5 year rolling period. All stats below are from claims incurred between 1/1/06—12/31/10.
This month we continue our look at hospitality services, with a review of SIC 5421—Meat and Fish Markets.
Meat and Fish Markets SIC 5421 - Top 5 Loss Sources % Total
Miscellaneous Incurred
Industry SIC: 5421 - Meat Markets 5%
All Other
As of: 4/30/2011 Vehicles 5%
Period: 1/1/06 - 12/31/2010 12% Workplace
Violence
Average Incurred $7,351 36%
Average Paid $4,367
% claims > $10,000 7.6%
% Incurred >$10,000 91.4% Slip/Fall -
Elevated
% claims >$25,000 4.7% 29%
% Incurred >$25,000 84.2% Slip/Fall -
Same Level
13%
0 -3 4 - 10 11+
First Report Mean Median Days Days days
Timeliness 6.03 1.0 75.4% 14.0% 10.5%
Key Metrics - SIC 54xx Loss Sources Average Inc. % Inc % Claims
Frequency Rate 2.3 Workplace Violence $ 226,578 36.1% 1.2%
Loss Rate $0.88
Slip/Fall - Elevated $ 27,865 28.8% 7.6%
NAIC 445210 Slip/Fall - Same Level $ 4,605 13.2% 21.1%
BLS Stat 2006 2007 2008 2009 Vehicles $ 30,412 12.1% 2.9%
Recordable 2.9 4.3 2.8 3.6 Miscellaneous $ 9,327 4.5% 3.5%
DART 1.3 2.6 1.9 1.2 All Other 5.4% 63.8%
Rate Definitions:
Frequency Rate = # non $0 claims / payroll per $1M Recordable = # OSHA recordable incidents / 200,000 hours1
Loss Rate = Total Incurred $ / payroll per $100 DART = incidents w/ Days Away, Restricted duty or job Transfer / 200,000 hours1
1—200,000 hours represents the amount of time worked by 100 WSE in one year
© 2011 P rax iom Risk Management LLC www.prax iom-rm. com
Prax iom Risk Management is a Certified Risk Management and Safety P rofessional firm. 08/11

6. PEO
RISK MANAGEMENT
ADVISOR © Praxiom Risk Management
Stay Connected...
If you haven’t already joined, there is now a group on LinkedIn dedicated to PEO
Risk Management. All PEO operators and Risk Managers are encouraged to join
and participate in the online discussions. Or, you can simply follow the news posts that relate to PEO,
Risk Management, and Workers Compensation.
Click here to go to the PEO Risk Management group on LinkedIn and join.
With PEO Risk Management professionals averaging 20 years of experience and encompassing a
broad range of industry expertise, Praxiom Risk Management is committed to providing a wide
range of resources to help PEOs mitigate risk and grow their Workers Compensation profit center.
This PEO RM Advisor is a monthly e-newsletter designed to keep PEO executives and Risk Manage-
ment professionals informed of relevant topics in the area of PEO risk management. Sharing infor-
mation and best practice through e-newsletters is one of the many ways we help support PEO or-
ganizations' risk management efforts.
If you would like to contribute industry specific content or articles for publication in the areas be-
low, you may submit them to the Editor at:
RiskAdvisor@praxiom-rm.com.
Loss Control
Claims Management
Performance Metrics
RM Information Systems
Policy Administration
Carrier Relationships
Industry Certifications
Up Next…
We’ll continue benchmarking the hospitality industry with an in
depth look into the WC results of:
5511—New/Used Car Dealers
5571—Motorcycle Dealers
© 2011 P rax iom Risk Management LLC www.prax iom-rm. com
Prax iom Risk Management is a Certified Risk Management and Safety P rofessional firm. 08/11