LOP's & BI Liens
Bodily Injury Liens and Letters of Protection Explained
The old saying that Life Isn’t Fair may be true enough, but it doesn’t mean we have to live with it in all circumstances! There is a way to make life a bit more fair for Medical Providers who are treating accident victims but who are not getting properly paid for their services! The way to level the playing field is by using a tool called a Bodily Injury Lien and in many states it is called a Letter Of Protection (LOP).
In many injury cases the accident victim is also the patient and is also called the Plaintiff in the legal case. That Plaintiff/patient will often have a lawyer representing them (called a Plaintiff’s Lawyer or Trial Lawyer) and they will be working to get money from the defendant. The defendant is referred to as the “third party defendant” because that is what the insurance is called that covers them. The third party defendant should have insurance covering the injuries they caused. More often than not the insurance covering the injuries the defendant caused is called Bodily Injury (BI) Insurance. The BI insurance is going to pay the Plaintiff’s attorney a lot of money to settle the case.
The Plaintiff’s attorney is going to use the medical bills your facility or doctors incurred to show the BI Insurance the value of the case. Part of the money the Plaintiff gets is to cover the medical bills. YOUR Bills!
The goal is to first maximize all “first party payors.” That means workers compensation insurance, automobile accident related insurance (PIP and/or Med Pay), and health insurance or government health insurance. But once that is exhausted or not applicable then the next step in solving the puzzle is to create a third party lien for the provider. Those BI Liens and/or LOPs are a contract between the medical provider and the patient which forces the Plaintiff’s attorney to pay the doctor his outstanding bill before paying the Plaintiff any of those funds.
In some states you need the Plaintiff’s attorney to sign off on the LOP. In other states the Plaintiff alone can create the contract and bind their lawyer to comply with that LOP. Some hospitals shy away from LOPs as they are worried they violate EMTALA. But they don’t when they are used correctly. They simply secure a fair payment from the third party settlement.
The final problem hospitals face when dealing with LOPs is the long term nature of the AR. These liens can take literally YEARS to settle. Hospitals simply don’t have the time or resources to follow paper for years. Yet, if done properly, LOPs are the most profitable payor in the medical receivables world. If your hospital is willing to create an LOP program and is willing to develop relationships with the community of personal injury attorneys around that hospital, the financial payoff is significant. However, the hospital needs a dedicated employee to following up on the outstanding balances and a categorization methodology to close those files during the pendency of the LOP so that the outstanding AR days to go crazy.
The best and easiest solution is to outsource this function to GO-SB! We have great individualized solutions to cover your hospital’s needs and to maximize your hospital’s MVA revenue without upsetting the delicate balance of AR days.