How a letter of protection actually works
An LOP is a promise to pay from settlement proceeds, not a payer contract. The difference explains most of what happens to your receivable.
A letter of protection is a written agreement, usually signed by the patient's attorney, stating that the provider will be paid out of the proceeds of a personal-injury case. It is not an insurance authorization, not a payment guarantee, and not an adjudicated claim. It is a priority position against money that does not exist yet.
That distinction matters operationally. With an insurance claim, the amount owed is determined by contract and the timing is determined by process. With an LOP receivable, both the amount and the timing are determined by the resolution of a lawsuit you are not party to.
What the LOP does give you
- A documented obligation that the attorney will hold and disburse settlement funds.
- A position ahead of the plaintiff's net recovery, subject to statutory liens that outrank you.
- A record of treatment authorized in reliance on the case, which supports the underlying charge.
What it does not give you
- A fixed amount. The billed charge is a starting point for a negotiation at settlement.
- A date. Cases resolve between three and twenty-four months, and outliers run far longer.
- A counterparty you can call. There is no adjudication, no appeal, and no payer service line.
Why this shapes your realization rate
Because the amount is negotiated at the end, the effective discount on an LOP receivable is set by parties and pressures outside your billing office. Practices that measure collections against the billing period rather than against the case will systematically overstate performance, because the collections arriving this quarter belong to cases billed one to two years ago at different volumes.
The honest way to read the number is per case: total collected divided by total billed, restricted to cases with a settlement or judgment date inside the window. Open cases are excluded, because including them makes the rate look worse early and better later without either being true.