Encompass Office Solutions, which provides outsourced equipment and nurses to physicians' practices for in-office procedures, filed suit against insurance giant UnitedHealthcare last week over its demands that Encompass return $2,051,896.22 - three years' worth of reimbursements from the insurer. The reason for the dispute? UnitedHealthcare claims that Encompass misrepresented itself as an ambulatory surgical center, a claim that Encompass vehemently denies.

Since its formation in 2007, McKinney, Texas-based Encompass says it has taken "painstaking efforts to ensure that all insurance companies from which it would seek reimbursement, including United, knew that it was not an ASC." Patients whose physicians have used Encompass for surgeries entered into an assignment of benefits with the company, thereby instructing their insurers to pay encompass directly.

The company claims that a United representative directed its billing company to bill on a UB form with an SU modifier and the physician's name to indicate the location of service. In the codes it used to bill nearly 1,100 claims to United, the company says it consistently represented that its services were performed in physicians' offices.

During a July 2009 claims audit, however, Ingenix, speaking on behalf of United, reversed course in stating that United only pays facilities billing on a UB form if they're licensed ASCs or brick-and-mortar facilities licensed under state law. In a letter to Encompass, a United attorney explained, "It appears that your business model was to assist physicians to perform procedures in their offices and bill as though you were an ASC in order to collect a facility fee, which, in fact, United Healthcare paid to you."

Court documents further state "United claims that it has already paid for the services to the physician billing the global procedure and Encompass is not entitled to repayment for its services as well."

"The physicians who provided surgical care to their patients were reimbursed for their costs, including staff, supplies and equipment required," says a representative for Ingenix. "Encompass' complaint is without merit. Encompass submitted bills as an ambulatory surgery center [but] Encompass is not an ambulatory surgery center and does not perform medical procedures."

Calls and e-mails to Encompass seeking comment were not immediately returned.

Dan O'Connor