What Is an NPI number and What Is It Used For?

Are you a healthcare provider or a provider organization working in the United States? When one becomes a healthcare practitioner, several procedures must be followed to ensure proper compliance with several standards, including HIPAA and insurance credentialing. These procedures must be followed to guarantee that your company is HIPAA compliant and that your reimbursement process runs smoothly. One of these processes is getting an NPI number, or National Provider Identifier number. Everything you need to know about NPI numbers, including their significance, kinds, and how to get your own, is listed here.

The NPI is a HIPAA Administrative Standard under the Health Insurance Portability and Accountability Act. For covered healthcare providers, an NPI is a unique identifying number developed to make the electronic transmission of health information faster and more efficient. All health plans, covered healthcare providers, and healthcare clearinghouses must utilize NPIs in their administrative and financial dealings. Each healthcare provider must use a consistent, distinctive health identifier under the HIPAA Administrative Simplification rules. NPIs became the norm as a result of the 2004 NIPs Finale Rule.

A National Provider Identifier (NPI) number is a unique identifying number assigned to each healthcare provider and organization in the United States. As part of the Health Insurance Portability and Accountability Act (HIPAA), NPI was introduced in 1966, meant to enhance the efficiency of electronic health records. Every healthcare plan and organization, including the Center for Medicare and Medicaid Services (CMS), uses its NPI to manage administrative and financial transactions and process medical payments and claims.

What is an NPI number?

The National Provider Identifier (NPI) number is an administrative simplification standard used by the Health Insurance Portability and Accountability Act (HIPAA). It is a unique identification number issued to covered healthcare providers. All the covered healthcare providers and clearinghouses must use NPIs for all the financial and administrative transactions incorporated under HIPAA. NPI number is a 10-digit numeric identifier that is intelligence-free. The intelligence-free number means that NPIs do not carry other personal information about healthcare providers, such as their medical specialty or state. Instead of traditional provider identification in HIPAA standards transactions, the NPI must be used.

Federal Regulation, The Health Insurance Portability and Accountability Act of 1996 (HIPAA), outlines that every covered healthcare provider must share their NPI with other healthcare providers, clearinghouses, health plans, or any other entity needing NPI billing purposes. The CMS (Centers for Medicare & Medicaid Services) has created an online portal where any healthcare organization, provider, or physician can access the NPI information. This forum is a part of the National Plan and Provider Enumeration System (NPPES) website NPI registry(nppes.cms.hhs.gov). The information about healthcare providers shared on this forum covers only the exposable data under the Freedom of Information Act (FOIA).

The NPI must be used in place of other provider IDs, such as a Provider Transaction Access Number (PTAN), Quality Improvement Evaluation System (QIES), Certification, Survey Provider Enhanced Reporting (CASPER), and National Supplier Clearing (NSC), in HIPAA standard transactions.

Other payers, including private healthcare insurers, utilize the NPI instead of the Unique Physician Identification Number (UPIN) as the necessary identity for Medicare services.

What is the purpose of an NPI number?

The final rule of the National Provider Identifier was to standardize the identification numbers and establish unique NPIs for healthcare providers to smooth the healthcare system. Implementation of this rule not only simplified the administrative process but also reduced the burden on healthcare providers.

The final rule requires the providers to use the NPI number while communicating any healthcare information associated with a healthcare transaction. The rule states. “The use of the NPI will improve the Medicare and Medicaid programs, and other Federal health programs and private health programs, and the effectiveness and efficiency of the healthcare industry in general, by simplifying the administration of the healthcare system and enabling the efficient electric transmission of certain health information.”

NPI prevents healthcare fraud

NPI incorporates efficiency in the standardized administrative process and helps Medicare and Medicaid prevent healthcare fraud. The NPI reveals the identity of the individual healthcare provider prescribing any medicines and treatments or ordering the drugs, supplies, and equipment. The additional verification of NPI supports the clarity in the process. NPI also checks the validity of the credentials of individual healthcare providers. Research states that NPI has saved taxpayers approximately $1.6 billion in the last decade.

Who needs an NPI number?

All individual healthcare providers, healthcare organizations, and healthcare clearinghouses working under the regulation of HIPAA must acquire an NPI number. Particularly the organizations and healthcare providers that use a medical insurance company to process their billing claims. Any healthcare organization, business, or individual service provider who electronically connects with patients and executes transactions must also have an NPI by HIPPA. Whether you are a covered provider working under HIPAA, a supplier who bills on funded programs offered by the federal government, or a healthcare provider, you must have an NPI. Enrollment with Medicare also requires healthcare providers to have an NPI before applying.

Other than individual healthcare providers, healthcare organizations, and healthcare clearinghouses, dentists NOT working as HIPAA-covered entities may be required to use an NPI. Most dental plans demand a dentist include their NPI numbers while making a paper claim. Medicare Part D also requires non-covered dentists to use their type-1 NPI on the prescriptions, particularly for Medicare Part D beneficiaries.

Moreover, an insurance plan for a pharmacy may also ask the pharmacist for the prescribing provider’s NPI number on the drug prescription. A medical specialist may also ask the patients to get a referral from a doctor with a type-1 NPI to fulfill the claim.

Who uses an NPI?

A detailed list of HIPAA-covered organizations and providers must use an NPI number.

• Ambulance companies
• Chiropractors
• Clinical Social Workers
• Clinical Therapists
• Clinics
• Dentists
• Group Practices
• Health care clearinghouses
• Health care plans
• Home health care agencies (HHA)
• Hospitals
• Licensed Therapists
• Medical Equipment suppliers
• Medical Laboratories
• Nurses
• Nursing homes
• Opticians
• Optometrists
• Pharmacies
• Pharmacists
• Physical therapists
• Physicians
• Physician Assistants
• Psychologists
• Residential Treatment Centers

How to get an NPI?

After knowing what an NPI is and whether or not you need one, the only question remains: How to get an NPI?

The National Plan and Provider Enumeration System (NPPES) has made getting an NPI easy to understand and follow. If you are an individual healthcare provider or a healthcare provider organization, all you have to do is visit the website of NPPES and apply for your NPI number. To support the NPIs, NPPES is in contract with Fox Systems, Inc. working as an enumerator.  Fox Systems, Inc. manages the processing of any provider’s NPI application, resolves issues related to NPI application, answers the frequently asked questions about NPI, and assigns the NPI numbers.

How to apply for an NPI?

Applying for an NPI number is a simple 20 – 30-minute procedure that will save the providers many future troubles and time. CMS has authorized the NPPES to cater to all the matters related to the NPI application process. The application process is free of cost. You must apply to CMS to obtain your particular NPI number. There are three methods for use:

• Web-based program: Apply for electronic file exchange by logging into the National Plan and Provider Enumeration System (NPPES).
• Electronic File Interchange: If you’re applying with a group of providers, consent to have an EFI organization use on your behalf.
• Application on paper: To have your application manually added to the system, send the paper application to the NPI Enumerator.

Since obtaining an NPI number is a requirement of HIPAA, there are no fees involved in the application process.

You have three options for applying for your NPI:

1. Apply via the NPPES or the National Plan and Provider Enumeration System.
2. Fill out a paper NPI Application/Update Form, sign it, and send it to the NPI Enumerator at 7125 Ambassador Road Ste 100 Mill, MD 21244.
3. An Electronic File Interchange Organisation (EFIO) permits the mass enumeration of application data.

Once the NPPES confirms your application data, you will receive your NPI number from Customerservice@NPIEnumerator.com. You must regularly check your emails because the email might go directly to your spam folder if spam filters are active. After applying, there is no fixed time to receive your NPI, but it usually arrives on the electronic forum within ten business days of use.

How do I find my NPI number?

An NPI lookup for individual healthcare providers or provider organizations can be done in several ways. The official website for NPI lookup is NPPES NPI Registry (https://npiregistry.cms.hhs.gov/). NPPES does not charge anything for looking up anyone’s NPI number.

NPI Lookup Results: An Understanding

• NPI: As previously mentioned, the provider is given a special, 10-digit National Provider Identifier (NPI).
• Enumeration day: The day the NPI was assigned is the enumeration date.
• NPI Type: NPI numbers come in two different varieties. Providers are given Type 1 NPI on an individual basis. Organizational providers are given Type 2 NPIs.
• Status: The NPI’s status indicates whether it is active or inactive.
• Address: The address connected to the NPI is referred to here. It could have a principal address, a secondary address, or a postal address.
• Taxonomy: Taxonomy Codes classify a healthcare provider’s kind, categorization, and specialization. Providers can choose multiple taxonomy codes, but only one can be the principal taxonomy. The NPPES search will also provide the state code and license number linked to the taxonomy and the primary and chosen taxonomies.
• Other Identifiers: To assist health plans in identifying the provider, this field compares NPIs with insurers like Medicare and Medicaid or other insurers. This field also returns state and number codes.
• Endpoint Information: This section displays the client’s access point for services, typically a website or a direct address. In addition, it may provide affiliation, usage, content type, and destination description.

Tracking actions to a standardized identification provides transparency that can detect and prevent fraud. When Verisys verifies a provider’s identification for customers throughout the provider credentialing process, one of the numerous data points it uses is the NPI.

What is the application cost of an NPI number?

Applying for an NPI number through the National Plan and Provider Enumeration System is completely free of charge. You can easily apply online by visiting the official National Plan and Provider Enumeration System website. The application process is straightforward and incurs no fees.

Will my NPI number change?

An NPI number does not change under any circumstances. It is a 10-digit number that does not carry electronic information about personal details like office locations, cities, etc. It does not have to change even if the provider relocates or transforms other personal information.

Two different types of NPI number

NPI numbers fall into two categories

• Type 1
• Type 2

NPI Type 1

Rendering NPIs, also known as NPI Type 1 provider, are individuals who work in the healthcare industry and are frequently sole proprietors.  Your eligibility for a Type 1 NPI is unaffected by the number of various office locations, additional workers, or whether those employees have an EIN.  To be easily recognized as a healthcare provider, an individual Type 1 NPI, which functions similarly to your social security number, should be obtained by every healthcare professional at the beginning of their employment.

NPI Type 2

Conversely, group healthcare organizations and practices must have NPI type 2 or organizational NPI. You need a type 2 NPI if your organization, which comprises many wellness providers, issues superbills or CMS-1500s to your patients. Instead of going through the procedure for each physician, they enable your entire group to obtain credentials from an insurance carrier. Type 2 NPIs suggest that the organization should get the payment rather than the particular provider.

Through the type 1 NPI, type 2 NPI enables the insurance company to identify not only the specific healthcare provider providing treatment but also the business entity under which the healthcare provider both the type 1 and 2 NPIs on their insurance forms when invoicing; otherwise, it’s highly probable that their claim will be denied. If we look at the typical CMS-1500 insurance form, we can see that it has boxes for type 1 and type 2 NPIs. The “Billing Provider” (NPI 2) should be entered in Box 33A, and the “Rendering Provider ID” (Box 24J) should be entered in Box 24J.

Individual providers must only get a type 1 NPI if they decide to incorporate their practice. Even if they continue to be the only provider at the convention, they will often be needed to get a type 2 NPI.

HIPAA rules for NPI

HIPAA has made basic rules for all the covered healthcare providers, clearinghouses, and healthcare plans listed below.

According to CMS, it is mandatory for all covered healthcare providers, clearinghouses, and healthcare plans to use NPIs to perform all HIPPA financial and administrative transactions.
According to the Federal Regulation of HIPAA, covered healthcare providers must share their NPIs with other healthcare providers, organizations, health plans, and clearinghouses.

Can NPI replace TIM (Tax Identification Number)?

A general question that comes to every health provider’s mind is if their NPI can replace their TIM (Tax Identification Number) or other identification numbers they already have. The answer is no. The National Providers Identifier does not replace other numbers used for other identifications. They do not return the taxpayers’ identification numbers, social license numbers, social security numbers, or DAE numbers. All these numbers have their standings and purposes of fulfillment.

Conclusion

NPI numbers revolutionize medical billing by ensuring it is convenient and hassle-free. They significantly boost the efficiency of revenue cycle management. The Health Insurance Portability and Accountability Act (HIPAA) mandates that all healthcare providers, provider organizations, and clearinghouses secure an NPI number. This requirement helps regulate and accurately track healthcare services and reimbursements. Consequently, health plans reject any insurance claims lacking a registered and valid NPI number.