National Provider Identifier is mandatory as of May 23, 2007

If you have not applied for your National Provider Identifier (NPI) yet, time is running out! As of May 23, 2007, healthcare providers who are defined as “covered entities” under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) are required to use the NPI for all electronic healthcare-related “standard” transactions.

“Covered entities” are individuals, organizations (which includes group practices), health plans, and healthcare clearinghouses. The NPI must be used with both public and private payers on all standard transactions—from coordination of benefits, claims processing, inquiries, and payments, to health plan enrollment or termination, and referrals.

All individual healthcare providers, including physicians, will eventually have to obtain and use the NPI, because most private health plans will delay the processing of claims that do not include it. Such delays will have a direct impact on your revenue cycle.

Some health plans are already asking providers to include their NPI along with their unique provider number for that plan. Small healthcare plans have an additional year before they are required to use the NPI. Contact your insurance carrier if they have not notified you of their NPI compliance deadline.

The NPI initiative

The NPI initiative dates back to 1993, when the Centers for Medicare & Medicaid Services (CMS) and private sector payers began to develop a joint healthcare provider identification system—the National Provider Identifier. In 1996, HIPAA mandated the adoption and use of a standard unique identifier for healthcare providers. CMS adopted the NPI for Medicare and began developing the National Provider System (NPS) to capture, maintain, and manage data on all healthcare providers.

This system of identifier records is known as the National Plan and Provider Enumeration System (NPPES). CMS has contracted with a vendor to serve as the NPI Enumerator, the administrative entity within NPPES, to provide the necessary support to healthcare providers and health plans on issues related to the issuance of the NPI. Questions that are addressed by the NPI Enumerator concern application status, lost notification letters or passwords, as well as other issues. The Department of Health and Human Services (HHS) exercises overall responsibility for oversight and management of the NPS.

Who needs an NPI?

The NPI divides covered entity healthcare providers into two categories: individuals (Type 1) and organizations (Type 2).

Each individual orthopaedic surgeon is a Type 1 provider. Other Type 1 providers include, but are not limited to, nurses, dentists, and physical therapists.

Orthopaedic group practices, hospitals, laboratories, clinics, and nursing homes are considered Type 2 providers. Organizations can have “subparts” (components or separate physical locations) that conduct standard transactions and may need to have their own NPI. It is the responsibility of the primary organization to determine if any of its subparts should obtain an NPI. This determination is beyond the scope of this article; you should visit the CMS Web site or contact your legal counsel for more information.

Each healthcare provider will receive only one NPI. A new number is obtainable only under a few specific circumstances, principally related to abuse or fraudulent use of the NPI.

The NPI can be deactivated if the healthcare provider ceases to conduct standard transaction under that NPI. For example, if two orthopaedic practices merge and one practice ceases to exist, the NPPES must be notified and it will deactivate the NPI for the defunct practice. NPPES will not reassign that NPI to another provider. The NPI can also be reactivated if the practice resumes operations.

You must notify NPPES of any changes (such as a new address or name change) within 30 days of the change. The NPI does not carry other information or code about the healthcare provider, such as employer identification number, Social Security number (SSN), or state identification number. Its 10-digit format simply ensures that an adequate supply of the numbers will be available for the next 200 years.

How can the NPI be used?

You must use your NPI to conduct standard transactions, but you must also provide your NPI to other covered entities such as referring physicians, hospitals, pharmacies, health plans, business associates, and healthcare clearinghouses. These other entities need your NPI to conduct their own standard transactions. The NPI may also be used for the following purposes, which require unique identification of the healthcare provider:

• As a cross reference in healthcare provider fraud and abuse files and other program integrity files
• As a healthcare provider identifier for debt collection under the provisions of the Debt Collection Improvement Act of 1996
• As a healthcare provider identifier in nonstandard healthcare transactions and on related correspondence
• As an identifier for other healthcare providers in healthcare transactions and on related correspondence
• As an identifier in the internal healthcare provider files of healthcare plans for processing transactions and communicating with healthcare providers
• In coordination of benefits communications between health insurance plans
• In the internal files of healthcare clearinghouses to create and process standard transactions and in communications with healthcare providers and health plans
• As a healthcare provider identifier in patient medical records
• As a healthcare provider identifier of those listed as health care card issuers on healthcare identification cards

Where’s the information kept?

The information collected from NPI applicants is kept in the National Provider File (NPF) database, managed by the NPPES. Applicants must provide all identifiers they are currently using (e.g., Medicare and private carriers), as well as their SSN and IRS Individual Taxpayer Identification (ITIN). These numbers (or other proof of identity, such as a driver’s license) are required data elements that uniquely identify a provider and match the assigned NPI to the provider. Other data on the application are for administrative purposes.

As of this writing, HHS/CMS have not finalized the strategy for disseminating information from the NPF, due to the difficulty in complying with different regulations and authorities. When the final strategy is ready, HHS/CMS will publish it in the Federal Register.

Don’t wait to apply

Even if you are still hesitant about applying for the NPI, if you conduct standard transactions with government or private payers, you are required to have an NPI. The NPI is an integral part of meeting the government’s objective to increase administrative efficiency and effectiveness in both federal and private healthcare programs and to advance the movement toward a patient electronic health record system.

The benefits to you are many. Using one provider number will streamline your billing process and increase revenue. Because the NPI will be the only required provider number on standard transactions, there will be less chance of placing the “wrong” provider number on claims, reducing resubmissions and delays in reimbursements. Visit the NPPES Web site and submit your application today.

Marty Krawczyk is the practice management program coordinator in the AAOS practice management group. She can be reached at krawczyk@aaos.org