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What are NPI Numbers and Why Are They Important?

January 23, 2020

What is an NPI Number?

The NPI (National Provider Identifier) Number is a 10-digit numerical identifier used to identify a provider to their health care partners and must share with other providers, health plans, payers, and entities that require it for billing and claims purposes. According to the Administrative Simplification provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) mandated the adoption of a standard, unique health identifier for each health care provider. The NPI is this unique identification number for health care providers. Covered health care providers and all health plans and health care clearinghouses must use the NPIs in the administrative and financial transactions adopted under HIPAA.

When did NPIs go into Effect?

In July 1993, the Centers for Medicare & Medicaid Services (CMS) undertook a project to develop a health care provider identification system to meet the needs of the Medicare and Medicaid programs and, ultimately, the needs of a national identification system for all health care providers. The NPI Final Rule, published on January 23, 2004, established the National Provider Identifier (NPI) as this standard.

What is the Purpose of an NPI?

CMS is taking steps to improve the electronic transactions in health care with the NPI. Having a national standard for electronic health care transactions simplifies the processes and reduces the administrative burdens on health care providers.

In order to administer its programs, a health plan (Federal programs such as Medicare, State Medicaid programs, or private health plans) must assign identification numbers to its health care providers or suppliers. The identifiers were not standardized in the past resulting in a single provider having multiple identification numbers for each different health plan, meaning each provider had multiple billing numbers. This complicated the provider’s claim submission processes, and often resulted in the same identification number being assigned to different health care providers by the different health plans.

The NPI Final Rule established a standard for a unique health identifier for health care providers to use in the health care system. Providers are required to use their NPI Number when transmitting any health information in electronic form in connection with a transaction. As stated in the NPI Final Rule “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 health care industry in general, by simplifying the administration of the health care system and enabling the efficient electric transmission of certain health information.”

Who Gets an NPI?

All individuals and organizations who meet the definition of health care provider as described at 45 CFR 160.103 are eligible to obtain a National Provider Identifier (NPI). These include health plans, health plan clearinghouses, health care providers who transmit health information electronically, and health care organizations that transmit protected health information to covered entities who require access to the protected health information. If you are a HIPAA covered provider or if you are a health care provider or supplier who bills federally funded programs for your services, you must have an NPI. Providers need an NPI Number prior to enrolling with Medicare.

There are two types of health care providers in terms of NPIs. Type 1 includes health care providers including physicians, dentists, and sole proprietors. An individual is eligible for only one NPI. Type 2 health care providers are organizations including physician groups, hospitals, nursing homes, and health care providers who are incorporated.

NPI Numbers are not required to practice medicine. A health care provider who is HIPAA non-covered, has opted out of Medicare, and who takes absolutely no third-party payments does not need an NPI.

What is NPPES?

NPPES is the National Plan and Provider Enumeration System which is where an individual or organization must submit an application in order to obtain their NPI. The Department of Health and Human Services selected Fox Systems, Inc., as the Enumerator. It will process provider applications, assign NPI Numbers, resolve issues related to applications, and answer questions about obtaining NPIs.

Does the NPI Replace the Tax Identification Number (TIM) or Other Identifying Numbers?

The NPI does not replace a provider’s taxpayer identification number, DEA, state license, or social security number because these numbers are used for other identification purposes.

The NPI replaces all previous identification numbers (legacy numbers) that providers were using for health care information transactions, claims, and billing. However, health care provider identification numbers other than the NPI may continue to be used in the internal processes and files of health plans or health care clearinghouses if they wish to continue to use those identification numbers only in those internal processes and files. 

Will a Provider’s NPI Ever Change?

Once enumerated, a provider’s NPI will not change. The NPI remains with the provider regardless of a job change or a change in location.

Using the NPI as a Key to Health Care Fraud Prevention

The National Provider Identifier (NPI) is a key to preventing fraud in Medicare put in place by the Centers for Medicare and Medicaid (CMS) Final Rule on Fraud Prevention. It is designed to ensure quality care because it allows the verification of credentials of a provider who is treating or prescribing and ordering equipment and supplies. It is expected to save taxpayers an estimated $1.6 billion over a period of 10 years. To read more about NPIs and Fraud Prevention click here.

Juliette Willard Written by Juliette Willard
Healthcare Communications Specialist
Being creative is my passion! Writer. Painter. Problem Solver. Optimist.
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