Take a Number: NPI to Be Required for All Electronic Transactions


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Medical Economics Feature - January 2007  

By  Ken Ortolon
Senior Editor  

You may not want a national provider identifier (NPI), but you'd better get one if you still want to get paid for treating patients.

Beginning May 23, all physicians, allied health professionals, hospitals, and health care facilities who electronically bill Medicare, Medicaid, or any other governmental or private health care payer must have this new unique identification number to bill for their services. The NPI will replace the multiple identifiers now used.

As of mid-November, though, only about half of the affected professionals and health facilities across the country had applied to the U.S. Centers for Medicare & Medicaid Services (CMS) for their NPI.

Texas Medical Association officials urge physicians not to wait any longer. Not only do physicians have to get the identifier before May 23, they also must share the number with their contracted health plans, physicians with whom they make or receive referrals, and other entities they do business with for the business end of their practices to continue to run smoothly. Simply put, clearinghouses and payers, both commercial and governmental, will reject claims if physicians do not use the new NPI. 

Physician, Identify Yourself  

Congress created the NPI in 1996 as part of the Health Insurance Portability and Accountability Act (HIPAA). It will be required on all electronic health care transactions. Physicians, hospitals, and other health care professionals will no longer be able to submit claims or other transactions with their Medicare or Medicaid provider numbers or unique identifiers previously used with commercial health plans. HIPAA also requires health plans and employers to have new unique identifiers.

Currently, health plans assign identification numbers to health care professionals. The result is physicians who do business with multiple health plans have multiple identification numbers. The NPI will replace them with a single identifier that CMS says will simplify administrative procedures for everyone involved in health care transactions.

TMA officials say CMS has taken years to implement the NPI because HIPAA made substantial changes in how electronic transactions must be conducted, and enormous volumes of rules, regulations, and standards had to be developed to implement those changes, including standards governing privacy, security, and coding.

Although physicians have been able to apply for an NPI since May 23, 2005, CMS spokesperson Barbara Cebuhar says only about 1.4 million of an estimated 2.3 million affected health care professionals had actually applied for their NPI by this past November.

Sandy Phelps, manager of utilization management system projects at Blue Cross and Blue Shield of Texas, says CMS data as of mid-October showed only 24 percent of the estimated 258,361 licensed health care professionals in Texas - including physicians, hospitals, physical therapists, chiropractors, laboratories, and others - had applied for and received an NPI.

Wichita Falls pathologist Susan Strate, MD, chair of TMA's Council on Socioeconomics, says confusion among physicians over whether they need an NPI may have caused the slow enrollment rate.

"It appears that many physicians aren't taking it seriously that they're going to need an NPI," she said. "Maybe they think if they don't see Medicare patients they're not going to need numbers. They absolutely are going to need a NPI, and they absolutely must have it to file claims next May."

There has been some hesitancy among physicians who already have obtained NPIs to share those numbers with health plans, other physicians, and other health care professionals because of concerns over privacy and the potential for fraudulent use of the numbers. However, CMS officials say physicians and others simply must share their NPIs if they want to get paid. Ms. Cebuhar says CMS will issue a regulation on how to share the numbers to protect identity, but that regulation has not yet been finalized. 

Leaving a Legacy  

CMS has posted a significant amount of information about the new identifier on its Web site at www.cms.hhs.gov/NationalProvIdentStand , including a program overview, how to apply for an NPI, educational resources, and frequently asked questions.

CMS says the easiest way physicians can apply for their NPI is online by logging on to the Web site of the National Plan and Provider Enumerator System (NPPES) at www.nppes.cms.hhs.gov . To apply online, physicians must provide their name, Social Security number, date, country, and state of birth, gender, mailing address, practice location, state license information, and other information.

Paper applications may be obtained by calling (800) 465-3202, by email at customerservice@npienumerator.com , or by mail at NPI Enumerator, PO Box 6059, Fargo, ND 58108-6059.

CMS suggests physicians applying for an NPI also provide their "legacy" identifiers, including all unique identifiers they previously used in submitting electronic transactions to Medicare and all other payers.

Most commercial health plans have information on their Web sites about how to submit NPIs. Unfortunately, each plan has a different process for how it wants the numbers submitted.

The Texas Medicaid Program also has implemented a "dual strategy" for NPI submission. Since June, the Texas Medicaid and Healthcare Partnership (TMHP), the Medicaid carrier, has allowed physicians to submit both their legacy numbers and NPI on electronic transactions. As of Nov. 13, however, TMHP had collected NPIs from only 365 acute care providers and 754 NPIs from long-term care providers.

Ken Ortoloncan be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email at  Ken Ortolon.  


Incorporated Physicians, Group Practices May Need Multiple Identifiers

Most individual physicians will need to apply for their national provider identifier (NPI) and be prepared to use it before May 23, but some incorporated physicians and group practices will need to apply for additional NPIs.

Individual physicians must apply for a Type 1 NPI, but a physician organization, such as a group practice, academic practice plan, or professional corporation, must apply for a Type 2 NPI. Type 2 organizations also should enumerate their individual physicians to distinguish them individually and avoid possible delays in payments.

The two types of identifiers are identical in format and cannot be distinguished without additional data.

Susan Strate, MD, chair of TMA's Council on Socioeconomics, says the number of NPIs a physician or group practice needs depends largely on how that physician or group practice bills for services.

"Each individual physician must have an NPI," Dr. Strate said. "If they bill as a group under the same tax ID number, then the group also has to have an NPI."

Incorporated individual physicians who have an employee identification number should have a Type 2 NPI. However, those physicians may also want a Type 1 NPI to provide flexibility to distinguish an individual who provided services from the practice entity. In that situation, the physician would apply for an individual Type 1 NPI and the business entity would apply for an entity Type 2 NPI.

Physicians applying for a Type I NPI must supply a Social Society number or individual tax identification number. Those applying for Type 2 NPIs must provide an employer identification number.


TDI Amends Clean Claim Rules to Accommodate New Identifier

Implementation of the national provider identifier (NPI) for all electronic health care transactions is forcing the Texas Department of Insurance (TDI) to revise its rules regarding clean claims under the Texas prompt payment laws.

Jennifer Ahrens, TDI associate commissioner for life, health, and licensing programs, says the agency is rewriting the clean claim rules to add a definition for the NPI and to reflect changes in the CMS 1500 claim form resulting from implementation of the NPI.

"We need to change our rules mostly because the forms are changing, and the NPI is a big part of the forms," Ms. Ahrens said.

Teresa Devine, director of TMA's Payment Advocacy Department, says the definition of a clean claim for paper claims in the existing rules is based on the old 1500 form and must be revised to reflect the new form, which has been significantly reorganized to accommodate inclusion of the NPI.

In addition to defining the NPI in the rules, the changes likely will include adopting CMS forms for submitting nonelectronic claims, providing mandatory form usage dates consistent with CMS timelines for both the revised 1500 claim form and the UB-04 form used by institutions to file paper claims, and specifying required data elements for both forms to reflect changes in the forms and to support use of the NPI.

TDI hopes to have the new rules finalized some time this month. That could be delayed, however, depending on what comments TDI receives when it publishes the proposed rules.

Even though the NPI will not be required for electronic transactions until May 23, physicians can begin filing paper claims by using the revised 1500 form and their NPI during a transition period that began Jan. 2. If the new rules aren't in place by the start of the transition period, any claims filed on the new form would not be subject to the Texas prompt pay requirements. 

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