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NPI Number: What is it, and how does it works?

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NPI Number: What is it, and how does it works?

An incorrect or missing NPI number is one of the most common billing errors. Without an accurate NPI, Medicare, Medicaid, and other health plans won’t pay your claims.

An NPI is a number that’s unique to you.

A HIPAA’s Administrative Simplification Standard gives covered providers a 10-digit identifier called an NPI number lookup. The number, simply a 10-digit number, contains no information about the provider. It will be left the same throughout your career regardless of changes in your personal information. HIPAA standard transactions, which transfer information between two parties for specific purposes, require all covered providers to use their NPIs during administrative and financial transactions.

Types of NPI Numbers

In the United States, there are 2 types of NPI numbers: Type 1 and Type 2.

Providers who operate independently as sole proprietors, or NPI Type 1, are included in this category. Type 1 NPI eligibility does not change if you have different office locations, other employees, or if they have EINs. An individual Type 1 NPI should be obtained at the beginning of a healthcare provider’s career. It acts the same as your social security number; it allows you to identify as a healthcare provider easily.

On the other hand, NPI Type 2, or organizational NPI, is needed by group healthcare practices and organizations. You need a Type 2 NPI if you provide superbills or CMS-1500s to your patients if you are an organization with multiple wellness providers. By using them, you can become credentialed with an insurer as a group instead of doing so for each provider. NPIs of type 2 indicates that reimbursements should be made to the organization instead of the individual provider.

In addition to identifying the individual healthcare providers providing care (through the Type 1 NPI), Type 2 NPIs also identify the organization to which the healthcare provider belongs. Both types of NPIs need to be entered on insurance forms, which are part of an organization; otherwise, their claim is likely to be rejected. As we can see on the standard CMS-1500 insurance form, there are boxes for Type 1 and Type 2 NPIs.

What is an NPI number used for?

NPI numbers are unique identifiers for each healthcare provider or entity required by all healthcare plans for every administrative and financial transaction. Formerly, healthcare providers were assigned their identifiers by health plans. Consequently, each provider had to submit claims to a different health plan using a different ID. NPIs have improved billing and tracking.

Every electronic transaction in HIPPA requires the NPI number. Additionally, healthcare providers can use it to identify themselves or other providers in transactions or

correspondence related to healthcare;

physicians can also use it on prescriptions;

health plans use it to communicate and transact;
to coordinate benefits with other plans;

the government can use it to track providers in fraud and abuse cases;

and others.

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