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The NPI Heads for Home

January 1, 2006
by Peter B. Mancino and Gregg D. Reisman
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Another major change for the healthcare industry is on its way. The January 2004 final rule of the U.S. Department of Health & Human Services requires healthcare providers to use a National Provider Identifier (NPI) when they conduct electronic claims and other HIPAA-regulated transactions (e.g., eligibility inquiries). The new NPI will replace the provider numbers used by hospitals, physicians and other healthcare providers in HIPAA transactions. Medicare, Medicaid and private payer provider numbers all will be affected.

The date by which providers must obtain and use the NPI and most health plans must accept the NPI in place of plan-specific provider numbers is May 23, 2007. The only exception is small health plans (annual receipts of $5 million or less), which have until May 23, 2008, to implement the NPI.

Connecting with the enumerator
The NPI is a single 10-digit number that contains no intelligence about the holder. Both individual healthcare providers (e.g., doctors, nurses) and organizations (e.g., hospitals, nursing homes, laboratories) can apply for an NPI. Once it is assigned, it is permanent and will not change, regardless of changes in job or location, ownership or corporate restructuring.

The Centers for Medicare & Medicaid Services (CMS) developed the National Plan and Provider Enumeration System ( to assign NPIs. It contracted with FOX Systems Inc., Scottsdale, Ariz., to act as the NPI Enumerator and handle support operations, process applications and operate a customer service center. Providers can contact the NPI Enumerator to apply for their NPI in one of three ways:

Another method will be possible when group NPI applications become available (expected soon). An organization may, with the provider's permission, submit a provider's application electronically. That is, under certain circumstances, one healthcare provider may submit an electronic file containing the information of other healthcare providers (e.g., a professional corporation may submit information regarding its employed physicians).

Providers should apply for their NPIs as soon as possible so they can begin implementation, which may include modifications to current billing processes and information systems. To avoid cash flow interruptions, providers also should monitor the implementation plans of relevant business associates (e.g., billing companies, clearinghouses, software vendors) to ensure that those involved in claims processing can implement the NPI promptly.

It is also important for providers to keep abreast of the NPI implementation plans of their payers. Some plans may accept the NPI early. For example, Medicare has indicated that it will begin accepting NPIs in HIPAA transactions on Jan. 3, 2006. From that date through May 2, 2007, providers can use their NPI in combination with their legacy Medicare number as a secondary identifier. However, legacy Medicare numbers will not be accepted starting May 23, 2007.

When a section is a subpart
According to the rule, an NPI might be assigned to one or more subparts of a provider organization "if the identifying data for the subpart are unique," such as for separate physical locations or separately licensed components. Subparts are not individuals, such as physician employees of a group practice, but they can be discrete components of a provider that are not separately incorporated and perform their own billing and other HIPAA transactions.

Obviously, the definition of subparts is somewhat ambiguous. For example, it is unclear whether every discrete hospital clinic would require its own NPI. CMS has promised to offer providers further guidance regarding subparts.

Spring '07 not really very distant
The NPI application process does not replace a health plan's regular enrollment or credentialing. Providers still must complete enrollment applications with their health plans.

HIPAA does not require use of the NPI in paper claims or transactions that are not regulated by HIPAA. However, some payers may require use of the NPI in all transactions, so providers must be aware of each payer's rules. For example, Medicare providers are required to use the NPI in all Medicare transactions, whether they are electronic or not.

May 23, 2007, may seem a long time away. But health plans, healthcare providers and their business associates must begin planning for NPI implementation soon.

Peter B. Mancino and Gregg D. Reisman are partners at Garfunkel, Wild & Travis P.C., a law firm in Great Neck, N.Y.