Do you know what the letters NPI mean? They stand for National Provider Identifier number, and it’s a 10-digit identifier for every individual Provider or a healthcare entity. An NPI number is shared across the board in Healthcare, and it is uniquely yours. Currently, all covered healthcare providers, health plans, and healthcare clearinghouses must use NPI numbers for all administrative and financial transactions in the marketplace.
NPI Type 1: Individual Health Care Providers, Including Sole Proprietors
Individual health care providers may get NPIs as Type 1. As a sole proprietor, the healthcare provider must apply for the NPI using their SSN, not a Tax Identification Number (EIN), even if the Provider already has that.
As a sole proprietor, a provider may get only 1 NPI, just like any other individual. For example, if a physician is a sole proprietor, the physician may get only type 1 NPI (the individual’s NPI).
The below-listed factors do not affect whether a sole proprietor is an Entity Type 1:
- Number of different practice locations.
- Whether you have staff or employees.
- Whether the IRS issued a TAX ID to you so your employees’ W-2 forms can reflect the TAX ID instead of your Taxpayer Identification Number (which is your Social Security Number).
Note: An incorporated(inc.) individual is a single healthcare provider who forms and conducts a business under a corporation. A sole proprietor isn’t an incorporated individual because the sole proprietor didn’t form a corporation. If you’re a sole practitioner or a solo practitioner, it doesn’t necessarily mean that you’re a sole proprietor and vice versa.
NPI Type 2: Organizational Healthcare Providers
Organizational healthcare providers are group health care providers eligible for NPIs as Type 2.
Organizational healthcare providers may have a single employee or hundreds of employees. For example, an incorporated individual may be an organization’s only employee. Some organizational healthcare providers are composed of components that function somewhat independently from their parent organization. These components may provide different types of Healthcare or provide Healthcare in separate physical locations. These components and their service locations aren’t legal entities but are part of the organization’s healthcare provider (a legal entity). The NPI Final Rule (FR) refers to the components and locations as subparts. An organization and a health care provider can get its subparts their own NPIs. If a subpart conducts any HIPAA standard transactions on its own (separately from its parent company), it must obtain its own NPI.
Subpart determination ensures that entities within a covered organization are uniquely identified in HIPAA standard transactions with Medicare and other covered entities. For example, a hospital offers acute care, laboratory, pharmacy, and rehabilitation services. Each subpart may require its NPI because each sends its standard transactions to 1 or more health plans.
What If You’re an Individual and Incorporated Health Care Provider?
If you’re an individual healthcare provider who’s incorporated, then you may need to get an NPI for yourself (NPI Type 1) and an NPI for your corporation or LLC (NPI Type 2).
If you’re looking for help with credentialing and enrollment for your healthcare practice with various insurance companies, or need help with managing your revenue cycle, please reach out to the professionals at Bikham Healthcare for a free consultation.
