ADMINISTRATIVE SIMPLIFICATION:
NATIONAL PROVIDER IDENTIFICATION

On January 23, 2004, CMS published the Final Rule establishing the standard for a unique health identifier for health care providers, and adopting the National Provider Identifier (NPI) as that standard. The Rule also establishes the procedures for obtaining and using the identifiers. We are providing the following summary of the Rule to assist you in understanding and preparing to implement the requirements of the Rule.

Applicability
The Rule applies to all health care providers, health plans and health care clearinghouses that are covered entities under HIPAA. Specifically, the Rule requires that covered health plans, health care providers and health care clearinghouses who transmit health information in electronic form in connection with a HIPAA standard transaction do so using the NPI.

Important Dates
The effective date of the Rule is May 23, 2005. Providers may begin applying for NPIs (see below) on that date. All providers other than small health plans must have implemented the requirements of the Rule by May 23, 2007. Small health plans have an additional year, or until May 23, 2008, to implement the Rule’s requirements.

What is the NPI?
The NPI is (or will be) the number assigned to a health care provider. The NPI is a 10-position numeric identifier, with the 10th position occupied by an ISO standard check digit. Note that the NPI is not the same as the provider’s social security number, tax identification number, or employer identification number.

However, providers who are individual human beings (Type 1 providers under the Rule) will be asked to voluntarily provide their SSNs or TINs, and those that are organizations (Type 2 providers) will be required to provide their FEINs on the application. Therefore, it is possible that portions of these numbers may be incorporated into the NPI. The NPI will be assigned by the National Provider System (NPS), which will be a central electronic enumerating system. According to DHHS, the NPI will contain the minimum number of data elements required to allow for the unique identification of each provider.

Requirements for Providers
Each entity that meets the definition of a health care provider under HIPAA and that is a covered entity under HIPAA must apply for and obtain an NPI by the implementation date (May 23, 2007 for providers). Entities that are health care providers but not covered entities are encouraged to obtain NPIs, but are not explicitly required to do so by the Rule. Yet since the NPI of a provider that is not a covered entity will often be required in a standard transaction conducted by another entity (i.e., a hospital’s submission of a claim for services performed by a non-covered entity sole practitioner), the extent to which acquisition of an NPI by non-covered providers will remain optional is questionable. Health plans and clearinghouses are not eligible to obtain NPIs. Each provider (covered or not) may only have one NPI, except that subparts of an organization may, in many cases, obtain separate NPIs. In the latter situation, the organization retains the ultimate responsibility of ensuring compliance with the Rule by the subparts.

CMS anticipates that providers will be required to submit an application to receive an NPI. The application process may be completed on paper or via the internet, and may be initiated no sooner than May 23, 2005. Providers will not be charged a fee to obtain an NPI. CMS has indicated that it is possible that a “mass enumeration” procedure will be implemented that will obviate the need for providers to submit applications. If such a system is developed, affected providers will be notified by CMS. We will keep you informed of any further developments.

A provider will be required to use its NPI to identify itself in all standard transactions; to disclose its NPI, when requested, to any entity that needs the NPI to identify the provider in a standard transaction; to communicate any changes to its required data elements to NPS within 30 days; and, where applicable, to require its business associates to use its NPI and the NPIs of other health care providers appropriately.

Requirements for Health Plans and Clearinghouses
As noted above, health plans and health care clearinghouses will not be assigned NPIs. However, the Rule requires that health plans use the NPI of any provider in all standard transactions where the identifier is required. Health plans are not permitted to require providers that have been assigned NPIs to obtain additional NPIs. Clearinghouses are similarly required to use the NPI of any health care provider in standard transactions in which it is necessary.

What Should Providers do Now?
Providers need not-and in fact cannot-apply for NPIs until May 23, 2005. Further, it is possible that providers will simply be assigned NPIs with no application involved.