The starter pack for working in a healthcare system includes many things, such as identification, credentialing, and practice setup. But what exactly is an NPI number? It is your identification in the U.S. In other words? Your professional fingerprint. Therefore, it is mandatory for every healthcare provider to have this number.
Even if you are familiar with an NPI, do you know about its types? If you are looking to start your career, read this blog to learn the difference between type 1 NPI and type 2 NPI, and choose the right option.
What is NPI in Healthcare?
As we clarified at the beginning, the National Provider Identifier (NPI) is a professional identification number for a healthcare provider. It is actually a unique 10-digit number issued by the CMS to all those who meet the definition of a healthcare provider, including:
- Physicians
- Nurses
- Healthcare organizations
The primary purpose of an NPI is to help insurance payers identify healthcare providers and entities in standard transactions, like medical claims.
Who Needs an NPI Number & Why?
It is mandatory for all HIPAA-covered providers to have an NPI number. Moreover, healthcare providers or suppliers who plan to bill Medicare for their services must also have this unique identification. The reason is quite simple! NPI is a standardized identifier. It simplifies claim processing and eliminates confusion for both providers and payers.
Billing Under Group NPI (Type 2) vs. Individual NPI (Type 1)
As we have mentioned, there are two different types of NPI numbers. It is important for healthcare providers and facilities to get the right one to avoid credentialing issues. Are you also confused between individual NPI and group NPI? The following table highlights the main differences.
| Key Differences | Type 1 NPI | Type 2 NPI |
|---|---|---|
| Identifies | A healthcare provider | A healthcare organization (entity) |
| Suitable for | Solo practitioners (physicians, dentists, therapists, etc.) | Group practices (hospitals, clinics, labs, etc.) |
| Purpose | Personal billing (required by the service rendering provider to file a claim) | Organizational billing (for filing group practice claims) |
| Payment Receiver | The individual who filed the claim | The group practice or healthcare organization |
| Limit | 1 NPI number per provider | Does not have a set limit (organizations may have multiple type 2 NPIs) |
What is a Type 1 NPI?
If it isn’t clear by now, then let us reiterate. A type 1 NPI is a unique number assigned to solo practitioners. But what does that mean? Individual healthcare providers are those who directly render healthcare services to patients and bill insurance payers under their own name.
In simple terms, they are not part of any healthcare organization. Therefore, persons who are required to have a type 1 NPI/individual NPI include:
- Physicians
- Dentists
- Nurse Practitioners
- Physician Assistants
- Therapists
- Psychologists
Remember that each healthcare provider can only have one type 1 NPI number. This 10-digit number becomes their permanent identity. It remains the same even if they move to a new state, switch specialties, or change jobs.
What is a Type 2 NPI?
Type 2 NPI, on the other hand, is for healthcare organizations. It is a unique 10-digit number assigned to group practices, hospitals, clinics, nursing homes, pharmacies, or any other facility that files a medical claim as a group. In short, any healthcare entity that bills payers under an organization’s name must have this type of NPI number.
This number represents the entire healthcare facility. As we also briefly outlined in the table, a type 2 NPI number does not have a set limit, unlike a type 1 NPI. For example, if a healthcare organization, let’s say a multi-specialty practice, has multiple branches across the state, each facility may have a distinct NPI number. However, this highly depends on the facility’s billing setup.
Benefits of Having an NPI Number for Healthcare Providers
So, what are the key benefits of having an NPI number, especially for healthcare providers? Well, you cannot avoid this number as it is essential for credentialing, billing, and e-prescriptions. With that in mind, here are the key advantages of an NPI number, whether type 1 NPI or type 2:
Administrative Efficiency
The best part about a standardized NPI number is that you no longer have to get multiple IDs. This national identifier simplifies the medical billing process. In short, you can use this number to file claims across multiple payers and reduce administrative errors.
Smooth Credentialing Process
NPI is one of the key requirements for credentialing, especially if you wish to enroll in Medicare and Medicaid networks. This 10-digit number streamlines the credentialing process by eliminating confusion and duplication and ensuring HIPAA compliance. As a result, healthcare providers experience faster approvals.
Ensures HIPAA Compliance
It is also mandatory for healthcare providers to have an NPI number if they handle electronic healthcare transactions. This is essential for adhering to HIPAA’s regulations, as an NPI ensures secure data exchange for billing.
Improves Claim Accuracy & Professional Credibility
With a standardized NPI number, you don’t have to worry about mixing up multiple identifiers. In simple terms, by replacing older identification methods, this number has significantly improved multiple providers’ claim accuracy. So, how does an improved claim accuracy work to your benefit? It reduces claim denials and strengthens your professional credibility.
Common Mistakes Providers Make with NPI Types
Type 1 and type 2 NPI numbers have several benefits if used appropriately. Unfortunately, many healthcare providers make the following mistakes with NPI types:
Entering the Wrong NPI Type on Claims
Some providers get confused when filing a claim, especially in a group practice setting. They mistakenly enter their own NPI, which is type 1, instead of their organization’s, which is a type 2 NPI. This mix-up is more common than you think, ultimately leading to claims denials.
Outdated NPI Data
It is important to enter the latest and correct information when registering for an NPI number. Many providers face issues because they forget to update or enter incorrect information about practice locations, taxonomy codes, contact details, or group affiliations.
Registering for Multiple Type 1 NPIs
Many providers also face issues because they mistakenly believe that they need multiple NPIs for different jobs or locations. So, they waste their time by registering for multiple NPIs.
How to Obtain an NPI Number?
It is very easy to obtain an NPI number once you have identified the correct type. The entire process can be done online. Just follow these 2 simple steps:
Gather Essential Information
Before registering for an NPI, make sure that you have all the essential information in one place. This includes your:
- Personal information (such as name, date of birth, social security number, etc.)
- Medical certifications and license(s)
- Taxonomy code(s) to indicate your specialization
- Business address and contact details
- Employer Identification Number (applicable for organizations)
Submit the Application Through NPPES
This is the fastest way to obtain your NPI number. Simply visit the National Plan and Provider Enumeration System (NPPES) website to submit your application. You will need an Identity & Access (I&A) Management System account to log into this website. I&A is a Medicare tool for healthcare providers to access multiple systems.
If you don’t have one, simply click on “Create or Manage Account” on the login page to get started. Once you have your I&A account, return to the NPPES website and enter your I&A credentials to create NPI data. Submit your NPI application and receive your distinct NPI within 10 days.
Avoid NPI Mistakes with NeuraBill’s Credentialing Services
As we have mentioned multiple times in this blog, NPI is essential for credentialing and billing. Therefore, every healthcare provider and organization must have this number. However, mistakes are unavoidable if you cannot distinguish a type 1 NPI from a type 2 NPI.
You have two options going forward. You can either do your own research and then submit an application on NPPES or hand over this initial and essential step of network enrollment to a professional. Our medical credentialing services cover type 1 NPI and type 2 NPI registrations, so you don’t have to worry about NPI mistakes or credentialing errors. Outsource and let our team help you enroll in your desired network.
FAQs
Can someone have two NPI numbers?
No, individual healthcare providers can only have one type 1 NPI regardless of their different specialties, jobs, or multi-state licenses.
Do you need an NPI number if you don’t bill insurance companies?
You will need an NPI number even if you don’t bill insurance companies because Medicare also needs it for processing claims. Moreover, it is essential for handling electronic prescriptions, providing referrals, or ordering labs or diagnostic tests.
Do nurses have an NPI number?
Yes, some nurses, such as nurse practitioners (NPs), certified registered nurse anesthetists (CRNAs), and clinical nurse specialists (CNSs), also have an NPI number, specifically a type 1 NPI number. It is mainly because they bill for their own services. However, it is not necessary for all of them.
Does an LLC need a type 2 NPI?
Yes, if the limited liability company (LLC) provides healthcare services and bills insurance payers, a type 2 NPI is required.
Do you need a new NPI for each location?
Only an organization may need a new NPI for each new location. Individual practitioners, on the other hand, have only one type 1 NPI for all locations.
