NPI Final Rule - Type 1 and Type 2 Provider Types

From the NPI perspective (i.e., the NPI Final Rule), a person – doctor, nurse, whoever – is eligible for one NPI.  The doctor/nurse/whoever applies for that NPI as an “Individual” (Entity type 1), furnishing his/her SSN.  An individual is eligible for only one NPI regardless of the number of groups in which he/she may be a member, the number of health plans in which he/she may be enrolled, the number of different locations at which he/she may render services.  There are no exceptions to this.

A provider that is an “Organization” (Entity type 2) is also eligible for an NPI.  Organizations include hospitals, DME suppliers, pharmacies, group practices, nursing homes, and also the corporations that individual practitioners form (LLCs, partnerships, S corporations – but NOT sole proprietorships, which I will address later in this note).   Organizations might have subparts that could also be assigned NPIs.  A subpart is never a person, and a person can never have subparts.

The solo practitioners mentioned in the e-mail you forwarded have apparently obtained NPIs for their corporations (Organizations, Entity type 2) but not for themselves (Individuals, Entity type 1).  If those individuals ever need to be identified in claims (such as Rendering Provider, Prescriber (on retail pharmacy drug claims), Ordering Provider, Referring Provider, Operating Provider, Supervising Provider, and so forth), they will need to have their own NPIs.

Generally, it is the organization provider (and not the provider who is an Individual) that submits the claims to health plans; that is, the organization would be the Billing Provider and (almost always) also the Pay-to Provider.  If the claims are submitted electronically, the organization provider would be a “covered provider under HIPAA” and is therefore required, by the NPI Final Rule, to obtain an NPI.  If the organization provider is enrolled in Medicare (whether it is a covered provider or not), it is required to obtain an NPI as a requirement for enrollment.  This is an additional requirement that is separate from the “covered provider” requirement in the NPI Final Rule.

The provider who is an Individual who is employed by the Organization provider is identified in the claim submitted by the Organization provider as the Rendering Provider—the person who rendered the service to the patient.  Providers who never send electronic claims but who are identified as Rendering Providers would not be “covered providers under HIPAA” and, therefore, would not be required by the NPI Final Rule to obtain NPIs.  If these individuals are enrolled in Medicare, they are required to obtain NPIs as a requirement for enrollment.  Also, and this is important to keep in mind, these providers who are individuals might also need to be identified in claims that are submitted by other providers if these individuals ever referred patients to other providers, or if they ever ordered tests or DME for patients from other providers.  In addition, if they ever prescribed mediations, they will need to be identified on the claims that the retail pharmacies send to health plans.  So, even though most of the providers who are individuals are not “covered providers under HIPAA,” there are a number of reasons why they will need to obtain NPIs.

Well over a year ago, we posted two FAQs about sole proprietors.  Both of those FAQs were cleared by our legal counsel.  A sole proprietor and his/her sole proprietorship are considered one legal entity, and that legal entity is an individual (it is NOT an organization).  A sole proprietor/sole proprietorship’s Taxpayer Identification Number (TIN) is the individual’s SSN.  Even if the IRS assigns an Employer Identification Number (EIN) to the sole proprietor/sole proprietorship, that EIN is not used for reporting taxes.  It is used on W-2s so that the employees of the sole proprietor/sole proprietorship (if it has employees, and many do) are not able to see the sole proprietor/sole proprietorships' SSN on those W-2s.  Any provider with “corporation,” “partnership,” “LLC,” “incorporated” in its Legal Business Name is NOT a sole proprietorship; it is a corporation.  There is a lot of confusion out there about this.  Many providers who are “sole practitioners” or “solo practitioners” (i.e., they are the only practitioner) are incorporated individuals, not sole proprietors.  Of course, they could be sole proprietors; the Legal Name/Legal Business Name and the TIN will tell the story.

Sole proprietors who apply for NPIs must do so as Individuals (Entity type 1) and furnish their SSNs.  Their name (first, last, middle) is the Legal Name.  If their sole proprietorship has a “doing business as” name, that name would be reported in the “Other Names” part of the NPI Application.

UPINs will be phased out and will be replaced by NPIs.  As mentioned above, NPIs will be used to identify “ordering and referring” providers, which is the current UPIN functionality.  Just as UPINs were assigned to specific providers, so are NPIs.  The UPIN of a group, for example, would not be replaced by the NPI of an individual.  The group would obtain its own NPI.