The National Provider Identifier (NPI) is a standardized, unique 10-digit identification number required for covered health care providers in the United States. This mandate comes from the administrative simplification provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The NPI’s purpose is to streamline the electronic transmission of health information, particularly in financial and administrative transactions. Providers who transmit information electronically must obtain an NPI. The system includes two categories of providers, and this article focuses specifically on the Organizational NPI, known as Type 2.
Defining the Organizational Identifier
The Type 2 NPI is a unique 10-digit code assigned to a health care entity rather than an individual clinician. Type 2 NPIs are often referred to as “group NPIs” because they identify the entire business entity responsible for billing and administrative functions.
This identifier is permanent and does not carry any encoded information about the organization, such as its location or specialty. Its primary function is to serve as the standard identifier for the business in all electronic transactions with health plans, clearinghouses, and other providers. The Type 2 NPI replaces older, non-standard identifiers previously used for these purposes.
Distinguishing Between Provider Types
The fundamental difference between the two NPI types is the entity they are meant to identify. A Type 1 NPI is reserved for individual health care providers, such as physicians, dentists, nurses, and sole proprietors, identifying the person who renders the care. An individual provider is eligible for only one Type 1 NPI, which remains with them throughout their career regardless of changes in employment or location.
In contrast, the Type 2 NPI identifies the organizational entity, such as a hospital, group practice, or incorporated clinic, which submits the claims for the services performed. Type 1 identifies the individual clinician who physically provided the service, while Type 2 identifies the legal business name under which the services are billed. Both identifiers are often used together in a single transaction, with the Type 1 NPI identifying the treating provider and the Type 2 NPI identifying the organization receiving payment.
This distinction is relevant when an individual provider incorporates their practice, such as forming a Professional Corporation or an LLC. The provider must obtain a Type 1 NPI for themselves as the individual clinician and a Type 2 NPI for their incorporated business. The corporation is the legal entity conducting the billing under its own Tax Identification Number (TIN). The Type 2 NPI allows the entire group or practice to become credentialed with a payer simultaneously, simplifying the payment process.
Entities Required to Obtain a Type 2 NPI
Any health care organization considered a covered entity under HIPAA must obtain a Type 2 NPI if they engage in electronic transactions. This requirement applies to a broad spectrum of organizational providers, ranging from large-scale facilities to small group practices. Examples include hospitals, nursing homes, home health agencies, and physician groups.
Other organizations legally mandated to obtain a Type 2 NPI include dental clinics, pharmacies, ambulance companies, and assisted living facilities that bill insurance. Even a small group practice with multiple providers billing under a single Tax Identification Number (TIN) for administrative efficiency must secure a Type 2 NPI.
Organizations apply for the NPI through the National Plan and Provider Enumeration System (NPPES), which is maintained by the Centers for Medicare and Medicaid Services (CMS). The application requires the business’s legal name, practice location, and its Employer Identification Number (EIN), also known as the Tax Identification Number (TIN). The most streamlined method for application is submitting the request online through the NPPES website.