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Type 1 NPI vs. Type 2 NPI: Which one should you choose?

As a physician, your National Provider Identification number is your lifeline to getting compensation for the care you provide. It doesn’t matter if you’re a one-man show or have an entire staff of doctors under you, using the NPI that lines up with what the payers have listed for you is key.

Entering in the incorrect details will only result in insurance claims being rejected which means less cash making it into your and your practice’s pockets. To properly utilize NPIs, comprehending the variations of NPIs is essential.

To use NPIs correctly, you must clearly understand NPI types. This blog will help you understand an NPI, the two types of NPIs (NPI 1 and NPI 2), and how they vary.

What Is National Provider Identification (NPI)?

The National Provider Identifier, or NPI, is a unique ten-digit number given out by the Centers for Medicare and Medicaid Services to all healthcare providers in the USA. Whether you’re a doctor running a solo practice or a huge hospital system, you need an NPI. It helps make sure claims for medical services get paid and keeps tracks of who’s providing what care.

Before NPIs came along, health insurance companies all had their own ways of identifying doctors and hospitals. If you were a provider who worked with multiple insurers, you’d have so many IDs you wouldn’t know what to do with them all. The NPI changed that by giving each provider just one number to rule them all.

NPIs are used for all the paperwork that HIPAA requires, like billing and payments. An NPI is just a 10-digit number, nothing more. It won’t tell you where a provider is located or their area of expertise. It’s meant to identify providers without revealing personal details.

Providers have to use NPIs instead of other ID numbers when doing HIPAA-related business. This includes transactions with healthcare clearinghouses, health plans, and of course the providers themselves. Other ID types like NSC, QIES, CASPER, and PTAN numbers are no longer accepted for these purposes. The NPI is the only game in town now.

Types Of NPI Providers

Type 1 NPI vs Type 2 NPI

Healthcare providers are categorized into two types.

  • Type I NPI
  • Type II NPI

What Is Type 1 NPI?

Say you’ve just finished up your residency and are ready to start your own practice. First thing you’ll want to do is apply for a National Provider Identifier or NPI.

The type 1 NPI is for solo physicians, the kind of doctor who works independently and doesn’t have a staff of other doctors or assistants. It doesn’t matter if you’ve got your own office or are renting space from another doctor, you still need your own unique NPI.

Your NPI is as important as your social security number. You’ll use it on every claim and bill you submit to identify yourself as the doctor who treated the patient. Along with your NPI, you’ll also provide a taxonomy code which tells the insurance companies exactly what kind of medicine you practice. With the NPI and taxonomy code, the payers know which of your services they need to reimburse and how much you’re owed.

Individuals need to get an NPI include:

  • Physical Therapists
  • Occupational Therapists
  • Speech Language Pathologists
  • Physicians
  • Audiologists
  • Psychologists
  • Dentists
  • Nurses
  • Pharmacists
  • and Chiropractors

What Is Type 2 NPI?

The group healthcare organizations and medical practices need what they call a Type 2 NPI, or an organizational national provider identifier. It’s a way to identify the entire outfit.

Say your organization has a lot of doctors and nurses and physical therapists. And you give your patients the bills and CMS-1500 forms they need to get their insurance companies to pay up. Well, in that case, you’ve got to have yourself a Type 2 NPI.

The Type 2 NPI lets your healthcare organization get approved by the insurance companies all at once, instead of putting each and every doctor of the organization through the credentialing process separately. Once credentialed as a group, any physician in your organization can bill the payer. The Type 2 NPI means the insurance company will pay the practice, not the single doctor.

For employees, the Type 2 NPI would contain your employer’s information. For private practices, it would contain the business name.

Organizations that require a group NPI include: 

  • Outpatient clinics
  • Group Practices
  • Home Health Agencies
  • Hospitals
  • Laboratories
  • Residential treatment centers
  • Durable Medical Equipment (DME) suppliers
  • Health Maintenance Organizations (HMOs)

How Do I Apply For An NPI Number?

If you work as a doctor, nurse or anyone else giving medical care, you have to get a National Provider Identifier or NPI. You can sign up for Type I as an individual or Type II as an organization through the National Plan & Provider Enumeration System. Or search their registry to find an NPI already issued.

To apply, you have three options:

#1 Method [Recommended] – You can visit the National Plan and Provider Enumeration System’s website and fill out an application online. This will require setting up login credentials to access the site and submit the necessary information.

#2 Method – For those preferring the old-fashioned way, you can print out the paper CMS-10114 form, fill it out legibly in ink, sign the document, and mail it off to the address listed inside the form. Calling the NPI Enumerator at 800-465-3203 or sending an email to customerservice@npienumerator.com will have them send you the hard copy by post.

#3 Method – If you work with an Electronic File Interchange Organization, or EFIO, you can authorize them to electronically submit your application data to get the bulk enumeration process started on your behalf.

Whichever method you choose, it won’t cost a penny. The Health Insurance Portability and Accountability Act made it mandatory for all healthcare providers to have an NPI.

Difference Between Type 1 NPI And Type 2 NPI

Type 1 and Type 2 NPI

The difference between Type 1 and Type 2 National Provider Identifiers (NPIs) is fundamental to understanding how healthcare providers interface with the billing and insurance systems in the United States.

Type 1 NPIType 2 NPI
DescriptionIssued to individual healthcare providers who are practitioners providing direct care to patients. This type of NPI is akin to a personal identification number for healthcare providers and is used throughout their professional lives, regardless of employment or practice location changes.Assigned to healthcare entities such as organizations, facilities, or groups that provide healthcare services. This type of NPI is used to identify the organization rather than individual practitioners within that organization.
Applies toIndividual healthcare practitioners such as physicians, dentists, nurses, chiropractors, physical therapists, pharmacists, and more.Entities like hospitals, group practices, clinics, nursing homes, pharmacy stores, laboratories, and health maintenance organizations (HMOs).
PurposeUsed by individual practitioners for their billing and identification across different service locations.Used for billing and identification at the organizational level.
SpecificsFunctions similarly to a Social Security Number for solo healthcare providers in medical billing and insurance.Linked to a specific healthcare facility, representing the entity providing healthcare services.

*Note: Healthcare services that involve both an individual provider and an organization requires NPI types on both the billing documents; the Type 1 NPI identifies the particular provider, while the Type 2 NPI identifies the organization responsible for the administrative and billing aspects of the patient’s care.

⚠️ Caution: Your NPI Profile Could Reveal Too Much!

Did someone else complete your NPI application? They may have accidentally used your personal contact information, exposing those details on your public profile. Even if you filled out the form yourself, it’s easy to miss privacy risks in the fine print.

Mistakes happen – maybe, in a rush to obtain your NPI number… But worry not!

At the Best Medical Billing company, we fill out NPI applications daily. We know what information is appropriate to include and what should remain private. When you partner with us, you can rest assured that we shield your sensitive details from public view.

Schedule a FREE Consultation to know more!

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