Standard Unique Health Identifier for Healthcare Providers

2. Definition of Healthcare Provider

In the Transactions Rule, we summarized the comments we received on the definitions we proposed in the May 7, 1998, NPI proposed rule (at 63 FR 25324), with the exception of the definition of ‘‘healthcare provider.’’ We codified all of the definitions in 45 CFR 160.103 and 45 CFR 162.103. Specifically, we codified the definition of ‘‘healthcare provider’’ at 45 CFR 160.103. We are responding in this preamble to the comments we received on the definition of ‘‘healthcare provider,’’ as we believe that these comments present issues that are more relevant to the standard unique health identifier for healthcare providers. As appropriate, our responses refer to discussions and decisions that were published in the Privacy Rule (65 FR 82462). This final rule does not change the definition of ‘‘healthcare provider’’ at § 160.103. This final rule adds the definition of ‘‘covered healthcare provider’’ at § 162.402.

Proposed Provisions (§ 142.103)

In the May 7, 1998, proposed rule, we proposed to define ‘‘healthcare provider’’ as a provider of services as defined in section 1861(u) of the Act, a provider of medical or other health services as defined in section 1861(s) of the Act, and any other person who furnishes or bills and is paid for healthcare in the normal course of business (63 FR 25325). We based the proposed definition on section 1171(3) of the Act for the reasons we stated in the May 7, 1998, proposed rule.

Comments and Responses on the Definition of "Healthcare Provider"

Comment: We received many comments concerning the kinds of entities that should receive NPIs. Some of these comments recommended that the definition of a ‘‘healthcare provider’’ be constructed narrowly to restrict the kinds of entities that would be eligible to receive NPIs; others recommended that the definition be constructed broadly. Comments did not reflect a consensus or majority view across all commenters or even within the two groups of commenters who recommended a narrow or a broad definition of ‘‘healthcare provider.’’

Commenters favoring a narrow definition of ‘‘healthcare provider’’ gave the following examples of entities to which NPIs should or should not be issued:

• Only to those licensed to furnish healthcare.
  
• Only to individuals and entities that furnish healthcare.
  
• Only to billing healthcare providers.
  
• Only to licensed healthcare providers that furnish care, bill, and are paid by third party payers for services.
  
• Not to physicians who have opted out of government medical programs.
  
• Not to groups, partnerships, or corporations.
  
• Not to entities that bill or are paid for healthcare services furnished by other healthcare providers. A billing or pay-to entity should be identified by its taxpayer identifying number, not by an NPI.
  
• Not to clearinghouses, administrative services only vendors, billing services, or healthcare provider service locations.

Commenters favoring a broad definition of ‘‘healthcare provider’’ gave the following examples of entities to which NPIs should be issued:

• Any healthcare provider that has a taxpayer identifying number.
  
• Any individual or organization, including Independent Practice Associations and clearinghouses, that ever has custody of or transmits a healthcare claim or encounter record.
  
• All healthcare provider groups.
  
• Each billing healthcare provider, healthcare provider billing location, pay-to provider, performing healthcare provider, healthcare provider service location, and healthcare provider specialty.
  
• Each incorporated individual and ‘‘doing business as’’ name of an organization.
  
• The lowest organizational level of an entity that needs to be identified.

Response: Although there was no consensus from commenters as to which entities should receive NPIs, several principles can be inferred.

Many commenters who favored a narrow definition of ‘‘healthcare provider’’ want to simplify the current situation for healthcare providers; that is, a healthcare provider may have many healthcare provider numbers assigned by health plans for different business functions. The healthcare provider numbers sometimes represent the actual healthcare provider that furnishes healthcare, but may also represent the healthcare provider’s service locations, corporate headquarters, specialties, pay-to arrangements, or contracts. Those who favored a narrow definition generally believed the NPI should represent only the healthcare provider that furnishes healthcare.

Commenters who favored a broad definition of ‘‘healthcare provider’’ recognized the many business functions and uses in healthcare transactions fulfilled by healthcare provider numbers today. These business functions will continue to need to be performed after the implementation of the NPI. In order for the NPI to replace the multiple, proprietary healthcare provider numbers assigned by health plans today, the NPI must be assigned so that the business functions can continue. Those who favored a broad definition believed that if the NPI is not able to identify the healthcare provider entities that must be identified in an electronic healthcare claim or equivalent encounter information transaction, health plans will be forced to continue to use their existing proprietary healthcare provider numbers and the NPI will add to, rather than replace or simplify, healthcare provider numbering systems currently in use.

The varying needs for healthcare provider numbers guided our decisions on which entities would be eligible to receive NPIs. Our general rule is that all healthcare providers, as we define that term in the regulations, will be eligible to receive NPIs. We discuss this in detail later in this section.

It is important to note that not all healthcare providers who are eligible to receive NPIs will necessarily be required to comply with the HIPAA regulations. This is because some healthcare providers are not covered entities under HIPAA. The fact that a healthcare provider obtains an NPI does not impose covered entity status on that healthcare provider. Only those entities that (1) meet the definition of healthcare provider at § 160.103, and (2) transmit health information in electronic form on their own behalf, or that use a business associate to transmit health information in electronic form on their behalf, in connection with a transaction for which the Secretary has adopted a standard (a covered transaction) are healthcare providers who are required to comply with the HIPAA regulations. These healthcare providers are covered healthcare providers and are considered ‘‘covered entities’’ under HIPAA. As noted above, we add a definition of ‘‘covered healthcare provider’’ at § 162.402.

The following discussion clarifies the eligibility of healthcare providers to be assigned NPIs and distinguishes between those that are covered entities under HIPAA and those that are not.

‘‘Healthcare provider’’ is defined in the regulations at § 160.103 as follows ‘‘Healthcare provider means a provider of services as defined in section 1861(u) of the Act, 42 U.S.C. 1395X(u), a provider of medical or health services as defined in section 1861(s) of the Act, 42 U.S.C. 1395x(s), and any other person or organization who furnishes, bills, or is paid for healthcare in the normal course of business.’’ Examples of healthcare providers included in this definition are: Physicians and other practitioners; hospitals and other institutional providers; suppliers of durable medical equipment, supplies related to healthcare, prosthetics, and orthotics; pharmacies (including on-line pharmacies) and pharmacists; and group practices. Additional examples are health maintenance organizations that may be considered healthcare providers as well as health plans if they also provide healthcare.

There are individuals and organizations that furnish atypical or nontraditional services that are indirectly healthcare-related, such as taxi, home and vehicle modifications, insect control, habilitation, and respite services. These types of services are discussed in the Transactions Rule at 65 FR 50315. As stated in that Rule, many of these services do not qualify as healthcare services because the services do not fall within our definition of ‘‘healthcare.’’ An individual or organization must determine if it provides any services that fall within our definition of ‘‘healthcare’’ at § 160.103. If it does provide those services, it is considered a healthcare provider and would be eligible for an NPI. If it does not, and does not provide other services or supplies that bring it within the definition of ‘‘healthcare provider,’’ it would not be a healthcare provider under HIPAA, and would not be eligible to receive an NPI.

The non-healthcare services of some atypical or nontraditional service providers are reimbursed by some health plans. Nevertheless, there is no requirement under HIPAA to use the standard transactions when submitting electronic claims for these types of services, because claims for these services are not claims for healthcare. (Health plans, however, are free to establish their own requirements for submitting claims in these
circumstances, which means that a health plan could require atypical and nontraditional service providers to submit standard transactions. The health plans could not require these entities to obtain NPIs to use in those transactions, however, because those entities are not eligible to receive NPIs.)

There are other individuals and organizations that, in the normal course of business, bill or receive payment for healthcare that is furnished by healthcare providers. These individuals and organizations may include billing services, value-added networks, and repricers. While these entities bill for healthcare, we do not read the statutory definition of ‘‘healthcare provider’’ as encompassing them. Rather, they would usually be acting as agents of healthcare providers in performing the billing function, or as healthcare clearinghouses assuming that they perform the data translation function described in the definition of ‘‘healthcare clearinghouse’’ at § 160.103. The definition of ‘‘healthcare clearinghouse’’ specifically lists these entities as examples of healthcare clearinghouses. The healthcare industry does not consider these types of entities to be healthcare providers. Further, we do not believe that the Congress intended for them to be considered as such, as the statutory definition of ‘‘healthcare provider’’ refers only to ‘‘other person furnishing healthcare services or supplies’’ and thus would exclude persons who only bill for, but do not furnish, healthcare services or supplies. Thus, this final rule does not include billing services and similar entities as healthcare providers. Therefore, because these kinds of entities are not healthcare providers, they will not be eligible for NPIs.

Comment: The Workgroup for Electronic Data Interchange (WEDI) commented that the NPI should be the only identifier for healthcare providers when the HIPAA transactions require provider identification. WEDI suggested that, to the extent provider-payer contracts require locations, location codes, and contract references, these should be handled outside of the NPS.To the extent numbers associated with providers (for example, Taxpayer Identifying Number (TIN) and Drug Enforcement Administration (DEA) number) are required for specific purposes other than provider identification, the HIPAA transactions should accommodate those numbers (and qualifiers) in the appropriate segments of the transactions.

WEDI recommended that:

• Healthcare providers who are individual human beings obtain one and only one NPI for life;
  
• Healthcare providers endeavor to have only one NPI per organization, but that the final decision on how many NPIs are necessary for an organization healthcare provider be left to the healthcare provider; and
  
• At a minimum, and as the most critical criterion, the NPS data associated with any additional NPIs that an organization decides to obtain must not be identical to those associated with any other NPI in use by the organization.

Some commenters supported our proposal that, if a separate physical location of an organization healthcare provider, member of a chain, or subpart of an organization healthcare provider needs to be separately identified, it would be eligible to get a separate NPI. A few commenters stated that different physical locations or subparts of an organization healthcare provider should not get separate NPIs. One commenter recommended that the NPS issue separate NPIs for separate physical locations, members of a chain, or subparts of an organization healthcare provider only if these are separately licensed or certified. The commenter believes that the issuance of separate licenses and certifications justifies their recognition as separate healthcare providers. Another commenter recommended that the NPS issue separate NPIs for these entities if Medicare considers the entities to be separate healthcare providers. A number of large health plans consider each physical location of a supplier of healthcare-related supplies to be a separate healthcare provider in order to uniquely identify it on claims to enable accurate pricing and reimbursement.

Response: We agree in concept with the recommendations made by WEDI.

At the time we published the proposed rule and received public comments on it, the Secretary had not yet adopted standards for any of the HIPAA Administrative Simplification provisions. Since that time, and as noted in section I. D., ‘‘Plan for Implementing Administrative Simplification Standards’’ of this preamble, the Secretary has adopted a number of Administrative Simplification standards, including the Privacy and Security standards. The following discussion describes the assignment of NPIs to certain organization healthcare providers and the relationship, if any, of the assignment methodology to the standards and implementation specifications adopted in the Privacy and Security Rules.

Many healthcare providers that are organizations (such as hospitals and chains of suppliers of healthcare-related supplies, pharmacies, and others) are made up of components or separate physical locations. Many of these components or separate physical locations are separately certified or licensed by States as healthcare providers.

• Examples of hospital components include outpatient departments, surgical centers, psychiatric units, and laboratories. These components are often separately licensed or certified by States and may exist at physical locations other than that of the hospital of which they are a component. Many health plans consider these components to be healthcare providers in their own right. Many of these components bill independently of the hospital of which they are a component.
  
• Organization healthcare providers that are chains generally have a corporate headquarters and a number of separate physical locations. A durable medical equipment supplier chain, for example, has a corporate headquarters and separate physical locations at which durable medical equipment is dispensed to patients. The separate physical locations are generally separately licensed or certified by States. They often operate independently of each other and usually do their own billing. Many health plans consider each separate physical location to be a healthcare provider itself; and many of these health plans, including Medicare, reimburse for these items based on the geographic location where the items are dispensed to patients and not on the geographic location of the corporate headquarters.

An entity that meets certain Federal statutory implementation specifications and regulations is eligible to participate in the Medicare program. Our definition of ‘‘healthcare provider’’ at § 160.103 includes those eligible to participate in Medicare as described in Federal statute (that is, in § 1861(s) and § 1861(u) of the Social Security Act). These entities, according to Federal statute and regulations, must be issued their own identification numbers in order to bill and receive payments from Medicare. The Federal statutes and regulations similarly affect the Medicaid program.

Healthcare providers that are covered entities (see the definition at § 160.103) are required to comply with this final rule. Thus, while all healthcare providers (as defined in § 160.103) are eligible to be assigned NPIs and may, therefore, obtain NPIs, healthcare providers that are covered entities must obtain NPIs. As mentioned earlier in this section, a healthcare provider that is not a covered entity and which has been assigned an NPI does not become a covered entity as a result of NPI assignment.

We refer to the components and separate physical locations described in the bulleted examples above as ‘‘subparts’’ of organization healthcare providers.

We use the term ‘‘subpart’’ to avoid confusion with the term ‘‘healthcare component’’ in the Privacy and Security Rules. We discuss terms and concepts in the Privacy and Security Rules later in this section.

Section 1173(b)(1) of the Act provides that the Secretary ‘‘shall take into account multiple uses for identifiers and multiple locations and specialty classifications for healthcare providers.’’ This language indicates that Congress realized that certain healthcare providers operate at multiple locations and/or provide multiple types of healthcare services, and intended that the identifier standard take these variations in circumstance into account. We accommodate this language by requiring covered healthcare providers to obtain NPIs for subparts of their organizations that would otherwise meet the tests for being a covered healthcare provider themselves if they were separate legal entities, and permitting healthcare providers to obtain NPIs for subparts that do not meet these tests but otherwise qualify for assignment of an NPI. For example, a subpart may qualify for assignment of an NPI based on such factors as the subpart having a location and licensure separate from the organization healthcare provider of which it is a subpart. Licensure is often indicative of specialty (Healthcare Provider Taxonomy) classification. Thus, the assignment scheme created by this final rule provides flexibility in addressing the varied circumstances of healthcare providers, as Congress intended.

A ‘‘subpart’’ described in this final rule may differ from a ‘‘healthcare component’’ described in the Privacy and Security Rules. Therefore, it is appropriate to discuss these concepts and their relationship, if any, to the assignment of NPIs as established by this final rule.

Standards and implementation specifications for the Privacy and Security standards fall under part 164— Security and Privacy, of 45 CFR, whereas the implementation specifications for the standard unique health identifier for healthcare providers (and for the other identifiers mandated by HIPAA) are within part 162—Administrative Implementation Specifications, of 45 CFR. The broad concepts of ownership, control, and structure of covered entities are relevant to determining the scope of, and defining responsibility for, implementing the Privacy and Security standards; therefore, we addressed those concepts in those rules. On the other hand, the concepts of ownership, control, and structure are of no significant value or importance in determining the healthcare providers that may be eligible to obtain NPIs, which is why those concepts are not discussed in this final rule.

The term ‘‘hybrid entity’’ is defined in part 164, which is applicable to the Privacy and Security Rules, and may be a factor in determining responsibility for the implementation of the Privacy and Security standards and implementation specifications. It is defined in § 164.103 and is discussed in the Privacy Rule at 65 FR 82502. It is possible that an organization healthcare provider may be a hybrid entity and, as such, may designate healthcare components for purposes of implementing the Privacy and Security Rules. It is possible and, indeed, likely that subparts as described earlier in this preamble may be healthcare components of a hybrid entity. It is also possible that the subparts may not align precisely with the designated healthcare components. There is no necessary correlation between what is a subpart and what is a healthcare component, and there need not be because, as stated above, the nature and function of the Privacy and Security standards differ from those of the healthcare provider identifier standard. The level of assignment of NPIs must be adequate to enumerate entities that meet the definition of ‘‘healthcare provider’’ at § 160.103. It is, therefore, possible that a designated healthcare component may in essence be assigned multiple NPIs if the healthcare component is made up of multiple healthcare providers or subparts, as described earlier.

The term ‘‘organized healthcare arrangement’’ is discussed in the Security and Privacy Rules and is defined at § 160.103. It is possible that subparts that are also healthcare components may elect to come together to form an organized healthcare arrangement. Whether or not subparts participate in an organized healthcare arrangement for purposes of implementing the Privacy or Security standards has no effect on their eligibility to be assigned NPIs.

It must be kept in mind, with respect to the subparts as described in this preamble, that the organization healthcare provider is a legal entity and is the covered entity under HIPAA if it (or a subpart or component) transmits health information in electronic form (or uses a business associate to do so) in connection with a covered transaction. The subparts are simply parts of the legal entity. The legal entity—the covered entity—is ultimately responsible for complying with the HIPAA rules and for ensuring that its subparts and/or healthcare components are in compliance. The organization healthcare provider, of which the subpart is a part, is responsible for ensuring that the subpart complies with the implementation specifications in this final rule. The organization healthcare provider is responsible for determining if its subpart or subparts must be assigned NPIs, as discussed above in this section of the preamble. The organization healthcare provider is also responsible for applying for NPIs for its subparts or for instructing its subparts to apply for NPIs themselves. (That is, it is not necessary that an application for an NPI be made by the organization healthcare provider on behalf of its subpart.)

Comment: Some commenters expressed concern that the professional claim or equivalent encounter information transaction be able to accommodate address or location information associated with billing, pay-to, and furnishing healthcare providers.

Response: The ASC X12N 837 Healthcare Claim: Professional, adopted in the Transactions Rule, accommodates addresses for all these entities.

Comment: Some commenters stated their desire for an identifier to represent each service address, for the purpose of reporting the location of service on a professional healthcare claim.

Response: We believe that the location of service can properly be reported by use of data elements in the standard professional healthcare claim or equivalent encounter information transaction. The address where service was furnished (if different from the billing or pay-to provider’s address and if not at the patient’s home) is accommodated in the X12N 837 Professional Claim in the Service Facility Location loop. For these reasons, we do not believe a healthcare provider identifier needs to be assigned to every address at which a service can be provided. If health plans need service location data in addition to the data that are accommodated in the standard healthcare claim transaction, they should notify the organization responsible for that transaction (see § 162.910 and § 162.1102).

Comment: Several commenters named specific kinds of practitioners or entities that should be eligible to receive NPIs. These commenters cited practitioners who write prescriptions, home health housekeepers, long-term care providers, providers of home health services, meals on wheels, and transportation.

Response: Entities that do not furnish healthcare, and do not meet the definition of healthcare provider, will not be eligible to receive NPIs. A title does not necessarily indicate that an entity does or does not furnish healthcare. Entities who are unsure as to whether they are healthcare providers should check the definition of ‘‘healthcare’’ in § 160.103 to determine whether the kinds of services they furnish are healthcare services.

Comment: Some commenters stated that billing services should not receive NPIs. None of these commenters gave a definition or criteria to distinguish billing services from entities that would be eligible to be assigned NPIs. Other commenters stated that these definitions and criteria would be difficult to apply.

Response: As stated earlier in this section, billing services do not meet our regulatory definition of healthcare provider and, therefore, will not be eligible for NPIs. Generally, the healthcare provider that furnished healthcare is the ‘‘Billing provider’’ on the X12N 837 transaction and would identify itself with an NPI. If a billing service needs to be identified as the ‘‘Billing provider,’’ it would identify itself with either an Employer Identification Number (EIN) or a Social Security Number (SSN).

Comment: Several commenters noted that the term ‘‘medical care’’ in our descriptions of individual and organization healthcare providers should be replaced with the term ‘‘healthcare.’’ They were concerned that one could construe ‘‘medical care’’ to mean only care that was physician-supplied or physician-authorized.

Response: We agree with the comment and have replaced the term ‘‘medical care’’ with ‘‘healthcare’’ in our discussion of individual and organization healthcare providers.

Comment: A majority of commenters stated that the NPS should not distinguish between organization healthcare providers and group healthcare providers. The NPS should collect the same data for both. A few other commenters suggested a definition for group, but did not suggest that different data should be collected for a group healthcare provider than for an organization healthcare provider.

Response: As described in the proposed rule (at 63 FR 25325), group healthcare providers are entities composed of one or more individuals (members), generally created to provide coverage of patients’ needs in terms of office hours, professional backup and support, or range of services resulting in specific billing or payment arrangements. Organization healthcare providers are healthcare providers who are not individual healthcare providers (that is, healthcare providers who are human beings). Examples of organization healthcare providers are hospitals, pharmacies, and nursing homes. For purposes of this rule, we consider group healthcare providers to be organization healthcare providers. There is additional information about these healthcare providers in section II.C.1.(d) of this preamble.

We agree with the majority of commenters that the NPS should collect the same data for group and organization healthcare providers. Because the same data are collected, there is no need for separate definitions of group and organization healthcare providers for NPI enumeration purposes.

Comment: Several commenters suggested that an NPI suffix or sub-identifier (sub-ID) be used to identify physical locations or subparts of a healthcare provider. Two commenters suggested that we explore the need for an electronic data interchange (EDI) identifier for transaction routing.

Response: We considered allowing each healthcare provider, if it so chose, to establish sub-IDs under its NPI. The healthcare provider might use the sub-IDs for different physical locations, subparts, EDI transaction routing, or other purposes. We decided not to establish sub-IDs because our decisions regarding which entities would be eligible to receive NPIs (including separate physical locations and subparts of certain kinds of organization healthcare providers) obviate the need for them. Sub-IDs may be useful as a later implementation feature that would support EDI routing or other purposes. We will consider an expansion at a later time to include them, if we determine that they would be beneficial.

Comment: Many commenters stated that all healthcare providers should be able to obtain NPIs, whether they conduct healthcare transactions electronically or on paper. Some commenters stated that healthcare providers that do not conduct any of the transactions named in HIPAA should be able to obtain NPIs.

Response: All healthcare providers— as we define that term—may obtain NPIs. Only covered healthcare providers are required to obtain and use NPIs in standard transactions.

Comment: Many commenters stated that NPIs should be mandatory for paper and fax transactions, as well as electronic.

Response: In the May 7, 1998, proposed rule, we did not propose to apply this standard to paper transactions. Therefore, we focus on standards for electronic transactions. Most of the paper forms currently in use today cannot accommodate all of the data content included in the standard transactions. This does not prevent health plans from requiring for paper transactions the same data, including identifiers, as are required by the HIPAA regulations for electronic transactions.

Final Provisions (§ 160.103)

As defined by section 1171(3) of the Act, a ‘‘healthcare provider’’ is a provider of services as defined in section 1861(u) of the Act, a provider of medical or other health services as defined in section 1861(s) of the Act, and any other person who furnishes healthcare services or supplies. Section 160.103 defines ‘‘healthcare provider’’ as the statute does and clarifies that the definition of a ‘‘healthcare provider’’ includes any other person or organization that furnishes, bills, or is paid for healthcare in the normal course of business.

Section 1173(b)(1) of the Act requires the Secretary to adopt standards providing for a standard unique health identifier for each healthcare provider, and to take into account multiple uses, locations, and specialty classifications for healthcare providers. All healthcare providers who meet our definition of ‘‘healthcare provider’’ at § 160.103, regardless of whether they conduct transactions electronically or on paper or conduct any covered transactions will be eligible to apply for healthcare provider identifiers.

We define ‘‘covered healthcare provider’’ at § 162.402. Subparts of organization healthcare providers, as described earlier in this section, may be assigned NPIs.

Registered nurses, dental hygienists, and technicians are examples of entities who furnish healthcare but who do not necessarily conduct covered transactions. They are eligible to receive NPIs because they are healthcare providers.

We define two categories of healthcare providers for enumeration purposes. A data element, the ‘‘Entity type code,’’ in the NPS record for each healthcare provider will indicate the appropriate category.

• NPIs with an ‘‘Entity type code’’ of 1 will be issued to healthcare providers who are individual human beings. Examples of healthcare providers with an ‘‘Entity type code’’ of 1 are physicians, dentists, nurses, chiropractors, pharmacists, and physical therapists.
  
• NPIs with an ‘‘Entity type code’’ of 2 will be issued to healthcare providers other than individual human beings, that is, organizations. Examples of healthcare provider organizations with an ‘‘Entity type code’’ of 2 are: hospitals; home health agencies; clinics; nursing homes; residential treatment centers; laboratories; ambulance companies; group practices; health maintenance organizations; suppliers of durable medical equipment, supplies related to healthcare, prosthetics, and orthotics; and pharmacies.

Entities that participate in the Medicare program and many that participate in the Medicaid program are eligible for NPIs. (Note, however, our discussion of atypical and nontraditional service providers earlier in this section.) Many subparts of organization healthcare providers (as discussed earlier in this section) are eligible to be assigned NPIs, and an NPI must be obtained for, or by, them if they would be considered a covered healthcare provider if they were a separate legal entity. By definition, subparts are not themselves legal entities; the legal entity is the organization healthcare provider of which they are a subpart. Organization healthcare provider subparts—because they too are organizations—will be issued NPIs with ‘‘Entity type code’’ of 2.

We do not consider individuals who are healthcare providers (that is, they meet our definition of ‘‘healthcare provider’’ at § 160.103) and who are members or employees of an organization healthcare provider to be ‘‘subparts’’ of those organization healthcare providers, as described earlier in this section. Individuals who are healthcare providers are legal entities in their own right. The eligibility for an ‘‘Entity type code 1’’ NPI of an individual who is a healthcare provider and a member or an employee of an organization healthcare provider is not dependent on a decision by the organization healthcare provider as to whether or not an NPI should be obtained for, or by, that individual. The eligibility for an ‘‘Entity type code 1’’ NPI of a healthcare provider who is an individual is separate and apart from that individual’s membership or employment by an organization healthcare provider. If such an individual is a covered healthcare provider, he or she is required to obtain an NPI. An example of the above discussion is a physician who is a member of a group practice. Both are healthcare providers and, therefore, both may apply for NPIs, but the physician would receive an ‘‘Entity type code 1’’ NPI, while the group practice would receive an ‘‘Entity type code 2’’ NPI. If either is a covered healthcare provider, that covered healthcare provider must apply for an NPI.

‘‘Entity type code’’ determinations will be made according to the following:

• An individual human being furnishes healthcare. The described individual is a healthcare provider and will be assigned an NPI with an ‘‘Entity type code’’ of 1.
  
• An organization furnishes healthcare. The described organization is a healthcare provider and will be assigned an NPI with an ‘‘Entity type
  code’’ of 2.
  
• An organization healthcare provider subpart, as described earlier in this section, is a healthcare provider and will be assigned an NPI with an ‘‘Entity type code’’ of 2.

Hereafter in this preamble, we include these subparts in our references to healthcare providers unless there is a reason to distinguish them.

An NPI will be used to identify the healthcare provider on a healthcare claim or equivalent encounter information transaction. If an organization healthcare provider consists of subparts that are identified with their own unique NPIs, a health plan may decide to enroll none, one, or a limited number of them (and to use only the NPI(s) of the one(s) it enrolls). A health plan may not require a healthcare provider or a subpart of an organization healthcare provider that has an NPI to obtain another NPI for any purpose. Links among the various NPI types may be made and maintained by health plans and other users of the NPS data, but will not be maintained in the NPS.

The data to be collected by the NPS for healthcare providers are described in section II. C. 2. of this preamble, ‘‘Data Elements and Data Dissemination.’’ The NPS will capture data elements for healthcare providers with an ‘‘Entity type code’’ of 1 (individuals) that are different from those that it will capture for those with an ‘‘Entity type code’’ of 2 (organizations) because the data available to search for duplicates (for example, date and place of birth) are different. The NPS will ensure the uniqueness of the NPI by assigning only one NPI to a healthcare provider with a distinct string of data in the NPS. The NPS will contain the kinds of data necessary to adequately categorize each entity to which it assigns an NPI. An NPI will be a lasting identifier for the healthcare provider to which it has been assigned. For healthcare providers with an ‘‘Entity type code’’ of 1, the NPI will be a permanent identifier, assigned for life, unless circumstances justify deactivation, such as a healthcare provider who finds that his or her NPI has been used fraudulently by another entity. In that situation, the health provider can apply, and will be eligible, for a new NPI, and the previously assigned NPI will be deactivated. For healthcare providers with an ‘‘Entity type code’’ of 2, the NPI will also be considered permanent, except in certain situations such as when a healthcare provider does not wish to continue an association with a previously used NPI, or when a healthcare provider’s NPI has been used fraudulently by another. In those situations, the healthcare provider that holds the NPI can apply, and be eligible for, a new NPI, and the previously assigned NPI will be deactivated. A new NPI will not be required for change of ownership, change from partnership to corporation, or change in the State where an organization healthcare provider is incorporated; indeed, ownership and incorporation information will not be contained in the NPS. A new NPI will not be required when there is a change in an organization healthcare provider’s name, Employer Identification Number, address, Healthcare Provider Taxonomy classification, State of licensure, or State license number. Instead, the healthcare provider will supply that information to the NPS and the data in the NPS about these entities will be updated. After a corporate merger, the surviving organization may continue to use its NPI. A healthcare provider’s NPI will not be deactivated if that healthcare provider is sanctioned or barred from one or more health plans. When an organization healthcare provider is disbanded, the organization healthcare provider’s NPI will be deactivated. If a previously deactivated organization healthcare provider is later reactivated, its previous NPI will be reactivated.

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