Standard Unique Health Identifier for Healthcare Providers

B. Implementation of the NPI

1. The National Provider System

Proposed Provisions (§ 142.402)

The May 7, 1998, proposed rule (at 63 FR 25331) described the National Provider System (NPS) as a central
electronic enumerating system. The system would be a comprehensive, uniform system for identifying and
uniquely enumerating health care providers at the national level. The Department of Health and Human Services (HHS) would exercise overall responsibility for oversight and management of the system.

Comments and Responses on the National Provider System

We did not receive comments specific to our description of the NPS. However, commenters were emphatic that the NPS be fully tested before it began assigning NPIs, and that the system ensure that the same NPI would not be issued to more than one health care provider. Commenters also suggested that an option be made available by which health care providers could apply for NPIs electronically in lieu of completing a paper application form. This comment is addressed in section II. B. 2. of this preamble, ‘‘Health Care Provider Enumeration.’’

Final Provisions (§ 162.408(a))

NPIs will be assigned to health care providers by the NPS, which will be a central electronic enumerating system operating under Federal direction. The NPS will uniquely identify and enumerate health care providers at the national level. The NPS may enumerate subparts of organization health care providers.

The NPS will be designed to be easy to use. The design will employ the latest technological advances wherever feasible for capturing health care provider data and making information available to users. This is discussed in section II. C. 2. of this preamble, ‘‘Data Elements and Data Dissemination.’’

HHS will exercise overall responsibility for oversight and management of the NPS. The NPS will include a database that will store the identifying and administrative information about health care providers that are assigned NPIs. The data elements comprising the NPS are described and listed in section II. C. 2. of this preamble, ‘‘Data Elements and Data Dissemination.’’

Identifying and uniquely enumerating health care providers for purposes of the NPI is separate from the process that health plans follow in enrolling health care providers in their health programs. The NPS will assign NPIs to health care providers. However, the assignment of the NPI will not eliminate the process that health plans follow in receiving and verifying information from health care providers that apply to them for enrollment in their health programs.

Health care providers will submit applications for NPIs to HHS. As health care provider data are entered into the NPS from the application, the NPS will check the data for consistency, standardize addresses, and validate the Social Security Number (SSN) if the individual applying for an NPI provides it; the NPS will validate the date of birth only if the SSN is validated. (If a health care provider chooses not to furnish his or her SSN when applying for an NPI, the assignment of an NPI to that health care provider may be delayed and additional information may be requested from that health care provider in order to establish uniqueness.) If the NPS encounters problems in processing the application, appropriate messages will be communicated to the applicant. If problems are not encountered, the NPS will then search its database to determine whether the health care provider already has an NPI. If a health care provider has already been issued an NPI, an appropriate message will be communicated. If not, an NPI will be assigned. If the health care provider is similar (but not identical) to an already-enumerated health care provider, the situation will be investigated. Once an NPI is assigned, the health care provider will be notified of its NPI.

2. Health Care Provider Enumeration

In section III of the preamble of the May 7, 1998, NPI proposed rule, ‘‘Implementation of the NPI’’ (at 63 FR
25331), we asked for comments on the entity or entities that would be responsible for assigning NPIs to health care providers. We explained that the HIPAA legislation did not contain a specific funding mechanism for activities related to enumeration. We asked for comments on how the enumeration activity and the NPS itself could be funded, and how the costs of enumeration could be kept as low as practicable. We presented two options for the enumeration of health care providers: (1) All health care providers, except existing Medicare providers, would be enumerated by a single entity. Existing Medicare providers would automatically be enumerated and would not have to apply for NPIs; (2) Federal health plans and Medicaid would enumerate their enrolled health care providers, and a federally-directed registry would enumerate all remaining health care providers. We also presented a phased approach to enumeration and requested public comment on it. In the phased approach, we proposed that enumeration would occur in the following order: (1) Medicare providers; (2) Medicaid, other Federal providers, and health care providers that do not conduct business with Federal health plans or Medicaid but that do conduct electronically any of the transactions specified in HIPAA; and (3) all remaining health care providers. The May 7, 1998, proposed rule also stated that phase three would not begin until phases one and two were completed.

Comments and Responses on Provider Enumeration

Comment: Several commenters stated that it would cost more than our estimate of $50 to enumerate a health care provider; others believed our estimate of $50 to be reasonable. Some commenters pointed out that Federal and Medicaid health plans do not maintain all of the information about health care providers that would be required to assign NPIs; thus, if those health plans’ prevalidated health care provider files were to be used to populate the NPS, costs might exceed $50 per health care provider in order to obtain the missing information needed to assign NPIs. Commenters also pointed out that the cost to enumerate an entity that furnishes atypical or nontraditional services would exceed $50.

Response: We respond to these issues as follows:

• We agree with the comment that there may be situations where information in addition to what is contained in existing health care provider files will be required in order to assign NPIs. For example, we have found that some Medicaid and Medicare provider files do not contain all of the information required to assign an NPI. Populating the NPS with existing files that lack certain required NPS data elements increases the cost of enumeration because additional resources would be needed to collect the missing information.
  
• Any inconsistencies or errors that are present in health care provider files that are considered to be used to populate the NPS would be imported into the NPS as part of that process. Resolving these inconsistencies and errors before loading these files will require resources and time. This will increase the cost of enumeration and possibly slow the process.
  
• Where the format or structure of a health care provider file being considered for use in populating the NPS differs from the format or structure of the NPS, additional costs will be incurred in attempting to conform that source file to the NPS.
  
• As discussed in section II. C. 2. of this preamble, ‘‘Data Elements and Data Dissemination,’’ we are reducing the amount of health care provider information being captured by the NPS to only that which is required to uniquely identify and communicate with the health care provider. Some of the information that will not be collected is the kind that is costly to collect, such as membership in groups, certification and school information. Not collecting these health care provider data lowers the cost of enumeration.
  
• On applications for NPIs from individuals, the NPS will verify the SSN if it is furnished on the application.
  
• Problems in processing the applications will have to be resolved. This will increase the cost of enumeration.
  
• The NPS will be designed, wherever feasible, to take advantage of technologies that will make its operation efficient. This may include the use of the Internet to accept applications and updates from health care providers. While up-front costs will be higher for some designs, the more efficient the design and operation of the NPS, the lower the cost of enumeration and ongoing operations.

Medicare Part B carriers indicated in comments that it costs about $50 to enroll a health care provider in the Medicare program. This process involves reviewing and validating a paper application containing far more information than will be collected and validated on the NPI application/update form. The NPS will verify the SSN only if it is furnished in applying for an NPI; the date of birth will be verified only if the SSN is furnished. The NPS will run various edits and consistency checks and will check for duplicate records to ensure that only one NPI is assigned to a health care provider and that the same NPI is not assigned to more than one health care provider. Enabling the receipt of Web-based applications and the limited validation will make the cost of enumerating a health care provider far less than enrolling a health care provider in a health plan. The majority of atypical and nontraditional service providers are not considered health care providers and, therefore, would not be eligible for NPIs. The use of modern technology to receive and process applications for NPIs makes it difficult if not impossible to attach a dollar value to the enumeration of a single provider. Implicit in enumeration are the costs of software, licenses, salaries, training, and overhead. We estimate that the combination of all of the above factors would reflect an average cost of enumerating a single health care provider to be closer to $10.

Comment: The majority of commenters favored enumeration option 1, where a single entity would
enumerate all health care providers except existing Medicare providers (who would automatically be
enumerated). (The May 7, 1998, proposed rule recommended enumeration option 2, which would have required Federal health plans and Medicaid to enumerate their enrolled health care providers, with a federally-directed registry enumerating all remaining health care providers.) The supporters of a single enumeration entity cited the following advantages of option 1: (1) It would be less costly than multiple enumeration entities; (2) it would ensure uniform operation of the enumeration process, reducing inconsistencies that could lead to duplicate assignment of NPIs; (3) it would be less confusing to health care providers, particularly those that participate in multiple health plans; (4) it would be a single point of contact with which to do business and seek help and information; and (5) it would ensure uniformity in resolving problems and would be more capable and efficient in responding to data integrity issues that may require investigation. Comments from Federal health plans and Medicaid State agencies (which were the proposed enumeration entities under option 2) stated that they preferred not to have a role as an enumerator. Some Federal health plans anticipated that too many health care providers would request that they handle their updates and changes. Medicaid State agencies indicated that they would require additional Federal funding to assume the responsibilities of enumeration.

Nonetheless, some commenters did support option 2. They stated that having Federal health plans and Medicaid State agencies enumerate their own health care providers had several advantages: (1) These entities already conduct a significant amount of enumeration activity in their health plan enrollment processes, which would bring a wealth of experience to the NPI enumeration process; (2) much of the information required to assign an NPI to a health care provider is already collected by these entities; (3) fraud detection would be enhanced because, as enumeration entities, they would have access to the data in the NPS; and (4) the initial cost of enumerating health care providers would be incremental to these entities, a major factor in making option 2 less costly than option 1.

Response: After analyzing all the comments and reviewing our computations as to the costs of enumeration under both options, we have determined that a single entity, under HHS direction, should handle the enumeration functions. We believe that enumeration by a single entity will be the most efficient option.

While supporters of option 2 cited several advantages, the reluctance of the Federal health plans and Medicaid State agencies to undertake enumeration functions was a major factor causing us to support a single entity. Selection of option 2 would have required those Federal health plans and Medicaid State agencies to perform functions they were not willing to perform. Another factor in our decision to choose option 1 was an oversight in our cost computations. While our narrative discussion of costs indicated that prevalidated Medicare provider files would populate the NPS under both options, Table 5 in the Impact Analysis portion of the May 7, 1998, proposed rule did not reflect those savings in the cost of option 1. If those savings had been reflected, the cost of option 1 would have been less. (Please see the next comment and response regarding Medicare provider files.) Costs for option 2 did not include the expenses that would be incurred by Federal health plans and Medicaid State agencies in resolving problems found in their health care provider records that would prevent some of those records from being loaded into the NPS for enumeration of the health care providers. This would have increased the cost of option 2. Had we applied both of these cost factors, both options would cost about the same.

The use of one entity, under HHS direction, to enumerate health care providers will ensure uniform operation of the NPS. Health care providers will have a single contact point for applications, updates, and questions. Problems will be resolved in a uniform manner. These factors make a single enumerator the more efficient option.

Comment: Several commenters cautioned against loading pre-existing health care provider files into the NPS. They indicated that any errors present in those files would be carried undetected into the NPS. Commenters cautioned that any data to be loaded into the NPS should be validated, accurate, and up to date.

Response: We agree with the commenters’ recommendation that accurate, current data should be included in the NPS. After publication of the May 7, 1998 proposed rule, we reexamined the existing Medicare provider files in anticipation of using them to populate the NPS. Our reexamination revealed that some mandatory NPS data elements are not present in some of the Medicare files. In addition, data integrity problems have been identified, and reformatting some of the Medicare files to make them consistent with the structure of the NPS may be more difficult than first expected. It may require considerable time to update and reformat these files for NPS purposes.

It is important to note that we are undertaking steps to update our existing Medicare provider files for independent business reasons. If we find it is feasible to use updated, accurate Medicare provider files to populate the NPS, we will do so, and we will notify the affected Medicare providers that they will not have to apply for NPIs. The NPS will notify the affected providers of their NPIs.

Comment: Nearly all commenters recommended that the enumeration function and operation of the NPS be federally funded because a Federal statute mandates the adoption and use of a standard unique health identifier for health care providers. Many commenters stated that the costs cannot be borne directly by health care providers or indirectly by health care provider organizations and clearly stated that health care providers should receive NPIs at no cost. Some stated that if fees need to be assessed, they should come from the health plans, not the health care providers, as the health plans will receive the most benefit from the use of the standard. There was some support for the collection of initial fees from health plans, health care clearinghouses, and other nonprovider entities to obtain data from the NPS; the fees would help offset the cost of maintaining the database. Another commenter recommended that the public sector and large health plans pay fees to a public-private sector trust organization. The fees would represent their proportion of the total health benefit dollars; the trust organization would administer various databases required by the HIPAA standards (not solely the NPS). One commenter suggested Federal funds be used initially, with the enumeration entity eventually becoming self-sufficient.

Response: HIPAA did not provide the authority to charge health care providers a user fee to obtain an NPI. Federal funds will support the enumeration process and the NPS, at least initially. After the NPI is implemented, HHS will investigate the use of other funding mechanisms. The data dissemination process is discussed in section II.C.2.,‘‘Data Elements and Data Dissemination,’’ of this preamble.

Comment: Some commenters supported the phases of enumeration as described in the May 7, 1998, proposed rule. Many commenters supported assignment of NPIs to existing Medicare providers first for these reasons: (1) These health care providers are the majority of the health care providers that conduct standard transactions; (2) the NPS is being developed by HHS; and (3) Medicare provider information is already available in HHS in the Centers for Medicare & Medicaid Services (CMS).

Many commenters stated that health care providers that do not conduct the transactions specified in HIPAA should be enumerated at the same time as all other health care providers—all health care providers must be equally able to receive NPIs. Many of these commenters believed that costly dual systems would have to be maintained (one for health care providers with NPIs and one for those without) and confusion in the marketplace would be created if paper processors did not also receive NPIs within the same time frame as electronic processors.

Other commenters suggested that NPIs be issued on a first-come, first-served basis.

Some commenters suggested enumeration phases by health care provider type or by geographical region of the country.

Response: The NPS will be stress tested, but even successful passage of the stress test will not enable all health care providers to apply for and be assigned NPIs at the same time.

Covered health care providers are required to use NPIs where those identifiers are required in standard transactions. We expect that covered health care providers will be the first to apply for NPIs. We estimate that, on the effective date of the NPI, approximately 2.3 million health care providers will be ready to apply for NPIs. They may apply for NPIs beginning on the effective date, which is May 23, 2005. Covered health care providers must begin to use their NPIs in standard transactions no later than May 23, 2007.

We estimate that, on the effective date of the NPI, the number of health care providers that typically do not conduct standard transactions will be approximately 3.7 million. A few examples of these health care providers are registered nurses employed by hospitals or other facilities, X-ray and other technicians, and dental hygienists. These health care providers may apply for NPIs at any time after the effective date of this final rule. However, because there is no requirement for these health care providers to use NPIs, we do not expect them to apply for NPIs as soon as those that conduct standard transactions or those that must be identified in standard transactions.

It may be determined some time after publication of this final rule that ‘‘bulk enumeration’’ of some health care providers is feasible. Bulk enumeration is a term used to mean mass-enumeration of a large number of health care providers, all at one time, from a database or file that uniquely identifies them in a way consistent with the identification criteria in this final rule. Bulk enumeration would eliminate the need for those health care providers to apply for NPIs. For example, bulk enumeration might involve a specific classification of health care providers that comprises the membership of a large professional organization, or it could involve different classifications of health care providers that are employed by one large organization health care provider. In both of these examples, the health care providers to be enumerated may or may not be covered entities. This enumeration could occur at any time, if it is feasible. HHS, along with the other affected entities, and working within the requirements of the Privacy Act, will determine the feasibility of bulk enumeration. Any health care provider that would be enumerated in this way will be notified.

The NPS will process applications for NPIs as they are received.

It is true that some health plans may have to maintain—for internal purposes—dual health care provider numbers: the NPI and the number(s) issued to health care providers by the health plans themselves. Health plans impose this burden on themselves in accommodating their own internal operational needs. We expect that health plans may decide to use NPIs for additional purposes beyond those required in this final rule.

Comment: The majority of commenters made it clear that NPIs must be assigned and the NPS fully and successfully tested well before the compliance date.

Response: We agree. The NPS will have been fully tested before it begins to assign NPIs. The speed of assignment of NPIs will be dependent in part on the complete, correct, and timely submission of the NPI applications.

Comment: Several commenters stated that the application forms for NPIs should be retained indefinitely in a
manner where the signatures or certification statements could be verified if necessary. Commenters stated that signatures or certification statements could be useful in prosecuting a health care provider that knowingly requested more than one NPI for itself.

Response: The NPI application forms will contain a statement whereby the signer attests to the accuracy of the information on the application. Paper applications will be maintained indefinitely for signature or certification statement verification and audit purposes. Applications completed electronically will be processed only if the person completing the application attested to the accuracy of the information by ‘‘checking’’ a designated box appearing in the on-line application. Those electronic applications that are successfully processed (that is, the health care provider is assigned an NPI) will be maintained indefinitely in a manner whereby certification statements can be verified if required.

Comment: Several commenters asked that the NPI application form be designed to accommodate updates to health care provider data.

Response: We believe this is a good suggestion, particularly because all of the information that will be required on the application for an NPI will have to be updated if changes occur. Therefore, we will attempt to design a form that can serve both application and update purposes.

Final Provisions

One entity will be given enumeration functions under the direction of HHS (option 1 as presented in the May 7, 1998, proposed rule) to enumerate all eligible health care providers who apply for NPIs. There are many advantages in using a single entity, which were discussed in the comment and response section above.

The enumeration function and the development and operation of the NPS will be federally funded, at least for the foreseeable future. Under this final rule, health care providers will not be charged a fee to be assigned NPIs or to update their NPS data.

If feasible, we will populate the NPS with Medicare provider files.

Health care providers will apply for NPIs, and covered health care providers must apply for NPIs.

We will attempt to design the NPI application form in order to also accommodate updates. The form will be available from the NPS and via the Internet (http://www.cms.hhs.gov).

We will attempt to design the NPS so that it can receive and accept NPI applications and updates on paper or over the Internet.

We expect that the use of modern technology to receive and process applications for NPIs and to apply updates to the NPS records of enumerated health care providers will greatly reduce our earlier estimates. In addition, the limited validation by the NPS of data reported by health care providers will further reduce NPS costs. We discuss the cost of operating the NPS in section V, ‘‘Regulatory Impact Analysis,’’ of this preamble.

Before enumeration begins, the NPS will be fully tested. We will strive to ensure that the NPS functions properly and guards against assigning the same NPI to more than one health care provider, assigning more than one NPI to the same health care provider, and re-using NPIs (assigning to a health care provider an NPI that had at one time been issued to another).

Health care providers may apply for NPIs beginning on the effective date of this final rule.

At this time, we do not expect bulk enumeration of health care providers, except possibly of Medicare providers, as discussed earlier. HHS will explore the feasibility of other such enumerations. If considered feasible, the affected health care providers will be notified and will not have to apply for NPIs.

We will consider the feasibility of allowing health care providers to designate authorized representatives to handle their NPI applications and updates.

Applications for NPIs and updates will be retained by HHS indefinitely in a manner in which signatures on paper applications or certification statements on electronic applications can be verified if required.

We will make available as much information as possible about the implementation of the NPI on the CMS Web site (http://www.cms.hhs.gov).

The web site will include information about the availability and submission of the NPI application/update form.

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