Time To Transition To NPIs — Take Appropriate Precautions For Compliance

December 10, 2006

This story first appeared in the November edition of Strategies for Healthcare Compliance, a monthly newsletter by HCPro Inc. For information on all of HCPro’s products, visit www.hcmarketplace.com.

The changeover from legacy numbers to national provider identifiers is expected to make organizations revamp the way that they submit electronic transactions.

A number of health plans include logic in legacy numbers that assists in properly processing claims and correctly paying providers. After May 23, 2007, health plans will no longer be able to rely on legacy numbers to assist with claims processing. Only the NPI will be allowed as an identifier, says Chris Apgar, CISSP, president of Apgar & Associates, LLC, in Portland, Ore.

Providers have long used legacy numbers, generally assigned by health plans, to file data within billing systems. The change from legacy numbers to the NPI means that providers will need to establish crosswalks between legacy numbers and NPIs, especially because there are usually more legacy numbers–even for a single health plan–than NPIs.

Healthcare clearinghouses have long acted as translators between health plans and providers. When translating transactions after the implementation deadline, they will be faced with the new challenge of ensuring that

  • legacy numbers are not used
  • the needed data to pay a claim are transmitted to the health plan and are included on the electronic remittance advice when transmitted back to the provider

Understand both types of NPIs

There are two types of NPIs: type 1 (individual) and type 2 (organizational). Both numbers may be used when providers submit claims to health plans. For example, a type 1 NPI will be used to bill at the healthcare provider level, and a type 2 NPI will be used to bill at the organizational level (e.g., hospital, clinic, psychiatric facility, nursing home, etc.). It is up to the provider to determine which type of NPI to apply for and how it will be used. This is not something that health plans can control.

This means that health plans and providers must communicate regarding the type of NPIs that the provider will be applying for and how the NPI will be used in the billing process, Apgar says. Health plans must tell providers what additional information (e.g., taxonomy code, procedure code, or location) will be needed to appropriately pay submitted claims.

This discussion also needs to include healthcare clearinghouses, because they need to know what to look for when acting as the translator between health plans and providers. Such discussions should occur early on in the process of provider NPI implementation, especially for large healthcare organizations.

Develop a crosswalk database

Providers and health plans should also work together to develop databases to store NPIs and associated legacy numbers.

For providers, this also means including which health plan issued the legacy number. This will assist in addressing problems that arise during the testing process and ongoing claims adjudication.

If the provider and health plan are able to crosswalk from the legacy number to the NPI using a current database of numbers, it will help when problems with claims adjudication arise and when providers update billing systems.

Depending on the size of the organization, the database may range from a simple spreadsheet to a more complex relational database. The database needs to be current and, if feasible, identify what additional types of information the health plan will need in order to process claims once the move is made to the NPI. These databases should be maintained for at least six months following the May 23, 2007, deadline to implement the NPI.

This allows for additional time to work out the bugs in the transaction process that will likely occur once NPIs are required and legacy numbers can no longer be used, Apgar explains.

Expect missing NPI field

Health plan claims-processing systems today rely on legacy numbers to process claims and may not include the needed NPI field. This means that health plans must work with their vendors to modify their claims-processing systems and accommodate NPIs.

It also means that as providers forward new NPIs to health plans, health plans need a place to store them and begin the crosswalking process between legacy numbers and NPIs (hence the use of a crosswalk database).

Providers are in a similar position when it comes to billing system applications. These may not have the appropriate field to store and process NPIs. Providers also need to work with their vendors to upgrade software and use a crosswalk database to make sure that the billing system correctly accounts for claims submitted to health plans and remittances received from health plans.

Several health plans have already built databases to record NPIs submitted by providers and store associated legacy numbers. Until testing is completed, and the claims adjudication process produces accurate payments to providers, and systems have been updated to accommodate the NPI–which includes processing of the NPI or the NPI and other allowable identifiers–the crosswalk database will be needed to assist in resolving errors.

Also, the crosswalk database may be needed as a workaround until applications on the health plan and provider sides are upgraded to use the NPI properly.

Health plans, providers, and healthcare clearinghouses need to incorporate the building, population, and use of the crosswalk database into any project plans related to the implementation of the NPI.

This means that someone needs to collect all legacy numbers, provider identification, and NPIs as they are obtained and load them into the database. Facilities must develop procedures regarding the use of the database, whether for billing purposes or claims processing purposes.

Also, the project plan needs to address how the database will interface–electronically or manually–with existing applications used to process claims, payments, and other HIPAA-related transactions until the time that the applications have been upgraded.

Consider future information needs

Following the implementation phase of the NPI, healthcare organizations need to determine whether data stored before the conversion to NPI will also need to be converted to reflect the new NPI. This is especially important for health plans and providers that use these stored data for quality assurance or research purposes.

It’s like comparing apples to oranges when it comes to conducting quality assurance, research, and other related activities if the older, stored data do not match the new, collected data, Apgar says. Although you don’t necessarily need to be concerned about this information transfer now, you may be in the future.

Ultimately, the maintenance of legacy numbers for an extended period of time by providers and health plans is necessary to assist in making sure that claims are paid correctly and to accommodate applications that currently are unable to work with the NPI.

It is also important that providers, health plans, and healthcare clearinghouses begin conversations today to make sure that they have appropriately included plans to properly populate transactions so they can be processed correctly.

Official Medicare Timeline for the NEW CMS-1500 (08/05) Claim Forms

Now – January 1, 2007 Physicians and suppliers may not report an NPI on a CMS-1500 (12/90) form. Those forms do not contain fields for reporting of NPI numbers. Providers must continue to enter their existing Medicare identification number on those 12/90 paper forms. Prior to April 1, 2007, Medicare will reject as unprocessable any claim submitted on a CMS-1500 (12/90) form with an NPI in a provider identification number field.

January 2, 2007 – March 31, 2007 Medicare will accept either the CMS-1500 (12/90) or the revised CMS-1500 (08/05) form. CMS-1500 (12/90) forms will continue to be rejected as unprocessable if submitted with one or more NPI. NPIs can be submitted when a revised CMS-1500 (08/05) is submitted, but NPIs are not yet required on these claims. If one NPI or more is reported on a revised CMS-1500 (08/05), the submitter is strongly encouraged to also submit the Medicare legacy provider identifier that corresponds to each NPI reported on the claim. Failure to report a legacy identifier with an NPI could result in a delay in processing of the claim.

April 1, 2007 – May 22, 2007 Medicare will reject any CMS-1500 (12/90) form received with or without an NPI number. Only the revised CMS-1500 (08/05) form will be accepted. An NPI is not yet required on the CMS-1500 (08/05) form, but should be entered if a provider has obtained an NPI. It is still highly recommended that claim submitters enter the Medicare legacy number that corresponds to each NPI reported on the revised CMS-1500 (08/05) to avoid a possible processing delay.

May 23, 2007 and thereafter Revised CMS-1500 (08/05) forms received without an NPI to identify each provider for which data is reported on a claim, such as rendering, referring or ordering physician, in addition to the billing provider, will be rejected by Medicare. Medicare legacy provider identifiers may no longer be reported on paper claims sent to Medicare.


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