What types of business structures are considered organization health care providers and thus eligible for organization NPIs? What types are not? The final NPI rule defines “organization health care providers” as providers who are not individuals (persons). These are classified as entity type 2 providers. Examples are hospitals, home health agencies, clinics, nursing homes, residential treatment centers, laboratories, ambulance companies, group practices, health maintenance organizations, suppliers of durable medical equipment or pharmacies.
Some health care provider organizations are made up of components or business units that function somewhat independently of the ”parent” health care organization of which they are a part. These components, which are referred to as “subparts” in the regulation, might conduct their own standard transactions, might be at the same or at a different address than the organization provider “parent”, might furnish a type of service different than the organization provider “parent.” These subparts or business units might be required by Federal regulations to have unique identifiers for billing purposes. Each organization must make a determination regarding the status of its subparts, and apply for NPIs as it deems appropriate. The Work group for Electronic Data Exchange (WEDI) has a white paper on this topic that can be helpful to covered entities in making their decisions.
A sole proprietorship is a form of business in which one person owns all of the assets of the business and is solely liable for all debts on an individual basis. Sole proprietors are individuals, and they must apply for their NPIs as Individuals (Entity Type I). The subpart concept does not apply to a sole proprietorship, even one with multiple locations, because the sole proprietorship is not an organization as defined in the Final NPI Rule (69FR3434).
State laws enable the creation of many other different types of businesses. While we cannot address every possible type of business structure, we apply the following broad principle to determine whether a business is eligible for an organization NPI: Any organization that is recognized by the State as separate and distinct from the individual is eligible for an organization NPI. The law in each State will govern how different business types are recognized by the State.