HIPAA requires the Department of Health and Human Services (HHS) to adopt unique identifiers for each individual, employer, health plan, and healthcare provider involved in the healthcare system. 

National Provider Identifier (NPI)

Historically, government and private health plans have assigned their own proprietary identification numbers to providers of healthcare services. The lack of a single and unique identifier for each provider creates administrative difficulties in keeping track of numerous different IDs. As the healthcare system becomes more dependent on data automation and electronic data interchange, the need for a universal, standard healthcare provider identifier will become increasingly critical.

The final rule for implementation of the National Provider Identifier required by HIPAA was published January 22, 2004. A National Provider System will be established and begin processing applications for the unique provider identification numbers in May 2005.

The 10-digit NPI will be the only number a provider needs to identify him/her for payment purposes. Payers will no longer be permitted to require legacy numbers (UPIN, Medicaid numbers, individual health plan numbers, etc.) after the May 23, 2007 compliance date (May 23, 2008 for small health plans). The NPI will be entirely numeric and will not contain any embedded information about the provider.

More information about the NPI implementation, including details about how to apply for NPIs, will be made available by CMS closer to the effective date of the rule.

Employer Identifier

HHS has adopted the Employer Identification Number (EIN) assigned by the Internal Revenue Service as the national standard for electronic health transactions. 

Payer Identifier

The unique payer identifier will apply to health plans covered by HIPAA. Health plan is defined in the law as an individual or group plan that provides for, or pays the cost of, medical care. This definition includes a significant number of employee welfare benefit plans, state regulated insurance plans, managed care plans, and essentially all government health plans. Rules designating a payer ID are pending. 

Health Identifier for Individuals

The concept of a national identifier for individual patients has raised significant controversy. Although no one argues against the administrative simplification that would result from use of a unique identifier, there is great concern about the threats to individual privacy and confidentiality such an identifier would create. Congress has indicated that they will not appropriate funds for the development of the individual identifier until adequate privacy protections have been promulgated.

Revised: March 2004