Introduction to NPI Numbers
NPIs are essential for medical billing, as they ensure that claims are accurately routed to the correct provider or organization and that payments and remittance information are directed properly. For pharmacies, NPIs are used to bill insurers, including Medicaid, for a wide range of services, from prescription medications to immunizations and clinical services.
Pharmacies may need to use multiple NPIs depending on the services being billed. When multiple entities are involved in submitting claims, the setup of NPIs must be managed carefully to ensure that each person receives the appropriate Electronic Remittance Advice (ERA). By properly configuring NPIs and understanding how they work, pharmacies can streamline their billing process and ensure timely payment and accurate claims reconciliation.
What is an NPI?
The National Provider Identifier (NPI) is a 10-digit number that is used to identify healthcare providers, including pharmacies, physicians, hospitals, and other healthcare entities. NPIs are issued by the Centers for Medicare & Medicaid Services (CMS) and are required for any healthcare provider who transmits health information electronically, including for billing and claims submissions.
Types of NPI Numbers
There are two main types of NPIs:
- Individual NPI (Type 1):
- This type of NPI is assigned to individual healthcare providers, such as physicians, pharmacists, and other practitioners.
- It identifies a single healthcare provider and is used to indicate the rendering provider on medical claims billed through a pharmacy.
- A pharmacist would have an individual NPI.
- Organization NPI (Type 2):
- This type of NPI is assigned to healthcare organizations, such as hospitals, clinics, pharmacies, and group practices.
- It identifies the entity as a whole, rather than an individual provider.
- Pharmacies, typically use an organizational NPI for billing and claims purposes to indicate the billable provider.
Multiple type 2 NPIs (Organization NPI) are required in situations where an organization needs to distinguish between different types of services. If your pharmacy is billing Medicare or Medicaid for services such as for DME, or doing any other medical billing using a system other than Workflow Services, and wants to start billing for clinical services, you will need multiple type 2 NPIs.
How NPIs Are Used in Medical Billing
NPIs play a key role in the medical billing process. When a pharmacy submits a claim to an insurance company, the NPI number serves as a unique identifier for that provider or organization. It ensures that the claim is directed to the right place.
The NPI also helps direct payment. For example, if the pharmacist is listed on the claim as the billable provider, payment will be made to the pharmacist. If the pharmacy is listed on the claim as the billable provider, payment will be directed to the pharmacy. It's important to have the right NPI numbers in the right place.
NPIs and Medicaid or Commercial Insurance Billing
Pharmacies use their NPIs to bill Medicaid and/or commercial insurance for a variety of services, including:
- Prescription Medications
- Vaccines and Immunizations
- DME
- Medication Therapy Management (MTM)
- Clinical Services
Workflow Services submits claims for Clinical Services (including MTM, vaccines and more) on behalf of pharmacies.
Claims Processing and NPI Number
When a claim gets paid the payer generates electronic remittance advice (ERA) and sends this back so the claims process can be completed. The NPI number associated with the claim directs the payer where to send the ERA.
If different systems are used by a pharmacy to submit claims, each system should only receive ERA's for the claims they submitted. NPI numbers need to be set up properly to ensure that the remittance information (ERA) is directed to the correct system. Here’s how the setup works:
- Assigning Multiple NPIs for Different Functions:
- DME or other Medicare Part B claims that get submitted through the PMS: one type 2 NPI is listed as the billable provider for these claims.
- Clinical services being submitted through Workflow Services: a second, different, type 2 NPI is listed as the billable provider for these claims.
- Receiving ERAs for Multiple Claim Submitters:
- When submitting claims, the NPI associated with the claim will determine where the ERA is sent.
- In the example above, the DME and Medicare Part B ERAs will be returned either to the PMS or to the pharmacy to adjudicate. The clinical service ERAs will be returned to Workflow Services for adjudication.
Ensuring Accurate ERA Routing:
It's crucial that the claim have the correct NPI information to ensure the ERA is sent to the correct person or department. This requires proper setup in the pharmacy's contracting and enrollments.
Medicaid (This may be state dependent)
Each Medicaid enrollment is associated with a single NPI. This means that if a provider or pharmacy has multiple NPIs—for example, for different locations, service lines, or business units—then they must complete a separate Medicaid enrollment for each distinct NPI. (Check each state for their individual requirements.)
This requirement ensures that Medicaid claims are properly attributed to the correct provider or organization and helps streamline payment, compliance, and auditing processes. The Medicaid system needs to know exactly who is delivering care or services, so they can verify the eligibility and appropriateness of the services billed.
Commercial Payers
In general, commercial payers allow for multiple NPIs rather than requiring new contracts for each NPI. When you get new NPIs that will be used for billing purposes, be sure to update any existing contracts with this number and include additional NPIs on new applications.