The Centers for Medicare and Medicaid Services, the federal agency that administers Medicare and Medicaid, recently announced that the National Provider Identifier will eliminate the need for health care providers to use different identification numbers to identify themselves when working with multiple health plans.

This identifier, which implements a requirement of the Health Insurance Portability and Accountability Act of 1996, must be used by most HIPAA-covered entities -- health plans, health care clearinghouses and certain providers that conduct electronic transactions.

The agency has implemented the following HIPAA standards: Electronic health care transactions and code sets, privacy, security and now, the National Provider Identifier.

The National Provider Identifier is a 10-position, all-numeric identifier with a check digit in the last position to help detect keying errors. The identifier will be assigned to a health care provider by the National Provider System.

This allows for 200-million unique identifiers, estimated to last 200 years.

The identifier will carry no intelligence, i.e., its characters will not provide information about the provider.

Presently, health plans assign their own identifying numbers to each provider -- individuals, groups, or organizations -- that provide medical or other health services or supplies.

Because providers conduct business with multiple health plans, they have a different identification number for each plan. The identifier will mandate that each provider have one single, unchangeable and unique identifying number to be used in transactions with all health plans.

As of the following dates, HIPAA-covered entities must obtain and use National Provider Identifiers to identify themselves and process standard transactions:

• May 23, 2007 for Medicare, Medicaid, and covered entities, except small health plans.
• May 23, 2008 for small health plans (receipts of $5 million or less).

Health care providers include physicians, dentists and pharmacists, as well as organizations such as hospitals, nursing homes, health maintenance organizations, pharmacies and group practices.

Every health care provider, including individual health care professionals who transmit health information electronically in connection with any of the standard transactions, is required to obtain identifiers, even if they use business associates, such as billing agencies, to prepare transactions.

Likewise, organizations that are covered health care providers must obtain an identifier and can elect to choose one.

They include:

• Identifier for the provider's entire organization.
•Identifier for each of its subparts that would be a covered health care provider if it were a separate legal entity.
• Identifier for the provider and for any one or more of its subparts.

A subpart refers to the components and separate physical locations of organization health care providers.

Health care providers not subject to HIPAA can choose to obtain an Identifier. Health plans with which they contract might require them to have one.

Providers applying for the National Provider Identifier will be able to use only one of three methods:

• A Web-based application found at: https://nppes.cms.hhs.gov.
• A paper application and send it to the entity assigning the identifier, available either from an address available at https://nppes.cms.hhs.gov, or by calling (800) 465-3203.
• With the provider's permission, an organization could file electronically on the provider's behalf.

National standards will encourage electronic commerce in the health care industry, simplify the processes involved and reduce the costly administrative burdens on health care providers.

With national standards and identifiers, health care providers will be able to submit transactions to any health plan anywhere in the U.S.

Any negative impact on health care providers would be related to the initial implementation period and the costs for converting systems, especially those that generate electronic claims from current health care providers to the National Provider Identifier.

Claims processing and timely payments to health care providers could be affected as health plans transition to the identifier.

Health plans will have to modify their systems, but the conversion will have a one-time cost impact that will likely be more costly for health plans with complex systems that rely on intelligent provider numbers.

Health care clearinghouses will face similar impacts. However, implementation will likely be more complex because health care clearinghouses handle many health care providers and health plans.

One of the best resources for information is www.cms.hhs.gov/hipaa/hipaa2