National Provider Identifier (NPI) & Healthcare Claim Settlement

Transcription

1 National Provider Identifier (NPI) & Healthcare Claim Settlement January 25, 2005 Lisa Miller Payformance Health CTO

2 Table of Contents INTRODUCTION...3 CLAIM SETTLEMENT TRENDS IN THE HEALTHCARE INDUSTRY...3 NPI AND THE CLAIM SETTLEMENT PROCESS...3 THE NATIONAL PROVIDER IDENTIFIER GENESIS...5 NPI UNCOVERED...5 TYPE 1 INDIVIDUAL PROVIDERS...6 TYPE 2 PROVIDER ORGANIZATION...6 ATYPICAL SERVICE PROVIDERS...6 ENUMERATION OF THE NPI...6 THE NPI IMPACT...7 NPI DATA MODELS...7 TODAY S DATA MODEL...8 NPI TOMORROW S DATA MODELS...9 NPI IMPACT ON ELECTRONIC CLAIM SETTLEMENT...11 IMPACT TO CLAIM SETTLEMENT SOLUTIONS...11 SUGGESTED STEPS...12 APPENDIX - GLOSSARY OF TERMS...13 NPI and Healthcare Claim Settlement Page 2 of 13

3 Introduction The primary purpose of this white paper is to define and discuss NPI as it relates to the claim settlement process. Specifically, this paper highlights the potential impact of NPI on solutions for electronic claim settlement (see Appendix for definition). Claim Settlement Trends in the Healthcare Industry In excess of $2 trillion is spent on healthcare every year in the United States, and a significant portion of this amount is spent on non-value-adding paperwork and administrative overhead. Each year, billions of dollars are spent on manual and paperintensive healthcare claims processing and payments. A growing number of payers and providers are looking for ways to address the enormous price tag attached to these manual systems, and are keen to resolve the issues that serve as barriers to efficient healthcare claims processing. Fortunately, many organizations have already enjoyed significant success in the automation of the first two stages of the healthcare claims process submission and adjudication. Automation has transformed the healthcare claims processing landscape by slashing costs and streamlining operations. Through electronic submission and auto adjudication of claims, payers and providers have been able to drastically shorten processing cycles and derive more than $5 billion in savings. However, this transformation has yet to substantially impact the healthcare payments process where more than 90 percent of payments are still made using paper checks. There are signs this is changing. The tremendous surge in ACH (Automated Clearing House) transactions over the last few years is a forerunner to changes certain to occur in the current paper-intensive environment. Electronic payments have received remarkable adoption rates in employee payroll, consumer bill payment and even in federal government transactions. Even in the healthcare industry, changing priorities, technological advances, and a solidified set of standards for payments and remittance data are driving the adoption of electronic payments. Based on the recent acceleration of e-payments in other industries and the alignment of priorities, technology and regulations in healthcare, healthcare claims payments via paper checks will soon become a thing of the past. It should be noted that one of the driving forces accelerating the adoption of electronic payments, in all industries, is the risk of fraud with paper checks. In a study done by the Association of Financial Professionals, they found that 94% of companies were subjected to check fraud in Conversely, only 3% of companies experienced fraud related to ACH Credit transactions in that same year. NPI and the Claim Settlement Process Although a mass migration to electronic claim settlement is inevitable, there are challenges to the transition. As one example, payers must plan for and implement a claim settlement system designed for electronic claim settlement to enable the move. Also, payment data coming out of payer claim management systems may need to be reworked to meet the requirements of electronic claim settlement solutions. Processes may need to be modified. NPI and Healthcare Claim Settlement Page 3 of 13

4 Other challenges to the transition relate to changes in the industry. The migration of the HIPAA 835 standard from 4010 to 5010 is an example. Another is the looming requirement for all providers to secure and use a National Provider Identifier (NPI) by May 23, 2007 (May 23, 2008 for smaller providers). This requirement for NPI is significant, and will have large ramifications to the healthcare industry. One area of certain impact from the switchover to NPI is on claim settlement systems. Today most of those systems operate based on Provider Identification Numbers (PINs) that were assigned to providers by health plans. NPI will require major changes to claim management systems to allow the association of payments with providers using NPIs rather than the old PINs. NPI and Healthcare Claim Settlement Page 4 of 13

5 The National Provider Identifier Genesis The Health Insurance Portability and Accountability Act of 1996 (HIPAA) mandates the Secretary of Health and Human Services (HHS) to adopt a standard to assign unique health identifiers to all healthcare providers. The National Provider Identifier (NPI) is the result of this HIPAA mandate. NPI is one of the last remaining mandates requiring implementation following the original HIPAA legislation. Still ahead are the national payer and the national patient identifiers, which have yet to be incorporated into final rules. The NPI will replace all existing provider identifiers (including UPIN, state Medicaid, and proprietary identifiers assigned by commercial health plans) in mandated HIPAA transactions. The intent of the legislation is to free healthcare providers from having to keep track of multiple numbers to identify themselves in standard transactions with one or more health plans. Note that a Taxpayer Identifying Number (TIN) may still need to be reported for tax purposes, as required by the transaction implementation guides. Refer to the HIPAA implementation guides located at for additional requirements concerning Taxpayer Identifying Numbers. All healthcare providers (defined in 45 CFR ) are eligible for an NPI. Furthermore, healthcare providers who transmit any health information in electronic form as required by HIPAA are required to obtain and use NPIs. IMPORTANT NOTE: The NPI Final Rule, dated January 23, 2004, is available at a number of websites. For your convenience, a link to one such site is provided below, affording direct access to the Final Rule. NPI Uncovered The NPI is a numeric 10-digit identifier, consisting of 9 numbers plus a check-digit in the 10th position. It is accommodated in all standard HIPAA transactions. The identifier contains no embedded information about the healthcare provider that it identifies. There is no expiration date for the NPI. Rather, it stays with the provider or provider organization until that provider or organization ceases to exist. There are different types of NPIs. Providers affected by the NPI are either Type 1 (individual providers) or Type 2 (provider organizations). A third type of provider (atypical) is not eligible for NPI enumeration. Each case is further explained below. NPI and Healthcare Claim Settlement Page 5 of 13

6 TYPE 1 Individual Providers One and only one identifier Each individual provider (a named person) will have one and only one NPI regardless of practice locations or settings. This number will remain with the provider for the entirety of the provider s professional career. TYPE 2 Provider Organization A potential for more than one identifier Provider organizations will also obtain NPIs to use within the HIPAA transactions. Large healthcare provider organizations (such as hospitals) can be assigned more than one NPI, as required to meet their business needs. Unique areas of an organization requiring their own NPI are referred to as subparts of the organization. These subparts may need to be assigned NPIs in order to conduct standard transactions on their own behalf or to meet Federal regulatory requirements related to their participation in health plans (such as Medicaid, Medicare, commercial plans, etc.). There will be nothing in the NPI number itself or in the National Plan and Provider Enumeration System (NPPES) that will link a subpart to its parent. The concept of a subpart does not pertain to healthcare providers who are individuals. Atypical service providers The Final Rule for NPI stipulates that some entities are not eligible to receive an NPI. These entities, such as billing services and re-pricers, conduct services on behalf of healthcare providers, but they are not eligible for NPIs themselves because they do not provide healthcare. Another example of an atypical provider would be a transportation service, such as a taxi service. Although they may provide a service that is compensated via a healthcare claim, the taxi service s primary business function does not meet the definition of healthcare services. Detailed explanations on entities that do and do not meet the definition of healthcare provider can be found in rule 45 CFR The existence of these atypical providers will pose a significant challenge to the payer community. Currently, WEDI (Workgroup for Electronic Data Interchange) and CMS (The Centers for Medicare & Medicaid Services) are working on a white paper to address the issues surrounding the NPI and atypical service providers. Enumeration of the NPI The 10-digit NPI is assigned by a government funded NPI Enumerator through the National Plan and Provider Enumeration System (NPPES). NPI and Healthcare Claim Settlement Page 6 of 13

7 The NPPES processes applications and makes updates. It is the responsibility of the enumerating contractor to ensure the uniqueness of the healthcare provider, and generate NPIs accordingly. The link below leads to the online application process used to request an NPI. The NPI Impact The impact of the NPI relates to a shift in how providers are identified today in the healthcare system. Traditionally, provider identifiers are assigned by a health plan to the provider. The health plan may assign more than one identifier to a provider, whether an individual or an organization. The NPI represents a significant change in the current healthcare business process with far reaching implications. NPI will require significant changes to all systems involved in the claim lifecycle. The provider identification lives at the epicenter of billing and claims payment processes for every healthcare entity within the United States. It will impact both internal and external systems, trading partner agreements, business partner agreements, and transactions sent between healthcare partners. NPI Data Models The potential impact of the NPI on payer systems is significant, and careful analysis is needed to determine the impact through all layers of the payer claim management process. To fully assess and address the impact of the NPI, the following models need to be evaluated within your organization: One NPI to One PIN (Provider Identification Number) One NPI to Many PINs Many NPIs to One PIN Many NPIs to Many PINs NPI and Healthcare Claim Settlement Page 7 of 13

8 Today s Data Model The following diagram depicts the current provider-payer enumeration data model from a provider s perspective. The provider is assigned identification by payers based on many business or technical factors. od Prov ider Data Model Today ID 1 Payer 1 ID 2 Payer 2 Provider ID 3 Payer 3 ID 4 ID 5 Payer 4 NPI and Healthcare Claim Settlement Page 8 of 13

9 NPI Tomorrow s Data Models With the NPI, data models are quite different from those in use today. The NPI data models are broken into two models, one for Type 1 providers and another for Type 2 providers. Type 1 Provider Model The following diagram depicts the potential Type 1 provider data model. od Type 1 Prov ider Data Model After NPI ID 1 Payer 1 ID 2 Type 1 Provider NPI 1 Payer 2 Payer 3 ID 3 ID 4 Payer 4 ID 5 The following data model types potentially exist within the Type 1 provider data model. One NPI to One PIN One NPI to Many PIN NPI and Healthcare Claim Settlement Page 9 of 13

10 Type 2 Provider Model The following diagram depicts the potential Type 2 provider data model. od Provider Data Model Today NPI 1 Payer 1 Type 2 Provider ID 1 Type 2 Prov ider Subpart 1 NPI 2 ID 2 NPI 3 ID 3 Type 2 Prov ider Subpart 2 NPI 4 ID 4 Type 2 Prov ider Subpart 3 ID 5 The following data model types potentially exist within the Type 2 provider data model. One NPI to One PIN One NPI to Many PINs Many NPIs to One PIN Many NPIs to Many PINs NPI and Healthcare Claim Settlement Page 10 of 13

11 NPI Impact on Electronic Claim Settlement Claim settlement vendors are not required to apply for NPIs. Vendors, such as Payformance, are not covered entities for HIPAA transactions and code sets. Instead, vendors are typically classified as business associates operating on behalf of the payers and providers that use the vendor services, such as services for paper remits, electronic funds transfer (EFT), electronic remits (835) and the printing of checks. Although these solution vendors are not required to obtain NPIs, the solutions the vendors provide will most certainly be impacted, along with all other systems that process healthcare claim data. From the registration of providers to the output of payments, accurate provider identifiers are crucial to a claim settlement system. To perform its functions, a claim settlement solution is fully dependent on the data flowing from claim adjudication systems. Given that a claim settlement solution is dependent upon adjudication data, the impact of the NPI upon the solution is directly related to the number of data models your NPI implementation encompasses. As a result, an assessment of the impact of the NPI on your claim settlement solution implementation should encompass all of the data models discussed previously. The data models are listed below with potential impact to a claim settlement solution. One NPI to One PIN minimal impact One NPI to Many PINs minor impact Many NPIs to One PIN major impact Many NPIs to Many PINs severe impact Impact to Claim Settlement Solutions To asses the impact of NPI, healthcare payers should carefully analyze their adjudication systems, provider enumeration systems, and business processes. Not only will changes be needed in these areas, but those changes will impact your claim settlement solution as well. Specifically, following are areas impacted by the NPI within a typical claim settlement solution: Provider registration Document archives Receiving accounts and payment structure IMPORTANT NOTE: For a claim settlement solution to function into the future, both NPIs and PINs must be present in the adjudication results sent to the claim settlement solution for processing. Dual enumeration will need to be present beyond May 2007 if the adjudication system of record is utilizing a PIN for adjudication processing. Provider Registration The claim settlement solution registration system will need to allow either the current registration code with PIN/TIN validation or with NPI/TIN validation. Claim settlement solutions will need to accommodate Type 1 and Type 2 provider registrations, including subpart registrations. The systems will not accommodate atypical provider registration. NPI and Healthcare Claim Settlement Page 11 of 13

12 Since atypical providers will not be eligible for NPI enumeration, it is assumed that all atypical providers will continue utilizing their current payer identifications. Document Archives Access to archived data will be an important part of the NPI implementation process. Maintaining access to pre-npi data will require both the NPI and the PIN or PINs associated with the archive. Be aware that your NPI implementation may have an impact on provider access to archived data. Provider Accounts and Payment Structure Both provider accounts and payment structures may be impacted by the NPI. For example, if a provider currently has one PIN associated with more than one NPI, the provider will now have multiple payments. The provider may wish to route the payments to different accounts. Conversely, if the provider has one NPI associated with multiple PINs and funds being routed to multiple accounts, the provider will need to identify which one account the single payment will be delivered to. Suggested Steps To assess the impact of the NPI on your current claim settlement solution, it is recommended that you pursue the following steps: Carefully review the NPI Final Rule to understand the requirements on you, a payer, and on your providers. Determine which NPI/PIN data models pertain to your environment. Analyze adjudication systems, provider enumeration systems, and business processes for impact from NPI. Work with your claim settlement vendor to analyze the impact of NPI on your claim settlement solution. Design an NPI implementation plan to address changes to adjudication systems, provider enumeration systems, business processes, and claim settlement systems. Perform tests to ensure that NPIs can be properly processed throughout all systems and processes. Choose a few providers that will work with you to test complete claim submission, adjudication and payment life cycles. Prepare a communication to your provider community to discuss your readiness for NPI. By taking the above steps, your systems and processes will be well positioned to make the transition to NPI by May 23, NPI and Healthcare Claim Settlement Page 12 of 13

13 Appendix - Glossary of Terms Business Associate An external entity that performs a business function for a covered entity on the covered entity s behalf. Examples include, but are not limited to: billing services, collection agencies, and clearinghouses. Covered Transaction The electronic transfer of healthcare information for their specifically named purposes, as promulgated under 45 CFR Examples include, but are not limited to: eligibility inquiries, claims, remittance advices, and benefit enrollment. Covered Entity A healthcare provider, health plan, or a healthcare clearinghouse that electronically transmits covered transactions is a Covered Entity. Covered Healthcare Provider - A healthcare provider who transmits any health information in electronic form in connection with a covered transaction is a Covered Healthcare Provider. Electronic Claim Settlement Relates to the process of a health plan using electronic payments to settle claims with their provider community. More specifically, electronic claim settlement refers to the use of HIPAA compliant 835 transactions for Electronic Funds Transfer (EFT) and Electronic Remittance Advice (ERA) to settle adjudicated claims. Healthcare Provider A healthcare provider is an entity meeting the definition of healthcare provider under 45 CFR A healthcare provider may be an organization or an individual. Identifiers HIPAA identifiers are data elements that are mandated for use in covered transactions. The NPI was adopted as the standard unique identifier for healthcare providers in the NPI Final Rule (69 FR 3434). Legacy Provider Numbers Provider numbers that are specific to a health plan, i.e., UPIN, Blue Cross, Medicaid, TRICARE, et al. Legal Entity This term is used most frequently to qualify enumeration for an Organizational Provider. In this context, a legal entity would include, but not be limited to: a corporation, or partnership performing legal business activities that is entitled to receive and use an Employer Identification Number (EIN) assigned by the IRS. Subpart - Any component of the covered organization healthcare provider needing an NPI in order to be identified in HIPAA standard transactions. Subpart designation may be based on whether subparts conduct standard transactions, whether existing Federal regulations require them to have unique identifiers to be reimbursed by Federal health plans, or certain other reasons. NPI and Healthcare Claim Settlement Page 13 of 13