Providers Facing Identity Crisis as NPI Vexes Claims Processing
By Martin Jensen

Hospitals, labs, clinics and physician practices large and small are used to the "flaming hoop" cycle � slicing and dicing the data each government and private health plan wants to see in order to get paid. The regulations enacted under HIPAA to establish a single National Provider Identifier were designed to correct a small but critical component of that: replacing the various payer-controlled identification systems with a single, universal numbering system that all payers would have to adopt, discarding all the state-specific Medicaid numbers, the half-dozen or more Medicare numbering systems, and various governmental and payer-specific legacy IDs.

The rule was that individual providers (i.e. human beings � doctors, nurses, physician assistants and the like) could obtain only a single number which would identify them in all contexts.  Organizational providers could obtain one or more identifiers as they saw fit, based on identifiable differences like location and care setting (acute inpatient hospital vs. rehab unit vs. outpatient surgery) and their own self-determined business requirements. Payers were specifically enjoined from telling providers how to enumerate.

But when the May 23, 2007 deadline approached, it was clear that, as usual, the industry was "unprepared" for the cutover. Providers weren�t ready to walk on their NPI legs and payers weren�t ready to drop their legacy ID crutches. Regulators at the Centers for Medicare and Medicaid Services (CMS) announced a one-year contingency period and CMS�s own Medicare division quickly adopted a phased contingency plan. First they would require billers to submit their own NPIs in combination with legacy IDs, then gradually wean them off to the mandated "NPI only" transactions. The critical issue of how to represent all of the other providers on the claims (such as the referring provider on a radiology claim, or the ordering physician on a lab claim) was left for a last-minute, untested cutover for May 23, 2008.

CMS, as usual, blamed the perennially unprepared providers for the delay. But the true culprits may lie a bit closer to home. Medicare, in what observers saw as direct violation of the regulation, issued a thinly-veiled threat (warning: PDF) to its providers to obtain NPIs according to their existing suite of Medicare numbers.

This wasn�t just a fairness issue. It was tantamount to an admission that Medicare was not gearing to deal with the post-NPI world of provider-determined identification schema. They also set an unhealthy precedent for other payers, including a number of state Medicaid plans, who subsequently communicated their own "expectations."

"If Medicare can tell them how to enumerate, why can�t we?" 

Well, how about, because if providers use one numbering system for Medicare and another numbering system for you, the claims which list both organizations as payers (many millions per day) will break down for lack of a consistent identifier? One ID per claim sort of requires that everyone use a common number, does it not?

The initial spike in claim rejections was startling, even to those familiar with the reports that some early adopters had gone unpaid for months. According to one source, Medicare rejections spiked by a factor of four, while Medicaid denials went up six-fold and Blue Cross rejections doubled.

Many of the problems have certainly settled out as providers regrouped for the new line of flaming hoops. But just as things seemed calmer, CMS imposed a new requirement: Employer Identification Numbers and Legal Business Names on NPI records needed to match an unnamed IRS data source or the NPI would be de-activated. While there was no recognition that such a change might trigger a mismatch downstream, our analysis indicates that virtually all of Medicare�s crosswalk logic relies on EIN, and nearly half of the matching goes against all or part of LBN. What�s more, secondary changes required on the Medicare side could, again, leave those claims unpaid for months, thanks to well-documented bureaucratic delays.

Catch more of our ongoing NPI coverage at the HIT Transition weblog.