What Every Healthcare Provider Should Know About NPI Types

Every healthcare provider needs an NPI number to work in the healthcare system. Whether you’re starting your own practice or working in a group setting, understanding NPI numbers is essential for smooth operations and proper billing.

However, many providers are unfamiliar with the two types of NPIs—Type 1 and Type 2—and often aren’t sure which one to use. This confusion can lead to billing errors, claim rejections, and unnecessary stress.

In this blog, we’ll break down the difference between these two types in simple terms, so you can confidently choose the right NPI for your practice and avoid common pitfalls.

What is Type 1 NPI?

A Type 1 NPI is a unique, 10-digit identification number assigned to individual healthcare providers. This includes doctors, dentists, therapists, or any licensed medical professional who provides healthcare services directly to patients.

Here’s what you need to know:

• Who needs it? Type 1 NPI is required for solo practitioners or individuals who bill insurance under their own name, not under a group or organization.

• Personal to you: It’s tied to the individual provider, meaning it follows you no matter where you work or which organization you join.

• Examples: A family physician running their private practice or a licensed physical therapist working independently.

• One per person: Each healthcare provider can have only one Type 1 NPI, even if they work in multiple locations or roles.

In short, Type 1 NPI is your personal identifier in the healthcare billing system. It ensures your services are recognized and reimbursed correctly by insurance companies.

What is Type 2 NPI?

A Type 2 NPI is a unique, 10-digit identification number assigned to organizations or group practices that provide healthcare services. This includes hospitals, clinics, nursing homes, or any healthcare entity that bills insurance as a group rather than as an individual provider.

Here’s what you should know:

• Who needs it? Any healthcare organization, company, or group practice that submits claims under the organization's name needs a Type 2 NPI.

• Separate from individuals: Unlike a Type 1 NPI, which is tied to a specific person, a Type 2 NPI represents the organization as a whole.

• Examples: A multi-specialty group practice, a physical therapy clinic, or a hospital system.

• Multiple locations: If an organization has multiple branches, each location might need its own Type 2 NPI, depending on how billing is set up.

In short, a Type 2 NPI identifies the organization providing the service, not the individual healthcare provider. Both NPIs often work together—individual providers use their Type 1 NPI for personal identification, while the organization uses its Type 2 NPI for billing claims.

When to Bill Under a Group NPI and When to Use an Individual NPI

Billing in healthcare can get tricky, especially when it comes to deciding whether to bill under a Group NPI or an Individual NPI. The choice depends on your role, the structure of your practice, and how claims are processed. Let’s break it down to make it simple.

When to Bill Under a Group NPI

You should bill under a Group NPI when:

You’re part of a group practice or organization. If services are rendered under the umbrella of an organization, claims typically go through the group’s Type 2 NPI.

The organization employs multiple providers. Each provider may use their Type 1 NPI to identify who performed the service, but the claim is submitted using the Group NPI for reimbursement to the organization.

Payments are directed to the organization. The reimbursement from insurance companies or payers goes to the group or entity rather than directly to an individual provider.

Example: A physical therapy clinic with multiple therapists would bill under its Group NPI to ensure all payments are processed for the clinic as a whole.

When to Use an Individual NPI

You should bill under an Individual NPI when:

You’re a solo practitioner. If you’re working independently, all claims should be submitted using your Type 1 NPI since you’re both the provider and the entity receiving payment.

You’re working as a contractor. Some organizations may require contracted providers to submit claims independently using their Type 1 NPI.

You receive payments directly. In this scenario, reimbursements are tied to you as an individual rather than an organization.

Example: A psychologist running a private practice would bill under their Individual NPI since they operate as a sole provider.

How Group and Individual NPIs Work Together

In many cases, both NPIs are used together. For example:

• A claim might list the Group NPI in the billing section and the Individual NPI in the rendering provider section.

• This allows the payer to know which provider performed the service while ensuring payment is directed to the organization.

Do You Need a New NPI for Each Location?

1. For Individual Providers (Type 1 NPI)

• No new NPI is needed.
  If you’re an individual provider with a Type 1 NPI, it stays the same regardless of where you work.

• Why? Your Type 1 NPI is tied to you personally, not to a specific location. Even if you work in multiple locations or move to a new practice, your NPI remains unchanged.

Example: A traveling physical therapist who provides services in various clinics uses the same Type 1 NPI everywhere.

2. For Organizations or Group Practices (Type 2 NPI)

• It depends on billing and structure.
  If your organization operates multiple locations, you may need a separate Type 2 NPI for each location if:

Each location has a distinct tax identification number (TIN).

Claims are processed separately for each location.

• When a new NPI is not needed:
  If all locations fall under the same TIN and are billed as a single entity, one Type 2 NPI can cover all locations.

Example 1: A hospital system with separate billing departments for its branches might assign a unique NPI to each location.
Example 2: A group practice with multiple offices but a single billing department may use one NPI for all locations.

3. Using a Subpart NPI

Organizations can assign a subpart NPI for individual locations instead of obtaining a completely new NPI. This helps with tracking claims and operations while staying linked to the primary organization.

Do You Need an NPI Number If You Don’t Bill Insurance?

The short answer is yes, in most cases. Even if you don’t bill insurance, having an NPI number is often required to comply with healthcare regulations and streamline certain processes. Let’s explore why.

When You Do Need an NPI Number

1. Participation in HIPAA Transactions
   Even if you don’t bill insurance, if you’re involved in any HIPAA-compliant healthcare transactions (e.g., sending referrals, patient records, or working with clearinghouses), you’ll need an NPI number.

2. Credentialing or Enrollment
   Many healthcare networks, government programs (like Medicare or Medicaid), and third-party payers require an NPI for credentialing, even if you don’t bill them directly.

3. Collaboration with Insurance-Billing Providers
   If you work alongside providers or organizations that bill insurance, they may require your NPI for claim submissions, even if you don’t personally bill.

4. State Licensure or Compliance
   In some states, obtaining an NPI number is part of the licensing or registration process for certain healthcare providers.

When You May Not Need an NPI Number

• If you operate completely outside the healthcare billing system, such as providing purely cash-based or concierge services, you may not need an NPI.

• However, even in this case, having an NPI can be beneficial for referrals, collaborations, or if your practice model changes in the future.

Do Nurses Have an NPI Number?

Yes, many nurses are eligible to obtain an NPI number, but whether they need one depends on their role and responsibilities. Here’s a breakdown:

1. Nurses Who Need an NPI Number

Nurses who provide independent healthcare services and bill insurance for them must have an NPI. This includes:

• Nurse Practitioners (NPs):
  Nurse practitioners often work as independent providers, prescribing medications, diagnosing conditions, and billing for services. They are required to have a Type 1 NPI.

• Certified Nurse Midwives (CNMs):
  If a nurse midwife bills insurance for maternity or birthing services, an NPI is mandatory.

• Clinical Nurse Specialists (CNSs):
  Clinical Nurse Specialists providing direct patient care and billing for their services also need an NPI.

• Registered Nurses (RNs) or Licensed Practical Nurses (LPNs) Working Independently:
  If RNs or LPNs deliver reimbursable services under their own name or act as independent contractors, they need an NPI to bill insurance.

2. Nurses Who Don’t Typically Need an NPI

Not all nurses need an NPI. For instance:

• RNs and LPNs working under a physician’s or organization’s billing structure generally don’t require their own NPI. The services they provide are billed under the employer’s NPI.

• Nurses in administrative, support, or educational roles that don’t involve direct patient care or billing usually don’t need an NPI.

3. When a Type 2 NPI is Needed

If a nurse operates a healthcare business, such as a home health agency or nursing practice, they may need a Type 2 NPI for the organization.

How to Get an NPI Number

Obtaining an NPI number is a straightforward process and can be done online for free. Follow these simple steps to get your unique identifier:

Step 1: Gather Your Information

Before starting, ensure you have the following details:

• Your personal information (name, date of birth, Social Security Number).

• Your healthcare provider credentials (e.g., license or certification).

• The taxonomy code(s) that describe your provider type (e.g., family physician, nurse practitioner).

• Your business address and contact information.

• Employer Identification Number (EIN), if applicable (for organizations).

Step 2: Visit the NPPES Website

Go to the official National Plan and Provider Enumeration System (NPPES) website: https://nppes.cms.hhs.gov.

Step 3: Create an Account

1. Click Create or Manage an Account to register as a new user.

2. Provide your email address, create a password, and follow the instructions to verify your account.

Step 4: Complete the Online Application

1. Log in to your account.

2. Select Apply for an NPI and fill out the application form.

3. Enter your personal or organization details accurately.

4. Choose the appropriate taxonomy code to describe your healthcare specialty.

5. Indicate whether you’re applying for a Type 1 (individual) or Type 2 (organization) NPI.

Step 5: Review and Submit

• Double-check all information to ensure accuracy.

• Submit your application.

Step 6: Receive Your NPI

Once submitted, your NPI is typically assigned within 1-5 business days. You’ll receive a confirmation email with your NPI number once it’s ready.

Final Words

Understanding the difference between NPI Type 1 and Type 2 is essential for healthcare providers and organizations. Whether you’re an individual provider working independently or part of a group practice, choosing the right NPI type ensures your claims are processed smoothly, your billing is compliant, and you avoid unnecessary headaches.

However, navigating the application process or deciding which NPI type fits your needs can sometimes feel overwhelming. That’s where HMS USA LLC comes in.

If you’re facing challenges in obtaining an NPI—whether for yourself or your organization—we’re here to help. Our experts can guide you through the entire process, from understanding the requirements to completing the application efficiently.

Let us handle the complexities so you can focus on what matters most: delivering exceptional care to your patients. Contact HMS USA LLC today to get started and take the stress out of managing your NPI needs