EINs and NPIs Explained

Managing a healthcare practice involves juggling various identification numbers. Let us help you keep them straight.

Closeup of hands of person filling out a form.

There are a lot of identification numbers involved when you run a healthcare practice. It’s easy to confuse them or the context in which you must use each type.  This article aims to demystify the different types of identifiers and provide clear answers to common questions.

Employer Identification Number (EIN)

Your EIN, often referred to as a Federal Tax Identification Number, is issued by the Internal Revenue Service to identify your business entity. The entity could be your professional limited liability company (PLLC), professional corporation (PC), or another entity type. This number will be associated with the business entity for its entire lifespan.

See our related article, “Should I Form an LLC? FAQs for Healthcare Practices”

Each entity must have its own EIN. Let’s say you filed “Practice A PLLC” and obtained an EIN. If you file a second business entity named “Practice B PLLC,” you would need a separate EIN for that new business entity. 

However, each business is assigned only one EIN. This means that even if your practice has various divisions or operates under multiple Doing Business As (DBAs) or assumed business names registered under a single business entity, that entity will still have one EIN.

To illustrate, assume you operate “Primary Care Direct” under Practice A PLLC. Then, several months later, you file an additional DBA for Practice A PPC called “Cold and Flu Urgent Care.” In this scenario, you would still only need one EIN. You would not obtain a second EIN unless you created an entirely new business entity (e.g., Practice B PLLC). 

What If you are a sole proprietor and conduct business in your personal capacity as opposed to through a legal business entity? In that situation, you can obtain an EIN or simply use your Social Security Number. However, if you plan to hire employees, an EIN becomes mandatory. Note that if you obtain an EIN as a sole proprietorship and later transition to a PLLC or other business entity, you’ll need to obtain a new EIN for tax filing purposes.

National Provider Identifier (NPI)

An NPI is a unique number related to billing for services rendered. The federal government issues NPIs to identify each individual provider or entity when billing claims as part of HIPAA standard transactions. It’s essential to distinguish between NPI Type 1 and NPI Type 2. 

NPI Type 1

You need an NPI type 1 when providing services as an individual. If you are a sole proprietor or an individual practitioner employed or contracted by an organization, you’ll apply for an NPI Type 1 using your Social Security Number. You will only ever have one NPI Type 1 assigned to you throughout your career.

NPI Type 2

Healthcare entities, in contrast, need an NPI Type 2 regardless of the entity’s size. In other words, if you operate a practice through a PLLC or a PC, you will need an NPI Type 2 for HIPAA standard transactions. To apply for an NPI Type 2 for your business entity, you’ll use your entity’s EIN for identification, not your social security number.

Remember the one-EIN-per-entity rule? NPIs work differently. A  single business entity may need multiple NPI Type 2s. If a practice has separate divisions or locations (referred to by CMS as “subparts”) rendered through the same legal entity, the practice may need additional NPIs. For example, hospitals that offer both acute care and pharmacy services would need a distinct NPI Type 2 for each of these subparts.

Get Legal Help

Maybe you need assistance obtaining an EIN for your medical practice. Or perhaps you need help determining the number of NPI Type 2s required for your multi-disciplinary practice. Working with an experienced healthcare attorney can help. If you operate in one of the states where we have licensed attorneys, set up a free consultation call to learn more.

This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader. It should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction

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