How NPI Numbers Help Protect You From Healthcare Provider

Healthcare fraud costs the industry billions of dollars every year. Some estimates suggest that fraud accounts for 10 percent of all healthcare spending in the United States. 

Fortunately, there are measures that healthcare organizations can take to protect themselves from fraudulent activities.

Chief among them is using an identification system with a detailed tracking process like National Provider Identification (NPI). 

This blog post will explain what NPI is and how it helps prevent healthcare fraud. If you work in the healthcare industry or are considering a career change, keep reading to find out more.

National Provider Identification Number

What Is a National Provider Identifier?

What Is a National Provider Identifier?

A National Provider Identifier (NPI number) is a unique 10-digit identification number issued to healthcare providers like physicians and nurses. 

NPI is used to verify providers’ identities and ensure they receive accurate work payments. The Centers for Medicare and Medicaid Services (CMS) created the system under the Health Insurance Portability and Accountability Act (HIPAA). 

The first three digits of the NPI represent the state where the healthcare provider is located. The next two digits represent the type of provider (e.g., MD for a physician, RN for the nurse, etc.). The last four digits are reserved for tracking purposes. 

How Do NPI Numbers Help Fight Healthcare Fraud?

How Do NPI Numbers Help Fight Healthcare Fraud?

NPI Numbers Help Reduce Duplicate Bills 

Duplicate billing occurs when a healthcare provider bills for the same service twice. This frequently happens with billing for lab work and other diagnostic testing

With duplicate billing, providers can easily commit healthcare fraud. However, since NPI numbers use SSNs as identifiers, many healthcare providers will only get billed once. 

NPI Numbers Prevent False Claims 

False claims are defined as a healthcare provider billing for a service they didn’t provide. False claims are a serious form of fraud that can lead to repayment of funds, fines, and even criminal charges. 

NPI numbers make it more difficult for healthcare providers to falsely bill for services they didn’t perform. 

NPI Numbers Help to Combat Fraudulent Billing Practices 

Billing practices that can lead to healthcare fraud include billing for services that were never performed and for excessive services.

NPI numbers help to combat these fraudulent billing practices by allowing healthcare organizations to see whether or not the service was provided. 

NPI Numbers Help with Avoidable Secondary Billing 

Healthcare providers should be billing for the services that they provide. However, sometimes providers will bill for a service that was not performed. This is known as avoidable secondary billing, another method for committing healthcare fraud. 

NPI numbers help prevent avoidable secondary billing by ensuring that providers are only billed for the services they provide.

In Summary

An NPI number helps prevent fraud by making it easier to track and identify providers.

When providers bill health insurance companies using a single identification number, those companies have a centralized database from which they can look up that number.  

While it is impossible to eliminate healthcare fraud, it can be reduced significantly by implementing a centralized identification system like the National Provider Identifier tool.