National Provider Identifier: Leveraging the regulation to help improve health plan operational efficiencies

The administrative simplification provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) require the Department of Health and Human Services (HHS) to establish national standards for electronic healthcare transactions. This includes assigning healthcare providers a National Provider Identifier (NPI), a 10-digit numeric provider identifier that will be used in standard electronic transactions, such as healthcare claims. As of a legislated date of May 23, 2007, each participating provider will have one and only one NPI, regardless of practice locations or settings.

Many health plans do not yet fully understand that complying with NPI could significantly impact their business processes and operations and, therefore, may require more than just a short-term information systems fix. Consequently, accommodating NPI should be viewed by health plans as both a regulatory compliance effort and an opportunity to achieve long-term and strategic administrative gains through enhanced operational efficiencies based on standardization and simplification.

NPI overview

All healthcare providers, whether they conduct transactions electronically or on paper, are eligible to apply for an NPI but only "covered" healthcare providers must obtain and use an NPI in standard electronic transactions. A "covered" healthcare entity is defined as health plans, healthcare clearinghouses and healthcare providers that transmit electronic standard transactions in connection with a transaction for which the Secretary of HHS has adopted a standard. These transactions include:

An NPI is intelligence free (containing no specific information about a provider's address, specialty, type of service rendered or the state in which the provider is licensed) and will be issued in two categories for healthcare providers: Type 1 for individual healthcare providers/practitioners (i.e., people) such as chiropractors, dentists, dental assistants, medical technicians, radiologists, nurses and doctors; and Type 2 for healthcare organizations (i.e., legal inanimate entities) such as hospitals, nursing homes, and home healthcare agencies. Of course, there are nuances within both NPI types, and the Centers for Medicare and Medicaid Services (CMS) provide guidance to determine whether a business is eligible for an organization NPI.

NPI implementation

Industry implementation of NPI is not as simple as it may seem. On the surface, standardizing provider identifiers appears logical and something IT can simply "translate." However, NPI implementation is a complex business issue that signals a paradigm shift in the healthcare industry: providers, not payers, will now determine how to enumerate themselves regardless of contract type, line of business, location, specialty and/or fee schedule. Adding to the complexity is the parallel adoption of these provider identifiers by the health plan industry, which for years has perpetuated the use of multiple proprietary provider IDs with lack of concern for standardization. These multiple identifiers were generated to work around payer administrative issues or system limitations, for example, to facilitate accurate claims payment related to creative provider contracting.

Determining readiness

Health plan executives should ask themselves the following key questions to determine if they are prepared to manage the technical and business impacts of NPI compliance: Do we have fully delegated contracts? Are they Independent Practice Associations or medical groups? Do they submit encounter data? Will we require these organizations to enumerate? How will we handle atypical providers? How will our financial reports roll-up? NPI or legacy? Can our financial processes handle it? How will historical reporting be affected by NPI? How will we transact business with non-healthcare providers? Enrollments from employers? Primary Care Physician changes from members? How will our organization handle disparate timelines for electronic and paper claims and their use of NPI? Will we require NPI on paper claims? Do we have a transition plan to support either format? How will we be able to handle NPI-only submitted transactions before the compliance date? Is our business prepared to support exceptions resulting from inaccurate provider data? How will our organization cleanse provider data during this conversion process? If the regulations are delayed or providers are given a grace period, have we planned for supporting multiple provider ID processing? To what degree will NPI adoption affect our customer, member, provider, employer and producer service channels? How does NPI impact our vendor relationships?

CHALLENGES AND PITFALLS

Health plans will have limited control over NPI enumeration and should expect to experience considerable business model changes—existing provider contracts may need to be modified, plan operations (particularly customer service) may be affected and systems may require remediation. The chief challenge for most health plans will be mapping the copious identifiers embedded with contracting, reimbursement schedules, location/address detail and provider specialty logic to one NPI identifier, for both inbound and outbound transactions. Here are some common NPI implementation pitfalls that health plans should try to avoid: Pitfall 1: Exclusion of business owners from NPI solution development

Most health plans agree that a crosswalk is necessary to accept an NPI and "translate" it to its legacy counterpart. However, health plan executives who simply assign this task to IT personnel will not produce a holistic and balanced business process. Implementing NPI is more a business implementation issue than a systems fix. Efforts should start with a holistic, cross-organizational assessment of the transactions that use provider identifiers as well as the ways these identifiers are used to adjudicate claims, answer provider and member inquiries, and generate internal and external reports. Pitfall 2: Poor provider data

Many health plans already struggle with maintaining accurate provider data, from the correct spelling of a name to correct address and license number. Moreover, due to data entry errors, it is possible for a single provider to have multiple records within a health plan's system. A crosswalk built atop a foundation of inaccurate provider data may lead to poor "mapping," which in turn may produce inaccurate claims adjudication and payment and lead to increased provider and member dissatisfaction and increased administrative costs. Clean provider data is a critical aspect to crosswalk effectiveness and sustained administrative efficiency after the compliance date. Pitfall 3: Insufficient business partner and provider communication

Failing to engage business partners that rely on data containing provider identifiers or provider files can produce an administrative disconnect. Health plans should communicate with their business and trading partners throughout the transactional assessment about how they intend to implement NPI. Similarly, omitting robust provider education and communication from an NPI implementation plan could lead to increased provider confusion and administrative breakdowns. Pitfall 4: Myopic gap assessment

Focusing solely on impacted transactions and translation may allow a health plan to accept standard electronic transactions with NPI, but it may not necessarily support other health plan operations. Effective NPI compliance is based on an organization's ability to accept as well as remit NPI on standard electronic transactions for which the Secretary of HHS has adopted a mandate and to effectively apply NPIs to the administration of health plan operations. Pitfall 5: Static crosswalk

Crosswalks rigidly designed and driven from one data element or field (i.e., ZIP code) can limit a health plan's ability to effectively map transactions to its appropriate legacy identifier. A crosswalk's effectiveness should be based upon its ability to address one-to-many and many-to-one enumeration scenarios and to allow real-time cross referencing of old and new identifiers. Additionally, exception processing should be well planned and designed, as there inevitably will be implementation defects and issues that should be addressed. Identifying and mitigating these potential problems can be critical to achieving a smooth transition.

Steps to effective compliance

Effective NPI compliance can be more than just mandated compliance—it can be the foundation for health plans to help reduce NPI disruptions and realize short- and long-term strategic and tactical objectives. Here are some steps to prepare for the May 23, 2007 compliance date:

1. Mimic Medicare's implementation timeline. Organizations should strive to align their NPI implementation plan with Medicare's implementation timeline to create administrative transparency among the medical delivery system.

2. Focus on provider education. A level of concern and confusion exists among the provider community regarding NPIs and how health plans are going to use them. Plans should create an extensive provider education strategy that covers NPI holistically, including potential provider administrative impacts as well as the health plan's implementation process and timeline.

3. Collect and cleanse provider data immediately. Due to the delay in the federal government's position on when and what type of data will be available regarding enumerated providers, it is imperative that health plans reach out to their provider networks to start collecting NPIs now. To assist with provider data cleansing, numerous vendors are collecting provider NPI information, adding it to their provider data cleansing applications, and making it available for purchase.

4. Verify that claims processing can accept NPI. Since a large portion of health plans use front-end technology to help keep their auto-adjudication rates high, it is imperative for plans to make sure that their front-end systems are able to accept NPI on electronic transactions as well as the new paper claim form, which became available Oct. 1, 2006. This is especially true for Medicare crossover claims.

5. Discuss timelines and needs with trading partners. It is imperative that health plans begin discussions with business and trading partners, vendors and practice management companies to discuss implementation timelines and needs to help facilitate a smooth transition by the compliance date.

6. Determine downstream data requirements. Health plans must take exceptional care to determine the depth and breadth of data requirements downstream from adjudication, so that other operational areas dependent on data with provider identifiers will be able to continue to operate efficiently. This is especially true for actuary, external reporting, medical economics and data analytics.

7. Educate customer service representatives. Health plans with disparate customer service and legacy applications must confirm that their customer service representatives, as well as other business process areas that use or rely on provider identifiers, have access to and understand the use of both legacy identifiers and NPIs.

8. Update Web portals. Health plans that allow members, employers and providers to send/view/edit standard transactions through Web portals and self-service applications will need to consider how to integrate legacy provider information with NPI consistently.

9. Plan how to adjudicate paper claims. Health plans that use OCR/scanning technology in front-end processing to enter paper claims into their system will need to plan how paper claims that do not have NPI will adjudicate in addition to preparing their systems to be able to accept the new claim form.

10. Understand state laws on use of NPI. Compliance and regulatory officers of multi-state health plans are encouraged to develop an understanding of state laws regarding the use of NPI. Some states, such as Wisconsin, are requiring NPI to be used on all claims regardless of medium .

NEAR- AND LONG-TERM OPPORTUNITIES

The transition to and use of NPI within the delivery of medical care will have a ripple effect throughout the medical delivery system for years to come—from providers to health plans, clearinghouses, billing companies and pharmacies. Health plans that develop an NPI solution that is flexible and easily adaptable will be in a better position to address short-term environmental, technical and operational challenges and achieve long-term gains through enhanced operational efficiencies.

Near-term opportunities include: Compliance: Fundamentally, attaining NPI compliance is a short-term opportunity, but it will keep health plan operations in line with Medicare and help support an organization's ability to compete in the marketplace. Administrative Efficiencies: Reducing administrative costs and increasing efficiencies via automated throughputs are critical to maintaining a competitive medical loss ratio (MLR). Through effective NPI implementation, health plans can sustain—and possibly improve—administrative efficiencies by using the effort to address manual and automated business process flows.

In addition, health plans can use NPI compliance as an opportunity to set the foundation for addressing impending legislation and other long-term strategic objectives. Additional long-term benefits include increased standardization, efficiency, organizational readiness and flexibility.

While there is no canned solution to NPI implementation, attaining compliance should start with avoiding the pitfalls and incorporating some or all of the steps outlined above. With the effective date just months away, health plans should immediately begin developing an NPI solution.

DELAY POSSIBLE

In November and December 2006, the National Committee on Vital and Health Statistics and the Workgroup for Electronic Data Interchange recommended that NPI implementation be delayed. However, these recommendations do not necessarily mean that health plans have a lengthy reprieve from the May deadline. If the government does grant a delay in implementation, health plans should consider using any extension to expand upon their efforts to: Validate provider data. Continue/expand education, internally and externally. Conduct end-to-end testing. Collaborate with vendors. James Brock is principal, Albert Ghafari is senior manager and Yvette Schmitter is senior consultant for Deloitte Consulting LLP, Life Sciences & Healthcare Industry.