HIPAA

# What is the Difference Between NPI and License Number?

- November 11, 2024
- Posted by Brian Bertrand

10 Sep

In the healthcare industry, all healthcare providers need to have the proper credentials and certificates to practice medicine and get reimbursed for the services they provide. This operation can be done smoothly and effectively if the provider has all practicing documents, like licenses and proper documentation for getting reimbursed on time without any technical glitches.

This creates ease for healthcare providers and insurance companies and regulatory authorities to perform their relevant tasks with cent per cent efficiency. In this article, we will discuss the about the NPT Number and License Number, the difference between NPI and license number and their administrative usage. We will also learn about the issuing protocols for these numbers as well. And you can also read about the time taken to get an NPI here.

## What is the NPI and License number?

The National Provider Identifier (NPI) number is the 10-digit code unique for each healthcare provider for effective electronic transmission of health information. This code is very essential for claim submission and reimbursement processes. Previous provider identifiers are now replaced by this standard code used in several transactions by insurance companies to make payments.

While the license number is the permission credential for the healthcare providers to start practicing medicine in the specific described jurisdiction, when you complete your medicine study and want to pursue a career in medicine, then it is necessary to get yourself approved by the regulatory authorities. After the approval, you get the license number to start practicing and providing medical services to the patients. Among all these credentials, NPI number and license are the important credentials which should be possessed by all the healthcare providers working individually or with any healthcare organization.

## Medical License Number VS NPI

### 1. Purpose and Scope

#### NPI:

In 1996, the HIPAA Act was passed, and NPI was introduced under this act to standardize the identification of healthcare providers in electronic records. Previously, difficulties were faced in identifying the healthcare providers due to confusion caused by similar names and working space information. Chances of error were also present in making payments or catching healthcare providers in case of any malpractice claim. Therefore, an NPI number was issued, and each provider is known by its unique number. NPI number has made the transactions smooth and effective with minimum revenue leak.

#### License Number:

In NPI vs license number, NPI is used for administrative purposes while license number is used for legal purposes. Healthcare providers get their medical degrees from foreign and local medical schools, and it is not always verified that they have legitimate degrees and certifications to practice medicine. There are regulatory bodies in the US which check their personal or educational background to give authorization to them to work as medical practitioners. Each provider is granted a license upon verifying their skills and medical expertise.

### 2. Issuing authority

#### NPI:

C enters for Medicare & Medicaid Services (CMS) through the National Plan and Provider Enumeration System (NPPES) is responsible for issuing NPI numbers. CMS is the federal agency which has the duty to maintain the electronic records of healthcare providers. This agency specifically manages the Medicare and Medicaid programs and is responsible for smooth and easy transitions to the healthcare providers.

#### License Number:

The license number varies from state to state, and healthcare providers get a separate license for working in each state. In comparing license number vs NPI, NPI is unique and specific for all states while license number is different from state to state. Medical boards and regulatory authorities are responsible for verifying all information about the providers and issuing license numbers to them. These bodies verify all the medical degrees, certifications and training licenses from the primary issuing bodies, and after being assured about the educational and skill level of the candidate, a medical license number is granted.

### 3. Format and structure

#### NPI:

It is a 10-digit code including all the digits like 1 and 2 randomly ordered to make a unique number. This number is assigned to each healthcare provider to avoid duplication in the health information. This number contains no personal information like name, educational background and working space details. Doctors and other providers like nurses, technicians and physician assistants are also applicable for getting NPI number.

#### License Number:

The license number usually denotes the provider’s practicing ability. Therefore, these numbers are alphanumeric and contain both digits and letters. The license number also denotes the educational level and year of licensure. If we look for a medical license number example, it might start with the word “MD” and be followed by some number. In many other states, it is purely numeric, and that shows its diversity in different states.

### 4. Validity and renewal

#### NPI:

The NPI number is permanent, and it never expires. NPI numbers are issued to standardize the identity of healthcare providers; therefore, changing the NPI number for providers will dissolve the whole reason for issuing this. It remains permanent and the same for the entire career, irrespective of change in location, medical services and employment. However, it is essential to update your information, including contact information, working space, and other details, from time to time.

#### License Number:

The license number has different features in this regard, as it is not permanent and needs periodic renewal. It often changes with changes in specialty, employment, and state. Health providers need to get it renewed every 1 or 3 years by maintaining continuous education standards. After a specific duration, again verification is done to determine whether the medical practitioner is following the guidelines of regulatory authorities or not. They need to get an education continuously to remain competent enough to provide medical services. Their license can be suspended in case of violation of rules.

## Importance of NPI and license number in healthcare

### Enhancing Healthcare Efficiency

NPI number is essential to streamline the transactions smoothly without any error. Administrative burden and revenue leaks are minimized using NPI numbers. In case of any malpractice claims, it is easy for regulatory bodies to identify the practitioner and get records of his medicine practice history.

License number ensures that only professional well-skilled providers are hired and provide medical services. This maintains high standards of healthcare and increases the trust of patients and doctors.

### Ensuring the Safety of Patients

Both numbers were introduced to enhance patient safety. According to records, malpractice claims and medical errors were increasing with every passing year, and there was no system to verify the professionalism of providers. That’s why these numbers were introduced for the sake of patient safety. Now, patients are more satisfied and at ease knowing the strict mechanism of verification and credentialing.

### Reduce Errors and Fraud

NPI numbers have made the claim and reimbursement process transparent and smooth, reducing the chances of error and delays. Both insurance companies and providers remain protected from unnecessary processes and errors. Fraudulent activities are also reduced. License numbers help the regulatory authorities catch quacks and reduce fraud.

## Does Every Provider Need an NPI and License Number?

No, not every provider is supposed to get the NPI number. It is only necessary for those practitioners who are registered with Medicare and Medicaid programs to get NPI to maintain records in the health records. However, getting the NPI number at the start of their career is recommended to maintain clear records of healthcare information, even if they are not registered with the Medicare and Medicaid program. There are generally two types of NPI numbers:

#### NPI Type 1:

It is the code for healthcare providers who practice medicine individually at their private clinic. NPI eligibility is not changed with different office locations, employment records and public or private practice. It just makes you identify in the healthcare system.

#### NPI Type 2:

It is an organizational code and acts as unique administrative code for healthcare organizations and practices having number of employees. NPI type 2 helps your organization to get credentialed with the insurance company as a single entity rather than being credentialed separately for each individual.

While talking about the license number, it is obligatory for each healthcare provider to get the license as it gives you permission to practice medicine and helps the healthcare providers to remain protected from malpractice claims.

## Conclusion

NPI and license number are two different credentials that healthcare professionals must acquire to practice medicine and get reimbursed for services. The NPI number is the unique number given to each individual to remain clear in the health records. It is necessary to get reimbursed for Medicare and Medicaid medical services. It is permanent, and there is no need to renew it.

The difference between an NPI and a license number is that an NPI is required for administrative protocols, while a license number is granted for legal protocols.

Every provider needs to have a license number to start practicing medicine, and it varies from state to state. Every practitioner is supposed to have a license, while an NPI is optional. Both numbers enhance healthcare and providers’ credibility.

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