How Change of Ownership (CHOW) Affects NPI Number

One of the most common mistakes in medical billing and rejected claims is inserting a wrong NPI number or a missing NPI number. Insurance claims submitted to Medicaid, Medicare, or any health plans are not paid without a proper NPI. So, what is NPI?

Medical provider and NPI

An NPI number, or a National Provider Identifier, is a unique 10-digit identification number given to each healthcare provider and institution in the United States. First introduced in 1996 as part of the Health Insurance Portability and Accountability Act (HIPAA), NPI’s were issued to improve the efficiency of EHRs. Moreover, they are used by the Centre for Medicare and Medicaid Services (CMS) and all other healthcare providers, healthcare plans, and healthcare clearinghouses to execute payment claims and all other monetary and administrative transactions.

When a healthcare provider or institution is enrolled in Medicare, transactions such as the transfer of assets to a new owner are cataloged by the CMS as a change of ownership (CHOW). Moreover, it requires notification from both buyer and seller, along with the approval of the CMDS Regional Office (RO). These transactions lead to the formal assignment of the NPI number and, sometimes, Medicare provider agreement to the new owner.

HIPAA mandates that any healthcare institution or private business that transmits any patient health data in an electronic health record (EHR) with regards to a transaction is required to get their NPI number issued. Once a healthcare provider gets their NPI issued, it cannot be altered or modified and remains with them irrespective of their position or where they live or work.

The easiest and the most reliable way to get an NPI number is to send an application through the National Plan and Provider Enumeration System (NPPES). It takes about 20 minutes for the application to fill and at least ten days to receive the NPI number. Individual healthcare providers are requested to create a username and password through Identity and Access Management System (I&A). Later, they are requested to log in to NPPES by inserting those credentials.

Moreover, providers can also apply for an NPI number through a paper or an organization on their behalf. NPI numbers are crucial for precise medical billing and accelerating revenue cycle management. As the number is mandated as per HIPPA regulations to track healthcare providers and reimbursement, any claim submitted with an incorrect, registered NPI will be discarded by a health plan.

When Does a CHOW Occur?

Even though a CHOW is followed by a TIN (Tax Identification Number) change, this doesn’t happen always. The RO typically approves the CHOW after reviewing the sales agreement. To determine the ownership, the RO will first determine whether an individual or a corporation has direct control of making decisions with regards to the operation of the supplier. Moreover, the RO is also responsible for determining which party bears the liability for the outcomes of the supplier’s operations.

NPI Number

Besides, a CHOW may also result from several scenarios involving leases. Whether the supplier’s operations are directly owned or leased or rented from an owner is immaterial. In any case, if the landlord agrees to directly make decisions involving the provider’s premises, it indicates that the landlord has entered into a management agency agreement or partnership agreement. Such transactions are called Medicare CHOW. Moreover, the renting of the entire or part of a healthcare institution used to render patient care will be considered a CHOW if it directly impacts the utilization, license, or certification of the institution enrolled in Medicare.

Activities between a healthcare provider and a management company do not typically lead to CHOWs. A management company that enters into an agreement with owners to offer management services, is regarded as an agent of the owners, as opposed to a partner or successor. This is the scenario even if the management company seems to have enough liberty in making decisions. Moreover, the case is similar when the management fee is based on the revenue or profit of the supplier. The only scenario that constitutes a CHOW is the one when the owner has given up all authority and liability for the provider organization.

Impact of CHOW on NPI Number

When the buyer and seller commence a CHOW, the supplier agreement in continuation, along with the CMS Certification Number (CCN), is allocated automatically from the seller to the buyer effective on the allocation date. It is crucial to remember that the buyer holds the ability to deny the automatic allocation before the transfer date. To deny the assignment, the buyer must file a participation application with the Medicare program.

what is an NPI number

The assigned provider agreement is still accountable to all statutes and rules, along with the terms and conditions under which it was issued. Any contractor will keep on modifying payments to the supplier to account for both underpayment and overpayment. Moreover, the buyer in a CHOW may obtain a new NPI or maintain the existing NPI.

Once the process of CHOW is complete, the seller will no longer be permitted to bill for services delivered after the processing of CHOW, and only the buyer is allowed to submit claims using the existing CNN. Also, it is crucial for parties participating in the processing of CHOW to understand that under the applied changes, any payment agreement for services delivered during the processing time is dependent on both parties to work out. Moreover, obtaining new NPIs for the buyer makes for a smooth billing transaction and tracking of receivables, along with avoiding NPI crosswalk issues, as well.