DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland 21244-1850 
 
Center for Medicaid and State Operations 
                 
                    SMDL #06-020 
              September 19, 2006 
 
Dear State Medicaid Director: 
 
This is an urgent reminder to all State Medicaid programs that, as covered entities under the 
Health Insurance Portability and Accountability Act of 1996 (HIPAA), States must accept and 
use, by May 23, 2007, National Provider Identifiers (NPIs) in electronic transactions for which 
the Secretary has adopted a standard (i.e., standard transactions).  Please make certain that your 
Medicaid Management Information System (MMIS) is prepared to accept and use NPIs for all 
HIPAA defined health care providers.  You should also instruct such providers to apply for their 
NPIs if they have not already done so.    
 
Please review the following Centers for Medicare & Medicaid Services (CMS) announcements 
and guidance about the NPI to assist you in meeting the compliance date, as established in the 
January 23, 2004, Federal Register rule (69 Fed. Reg. 3434).   
 
Letter to Health Care Providers from the CMS Administrator (May 6, 2005)  
 
The CMS Administrator announced May 23, 2005, as the start date of enumeration for the NPI.  
The NPI is the standard unique health identifier that was adopted by the Secretary of Health and 
Human Services under HIPAA for all health care providers. 
 
The Administrators announcement letter: 
 
 Informs health care providers about the NPI; 
 Describes three ways to obtain an NPI; and 
 Provides guidance once the NPI has been obtained.  
 
The letter, which also provides contacts and resources, should health care providers have 
questions about the NPI, can be viewed at the dedicated NPI Web page on the CMS Web site at:  
http://www.cms.hhs.gov/apps/npi/01_overview.asp. 
 
The CMS Guidance Related to Subpart Enumeration for Covered Organization Health Care 
Providers and Responding to Providers 
 
Please be advised that Medicaid, as with all other health plans, cannot dictate how providers 
enumerate subparts.  Subpart determination is necessary to ensure that entities within a covered 
organization, that need to be uniquely identified in HIPAA standard transactions, obtain NPIs for 
that purpose.  Each State Medicaid program may want to develop a document similar to the   Page 2  State Medicaid Directors 
 
Medicare Expectations on Determination of Subparts by Medicare Organization Health Care 
Providers who are Covered Entities under HIPAA.  Any State document can encourage, but 
cannot require, subpart enumeration to mirror the Medicaid programs provider enrollment and 
assignment of current legacy provider numbers. 
 
If contacted, the State agency, or any State Medicaid program representative, should remind 
callers that the NPI is for use on all HIPAA standard transactions, not only the HIPAA standard 
transactions they conduct with Medicaid.  Callers should also be informed that Medicaid 
programs and other health plans cannot instruct providers on how to enumerate subparts.  The 
callers should be referred to the authoritative documents and other resources on the CMS NPI 
Web site, identified on page one, to help them make these decisions.  
 
Atypical Providers
 
Atypical providers are providers that do not provide health care, as defined under HIPAA in 
Federal regulations at 45 CFR section 160.103.  Taxi services, home and vehicle modifications, 
and respite services are examples of atypical providers reimbursed by the Medicaid program.  
Even if these atypical providers submit HIPAA transactions, they still do not meet the HIPAA 
definition of health care and therefore cannot receive an NPI.  Therefore, the MMIS must be 
prepared to accommodate the current legacy numbers for atypical providers.  
 
Medicaid Management Information System  
 
The MMIS must be prepared to accept and accommodate the NPI.  Methods that the State may 
use include remediation or the development of a crosswalk.  The State may want to consider a 
testing plan involving acceptance and processing of transactions with the NPI and legacy number 
in separate, phased-in stages.  
 
Please ensure that your NPI test plan includes testing with providers so that they receive 
appropriate reimbursement and are properly identified.  CMS has approved enhanced funding at 
the 90-percent Federal financial participation level for any of the MMIS-related gap analysis and 
remediation activities under an approved Advanced Planning Document.  
 
For more information on NPI, check the following Web site at:  
http://www.cms.hhs.gov/NationalProvIdentStand/04_education.asp#TopOfPage.  There are 
numerous downloads and links with information and instructions on how to apply.  
 
Because of the critically important role the NPI will play in future Medicaid reimbursement, we 
have been asked to keep the CMS Administrators office informed on the progress States are 
making to ensure their systems are NPI-compliant as of May 23, 2007.  We have asked our 
regional office systems staff to work closely with your staff to monitor and report to us the status 
of your systems readiness on a periodic basis over the next 12 months. 
 
  Page 3  State Medicaid Directors 
 
If you have any question concerning this letter, please contact Mr. Edward C. Gendron, Director, 
Finance, Systems and Budget Group, at (410) 786-1064, or by e-mail at:  
Edward.Gendron@cms.hhs.gov   
 
I appreciate your attention in addressing this effort and in making this transition successful.  
 
Sincerely,  
 
            /s/   
 
            Dennis G. Smith  
            Director 
             
cc: 
 
All CMS Regional Administrators 
 
All CMS Associate Regional Administrators 
  for Medicaid and State Operations 
 
Martha Roherty  
Director, Health Policy Unit 
American Public Human Services Association 
 
Joy Wilson 
Director, Health Committee 
National Conference of State Legislatures 
 
Matt Salo 
Director of Health Legislation 
National Governors Association 
 
Jacalyn Bryan Carden 
Director of Policy and Programs 
Association of State and Territorial Health Officials 
 
Christie Raniszewski Herrera 
Director, Health and Human Services Task Force 
American Legislative Exchange Council 
 
Lynne Flynn 
Director, Health Policy 
Council of State Governments