The short version
HIPAA requires one standard ID for providers on electronic health transactions such as claims, eligibility checks and referrals. That ID is the NPI. CMS issues it for free through NPPES. It is only a number, with no information hidden in the digits about where you work or what you do, and it stays with you for life.
Who needs an NPI
Any provider who sends electronic claims or other HIPAA transactions must have one. That covers doctors, nurse practitioners, dentists, therapists, pharmacists, chiropractors and most other licensed clinicians, plus hospitals, clinics, pharmacies, labs and suppliers. Many providers who don't bill also get one, because prescriptions and referrals ask for it.
Type 1 and Type 2
- Type 1 (NPI-1) is for individuals, including sole proprietors.
- Type 2 (NPI-2) is for organizations: groups, hospitals, pharmacies, nursing homes, and practices set up as a company.
A doctor in a group practice usually has their own Type 1 NPI, and the group has a Type 2. Claims show both: the doctor as the rendering provider and the group as the billing provider.
What an NPI is not
It is not a license, and having one doesn't mean someone is allowed to practice. It isn't Medicare enrollment either, which is a separate step in PECOS. It also isn't secret. Every active NPI is public and you can look it up.