Entity Codes The Building Blocks of Healthcare imageIf you are working for any healthcare organization, you must have heard about entity codes. Understanding the basics of these codes is essential for the impeccable functioning of the medical billing process. Entity codes are essential because they ensure that the right provider is billed for the services. In this blog, you will get to know everything about these codes, including their types, significance, common errors, and preventive measures.

What are Entity Codes in medical billing? 

Entity codes in the medical world are defined as the alphanumeric or numeric identifiers used for the representation of healthcare entities. This includes hospitals, physicians and practitioners, health clinics and group practices, pharmacies, health plans, and laboratories. These identifiers particularly help to identify which provider and healthcare facility is involved in patient care and treatment.

Entity codes ensure effective and seamless coordination between healthcare providers, insurance companies, and government agencies. This could happen as codes facilitate revenue cycle management, accurate record-keeping, and timely reimbursement.

Types of Entity Codes

Entity codes are used to represent different healthcare providers, healthcare facilities, pharmacies, laboratories, and other health-related organizations. The following table sums up all the various facilities involved in the healthcare system.

Entity Type Description
Physicians (Doctors) Individual provider including specialists and general practitioner.
General Hospitals General acute care hospitals that provide emergency treatment for a vast range of diseases.
Nurse Practitioners (NPs) Primary care providers with advanced practice.
Specific Hospitals Speciality hospitals provide cure for a specific medical disease.
Independent Clinics Independent healthcare clinics offer special services
Nursing Homes Nursing homes provide services to old people for a longer span of time.
Commercial Health Plan These are basically private health insurance plans.
Medicare Federal health insurance plan for elderly people above 65.
Medicaid  State level insurance plan for people with low income.
Clinical Laboratories   Laboratories offer diagnostic and clinical testing.

Significance of Entity Codes

Following are some of the reasons that depict the crucial role of accurate entity codes in revenue cycle management in particular and healthcare systems in general.

Significance of entity codes

Identification of a particular provider

Entity codes help to distinguish healthcare providers based on their specialties and services rendered. By doing this, a particular provider or any specific healthcare organization can easily be identified.

Network Verification

Health insurance companies verify whether the provider or health organization has entered their network or not. Entity codes provide an easy way to verify eligibility, which directly impacts the reimbursement.

Precise Claim Processing and Submission

Entity codes allow the seamless processing and submission of claims. Insurance companies and other regulatory bodies rely on entity codes to maintain a clear record of services provided. This reduces the margin of errors and hence a lowered rate of claim denials.

Regulatory Compliance

Entity codes are used by regulatory bodies to maintain data security and protection. Compliance is only possible if the data is securely transmitted in electronic transactions following the set standards and guidelines.

Prevention of Frauds

Entity codes provide legitimacy to healthcare providers. By doing this, fraudulent claims can easily be detected, and the misuse of the payment is prevented.

Common Entity Code Errors and their Impact

Entity Code Errors Impact
1 Selecting the Incorrect Entity code Payment can be sent to the wrong provider, resulting in confusion, denials,and delays in the process.
2 Incomplete Entity Code Essential entity codes, such as the provider’s taxonomy code or the insurance company’s identification code, are missed by mistake. This directly rejects the claim.


3 Outdated Entity codes An outdated entity code means an outdated NPI for the provider. This leads to claim denials and delays in reimbursement.
4 Non-Standard codes A non-recognized entity code causes revenue loss to the provider.
5 Incompatible Code Formats An incompatible code format for billing and coding results in technical errors. Claims are rejected on the basis of format incompatibility.

Some other entity related errors are listed below:

  • Wrong NPI or tax identification number: Using the wrong NPI or tax identification number is the major reason for claim denials and rejections. Delays in payment and administrative burdens are some other issues.
  • Mismatch of HICN: If the HICN on the claim does not match the HICN on the patient’s record, rejection of the claim is possible. The Health Insurance Claim Number (HICN) is used for Medicare claims.
  • Incorrect Member ID: An incorrect patient’s insurance identification number (Member ID) is another type of error. The submitted claim can be linked to the different insurance policies, potentially causing issues with reimbursement.

Preventive Measures to Combat Entity Code Errors

Preventing entity code errors is essential, as it has potential effects on revenue cycle management. Healthcare providers can prevent all the errors by simply considering the essential points listed below:

Preventive Measures to Combat Entity Code Errors

Keep Informed about the Latest Updates

The healthcare provider must be informed about all the latest changes in the guidelines of the entity codes. Regular checkups on the NPI and payer identification codes help to avoid major entity errors.

Accurate Patient’s Demographic Data

Mismatched or incomplete patient information can be a real challenge. Double check the demographic data, such as member ID, practice address, etc., before the submission of the claim.

Verify Patient’s Insurance Coverage

Some patients can switch their insurance coverage. In this specific case, the provider must double-check the insurance status and coverage of the patient. Pro-active verification reduces the risk of claim denials.

Use Authorized Sources to Obtain Entity Code

Use authorized sources such as the National Plan and Provider Enumeration System (NPPES) or any other authentic resource to get the NPI.

Accurate Payer ID

An accurate payer ID is crucial for successful claim submission. Verify the payer ID and make corrections if there are any errors.

How to get an entity code?

Applying for the entity code consists of some easy steps. One can enroll himself by just following these steps:

  • To get an entity code, the provider must check the eligibility criteria and ensure that he meets the criteria.
  • Create an account on the National Plan and Provider Enumeration System (NPPES) website.
  • Fill out the application form and provide the basic information, such as name, contact number, practice address, etc.
  • Select the type of NPI. NPI 1 is for individual providers, and NPI 2 is for healthcare facilities.
  • Submit additional documents if required.
  • After the submission of the application, the provider will receive a notification. The whole process will take a few weeks.
  • Update the NPI information at regular intervals.


In conclusion, entity codes are the building blocks of the healthcare industry. From the moment the patient registered itself to the reimbursement received by the provider, entity codes play their vital role. These codes ensure the accurate submission of the claim,  identification of the providers, and  timely reimbursement. If you are associated with any healthcare organization, you must understand how these codes work.

Choose Medheave to Avoid Entity Code Errors

Medheave Medical billing and coding experts have a professional approach to preventing all medical billing and  coding errors. If you are facing any issues related to entity code errors, hire Medheave as your reliable partner. An expert team of the company helps you combat all the complexities  that hinder the smooth functioning of revenue cycle management. It ensures a seamless and error-free reimbursement process. Contact us now for further details.

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