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Healthcare providers offering medical services of any sort encounter errors and challenges. The most common problem providers face during the medical billing process is claim denials from the payers for the billed entities. Insurance companies reject the claims due to missing or wrong entity codes.
An entity code is a specific number that identifies the services/entities billed in a claim. Each entity has its unique code. To understand entity codes and their role in medical billing, you must read this blog. Let’s discuss the entity codes in detail and find out what entities are exactly in medical billing.

Understanding Entities in Medical Billing

An entity can be defined as a person, thing, or place with an individual existence. According to this information, a business, medical institutes, organizations, corporations, and third-party medical billing companies are entities. Here, healthcare providers, patients, and medical services are also entities.
Entities play an important role in the medical billing process and any liabilities involved in the billing process. Entities can confuse medical billers when dealing with claim submission and denials. If a biller finds an error in the entity code, the issue can be in any of the entities involved in services. So, having a complete knowledge of entities and entity codes is a must for providers and billers.
This article provides detailed information on why entities are essential for the accurate use of entity codes in the medical billing process. Here, you will learn how entity code in medical billing plays its part in collecting payments from the payers for services rendered during the patient’s visit.

Types of Entity Codes in Medical Billing

Entity ID numbers refer to unique identifiers for a specific entity in a healthcare system. These codes are specifically assigned to different entities involved in the medical billing process, such as insurance companies, providers, patients, billing companies, and medical facilities. In medical billing, entity codes are not specified in a specific format, length, or characters. Entity codes in medical billing can be the combination of numbers, alphabets, or special characters as required. The different types of entity codes in medical billing are below.

Employer Identification Number (EIN)

Employer Identification Numbers (EINs) are used to identify businesses and their tax accounts.

National Provider Identifier (NPI)

In the USA, the National Provider Identifier (NPI) is used by healthcare providers and Health Organizations for administrative and financial transactions.

Health Plan Identifier (HPID)

Health Plan Identifier (HIPD) is a health plan identification number used for standard transactions.

Tax Identification Number (TIN)

This specific entity ID number is for healthcare facilities and businesses to manage tax purposes in the health industry.

Why is an Entity Code Essential in the Healthcare Industry?

Entity codes are crucial for accurate claim processing. Insurance companies can easily identify the provider with the help of their entity codes, which helps them in communication and coordination with the provider. Practices must provide identifiers like NPI, EIN, HIPD, and TIN, which are necessary during electronic transactions.
Entity codes are essential to ensure that the correct entities are billed in a claim and that the same services are not billed for Medicare, Medicaid, and other payers. Accurate entity codes minimize claim denials and multiple claim revisions during adjudication. Each entity has its unique code, and practices must understand its nature and accurate use. These entity codes can help practices classify the services according to the nature of their codes so that payers can quickly identify them.
Multiple claim rejections due to the wrong entity code affect the medical practices and the patients. Claim denials increase the practice’s workload, and patients need help understanding the bills due to the complex or missing information causing payment delays and rejections. So, using accurate entity codes when preparing a claim is extremely necessary.

Common Entity Code Errors During the Billing Process

Most errors happen due to lack of understanding of the entity codes while coding the services against the treatments and the procedures by the practices. If the billing team minimizes these errors, it can save the practice from claim rejections, revenue losses, wrong payment postings, Unbundling, and legal penalties. Here are some common entity errors providers should be aware of.

Wrong National Provider Identifier (NPI)

Adding the wrong NPI can cause problems for providers. It is a unique entity number for providers. If a provider submits a claim with missing or the wrong NPI number, their claim will be rejected.

Wrong HICN Number

A Health Insurance Claim Number (HICN) is a Medicare beneficiary’s identification number that determines eligibility for entities. Using the wrong HICN can lead to claim rejection due to incorrect verification.

Missing Entity Code

This mistake happens when the practices miss the entity code of any of the entities billed in a claim, which will cause claim rejection. Biller Mut uses the accurate code of each one of the entities mentioned in the claim.

Wrong Member ID

Payers will reject the claim because of the incorrect Member ID. This happens when the practices miss some of the patient’s information or mention the wrong details, give services to a patient who is not eligible, his insurance plan is changing, or submit a claim to the wrong insurance company.

Zip Code Error

Practices must ensure the last 4 digits of the zip code and the location of the practice is mentioned before submitting the claim.

Preventions for Entity Code Errors

Healthcare providers can avoid the errors they encounter on a daily basis by avoiding a few mistakes mentioned below:

Check Payer ID

The payer ID number mentioned must be verified as accurate while preparing a claim. Billers are advised to check the details twice before submitting the claim and make corrections if any errors are found.

Collect Accurate Patient Demographics

Healthcare staff should document patient demographics accurately before providing medical services so that Medical billers can easily mention them in the claims. Patient demographics contain personal information such as the patient’s Address, Member ID, patient history, and other relevant details.

Insurance Verification

Confirm patient insurance details when the patient visits the healthcare practice. This step can verify whether the patient has a change in his insurance plan or has been new insurance, saving the practice from claim rejections and payment delays.

Document the Admission Details

If a physician admits a patient for medical services, the practice must fulfill the admission criteria, verify patient details and history, and collect all the required documents. This will minimize coding errors and ensure the accuracy of the claims.


Understanding the entity codes and their correct use in medical billing while claim processing is crucial for seamless reimbursements. Errors in entity codes can cause claim denials and prolong payments. Practices can prevent claims rejections simply by using the correct entity code in medical billing and adhering to compliance. Struggling practices can outsource their medical billing to Physicians Revenue Group, Inc. to minimize claim denials, address entity codes, and maximize reimbursements, as the company offers comprehensive billing services across the USA to support and grow your practice revenue.