Taxonomy Codes – Why They Are Important

What the heck is a taxonomy code and why is it important? Taxonomy Codes are an administrative code set for identifying the provider type and area of specialization for health care providers. They are alphanumeric and are ten characters in length. Taxonomy codes allow providers to identify their specialty. A provider can have more than one taxonomy code.

Taxonomy Codes have 3 distinct levels. Level I is the provider type which is a
major grouping of health care providers. For example: Dentists, Osteopathic Physicians, and Chiropractors.

Level II is Classification or a more specific service or occupation related to the provider type.

Level III is the Area of Specialization. This is a more specialized area of the classification in which a provider chooses to practice or make services available. This is usually based upon the sub-specialty certificate.

Taxonomy Codes allow the provider to identify their specialty at the claim level so this can directly affect your reimbursement from insurance companies. If you have an inaccurate taxonomy code linked to your NPI number then your services may be paid at a lower reimbursement rate, or outright denied by an insurance company.

For Example: If you are a Pediatric Surgeon and you pick a taxonomy code for just straight Pediatrics, your services may be denied. You would need to pick the more specific code of Pediatric Surgeon (at Level III) in order to ensure proper reimbursement for your services.

If you have more than one specialty you can pick more than one taxonomy code. In the NPI system if you have more than one taxonomy code you do have to indicate which one is primary.

Insurance carriers are going to start to request (then require) that you have the taxonomy code on claims when they are submitted. They are going to be in box 33b on the CMS 1500 form. If a provider has more than one specialty it will be important that they put the appropriate taxonomy code for the service they are billing for on the claim.

For Example: I have a provider who is a DO and does osteopathic manipulation. He is also certified for treating drug addiction. This may seem like a strange combination, but it is actually genius. People who are addicted to Oxycodone were prescribed the drug due to pain. Now they are addicted and need to be treated for the addiction, but many still have the pain. He can treat their drug addiction, and also relieve their pain with osteopathic manipulation.

Ok, I got a little off track. The point is, if he is billing for services that are treating the drug addiction, then he should have the taxonomy code for the addiction medicine on the claim. If he is billing for the osteopathic services, then the taxonomy code for osteopathic medicine should be on the claim.

Picking the correct taxonomy code is extremely important because it can directly affect your reimbursement by insurance companies. If you are not sure the correct taxonomy code is on file with NPPES (NPI system) then you should double check it. Better safe than sorry.

Here is a link to a web site that has a listing of taxonomy codes.

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