What Is Taxonomy Code in Medical Billing and How To Use It Correctly?

what is taxonomy code in medical billing

What is a taxonomy code in medical billing? You may be surprised to learn that almost all healthcare providers use at least one taxonomy code when identifying their specialty. It’s an important additional identifier in the billing process, but there’s a bit more to it.

Learn more below about taxonomy codes and how they differ from NPI numbers. PracticeForces, a local medical billing company in Florida, can also provide more insight into how to use your taxonomy code to your practice’s full advantage.

 

What Is a Taxonomy Code?

Healthcare providers use taxonomy codes to self-identify their specialty. Besides determining which field a healthcare provider works in, taxonomy codes are an important part of data collection, records management, and insurance reimbursement. 

There’s an established collection of taxonomy codes comprised of unique alphanumeric codes organized into three separate levels: 

  • Provider Grouping
  • Classification
  • Area of Specialization

 

NPI vs. Taxonomy Code: What’s the Difference?

Taxonomy codes are not NPIs. The relationship is that a healthcare provider cannot receive an NPI without a taxonomy code. However, these two distinct codes serve different purposes, especially when it comes to the billing process.

National Provider Identification

The Centers for Medicare & Medicaid Services has a National Plan and Provider Enumeration System in place. It gives a healthcare provider a unique ten-digit National Provider Identifier for insurance reimbursement, patient referrals, and prescriptions. 

All HIPAA-covered healthcare providers must apply for an NPI. Without one, most insurance companies won’t honor reimbursements, and pharmacies won’t fill prescriptions.

Taxonomy Code

Before applying for an NPI, the provider chooses which taxonomy code fits their specific field. An NPI identifies the provider for payment, but the taxonomy code distinguishes the specialty field in which they’re submitting a claim for healthcare services. 

 

Tips For Using Your Taxonomy Code Correctly

So, what is taxonomy code in medical billing terms? A healthcare provider uses their taxonomy code as a secondary identifier (on top of their NPI code). The point is to strengthen the claim submission so that the practice receives the revenue it’s due, whether that’s a Medicare or commercial claim.

Taxonomy codes also play a vital role in data collection and determining patterns in different specialties. Skewed data can sorely impact the reimbursement process, so accuracy is important when submitting these taxonomy codes.

What happens when multiple taxonomy codes pertain to the services? For example, a primary physician who offers addiction therapy will have a specific code for the addiction services with a different taxonomy code for their mainstream services. Using the right code for the treatment matters for data purposes and for getting paid.

What is a taxonomy code in medical billing compared to an NPI? As we’ve seen, the NPI is an essential entity code more frequently used than a taxonomy code. However, having both is an important requirement for all healthcare providers who want a chance to streamline their billing and coding for better returns.

Would you like to learn more about how nailing taxonomy codes and other identifiers can increase revenue for your medical practice? Call 727-202-5429 to hear about PracticeForces’ strategic medical billing solutions in Clearwater, Florida.

Parul Garg, CEO and co-founder of PracticeForces, has significantly contributed to the growth of over 1,000 U.S. medical practices through her expertise in medical billing and coding since the company’s inception in 2003. With a background in Computer Science and an MBA in Human Resources, her leadership and AAPC-certified coding skills have been pivotal in managing the company’s operations effectively.

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