Medical practice licensing and setup

What do I need to open a new practice, urgent care or freestanding ER?

You need five things, and two of them depend on your state and your services. Every billing provider needs an NPI. Every business needs an EIN. A facility needs whatever license its state requires. A site that runs lab tests needs a CLIA certificate. Medicare billing needs an approved enrollment.

No single agency issues all five. CMS runs the NPI and CLIA systems, the IRS issues the EIN, the state licenses facilities, and your MAC approves Medicare enrollment. The table shows who owns each piece.

For multi-site rollouts, see the guide to credentialing new locations.

What is the difference between a type 1 and a type 2 NPI?

A type 1 NPI is for an individual provider and a type 2 NPI is for an organization. The NPI (national provider identifier) is the number health plans use to identify a provider in claims. The CMS NPI fact sheet defines type 1 as individual health care providers, such as physicians, nurse practitioners and sole proprietors.

The same fact sheet defines type 2 as health care organizations, such as hospitals, nursing homes and physician groups. Individuals are eligible for only one NPI. Organizations can have more than one.

A provider who is incorporated can hold both. The CMS fact sheet says an incorporated individual can obtain an NPI for themselves (type 1) and an NPI for their corporation or LLC (type 2).

What the NPI does not do

An NPI is only an identifier. The CMS fact sheet states that having an NPI does not ensure a provider is licensed or credentialed, does not promise payment, and does not enroll a provider in a health plan. It also says updating the NPPES record does not automatically update Medicare enrollment.

The format is fixed. Under 45 CFR 162.406 the NPI is a 10-position numeric identifier with a check digit in the 10th position.

How you apply and what you must keep current

The CMS fact sheet lists three ways to get an NPI: the online application at NPPES, a paper application, or a trusted organization applying for you through bulk enumeration or Electronic File Interchange. A covered health care provider must send NPPES any change to its required data within 30 days, under 45 CFR 162.410(a)(4).

Subparts need care. Under 45 CFR 162.408, NPPES can assign an NPI to a subpart of a provider, on request, if the subpart's identifying data are unique. Whether a location or department should get its own NPI is a question to settle with CMS guidance and your payers before you apply, not after.

Do I need an EIN before I can bill?

Most new practices and facilities get an EIN early, because other applications ask for it. The IRS says businesses and organizations need an EIN to manage their taxes. The CLIA application, Form CMS-116, has a field for the laboratory's federal tax identification number.

An EIN is free. The IRS says you never have to pay a fee for an EIN and warns about websites that charge for one. Online, you can apply for only one EIN per responsible party per day, and you need the responsible party's SSN or ITIN.

Which legal structure to form first is a legal and tax decision. Ask an attorney and a CPA. We do not advise on entity choice.

Does an urgent care need a CLIA certificate for in-house lab testing?

Yes, if the site tests patient specimens. CMS states that laboratories are generally required to have the appropriate certificate before they can begin testing. CLIA, the Clinical Laboratory Improvement Amendments, is the federal program that sets those requirements.

Apply on Form CMS-116 and submit it to your State Agency, per the CMS CLIA quick start guide of March 2026. Leave the CLIA number blank on a first application, since a number is assigned when it is processed. CMS says you pick the certificate that matches the highest level of test complexity the lab performs.

All CLIA certificates are valid for 2 years, according to the same guide. The fee depends on certificate type and test volume. A Certificate of Registration is a temporary certificate issued only to labs applying for compliance or accreditation, and it is valid for no more than 2 years.

Directors performing non-waived testing, including PPM, must meet education, training and experience rules under subpart M of the CLIA regulations, and proof goes in with the application. A change of ownership, name, location or director must be reported to the State Agency within 30 days. Check the FDA database for whether each test is waived, moderate or high complexity.

Which Medicare enrollment form does a new practice file?

It depends on who is enrolling. CMS lists the CMS-855A for institutional providers, the CMS-855B for clinics, group practices and certain other suppliers, and the CMS-855I for physicians and non-physician practitioners. CMS also says PECOS applications tend to process faster than paper applications.

A Medicare provider or supplier is not paid until it is properly enrolled, per the CMS NPI fact sheet. Getting the NPI and the license does not replace that step. Enrollment, CAQH, Medicaid and commercial payers are covered on our credentialing and enrollment page, so we do not repeat them here.

The CMS-855 forms are the Medicare step that follows setup. Each form has its own instructions on CMS.gov, so read the current version before you start.

What are the state licensing rules for freestanding emergency facilities?

They are set state by state, so there is no single national rule. The agency and the requirements differ by state. Check the licensing agency in the state where you will operate before you sign a lease.

Colorado is one verified example. Its 2019 bill HB19-1010 created a new license called the freestanding emergency department license, effective July 1, 2022, issued through the Colorado Department of Public Health and Environment, with the State Board of Health writing the rules.

That is one state and one point in time. Do not apply it elsewhere. Our state billing pages cover payer and billing rules by state, and the licensing agency in your state has the final word on facility licensure.

How early should setup start before opening day?

As early as the lease is signed, because several steps cannot be skipped and none of them are instant. We do not quote a typical duration for licensing or enrollment, because the official sources we reviewed publish no standard timeline.

Three points do have hard edges. A lab is generally required to hold its CLIA certificate before it begins testing. A Medicare supplier is not paid until properly enrolled. A covered provider must update NPPES within 30 days of a data change. Work backward from those.

• Confirm with the state agency which facility license applies, and what it needs from you.
• Decide the entity and ownership structure with your attorney and CPA, then get the EIN.
• Apply for the type 2 NPI for the organization and type 1 NPIs for each provider.
• Apply for the CLIA certificate if you will test specimens on site.
• File the Medicare and payer applications once every number above is in hand.

That list is a working checklist, not a legal sequence. Your state may require a different order, and some applications can run in parallel.

How do we handle licensing and business setup?

Licensing and business setup is one of our 22 services, and it sits next to credentialing and enrollment, payer contracting and medical billing. We have billed for US practices since 2018.

The scope of a setup project depends on your state, your entity and your services, so we scope it on a call. It is the first step for many urgent care networks opening new sites, and questions of law go to your attorney.

If a new practice also needs a website and local search presence, that sits under marketing for practices. For checklists you can use today, see our billing guides. To talk through your project, book a call.