In the absence of an all-encompassing Provider Classification System, both ASC X12N and the National Provider System Workgroup from the Centers for Medicare & Medicaid Services (CMS) began work on identifying and coding an external provider code set that would be able to codify provider type and provider area of specialization for all health care related providers. CMS' intent was to provide a single coding structure to support work on the National Provider System, while X12N needed a single common code set for trading partner use. The two projects worked independently to some extent until April 1996 when the lists were coordinated and a single taxonomy code set was proposed. A sub-group of X12N TG2 WG15 (Provider Information Work Group) was charged with resolving differences in the two proposed taxonomy code sets. Their work resulted in a single taxonomy code set that both CMS and members of X12N found meaningful, easy to use, and functional for electronic transactions.

The sub-group initially started with the CMS draft taxonomy code set. This list incorporated all types of providers associated with health care in various ways, e.g., technologists or technicians who support or repair equipment/machinery, contractors, physicians, dentists, suppliers. A number of the providers offer health services, in concert with others, and do not or cannot bill independently for their services. The amount of research to validate and classify all providers using the proposed hierarchical structure was enormous. The X12N sub-group focused on health care providers who are licensed practitioners, those who bill for health-related services rendered, and those who appeared on the Medicare CMS Provider Specialty listing. This included providers who were licensed to practice medicine via state licensure agencies. In addition, a very broad definition of "areas of specialization" was used, which included nationally recognized specialties, provider self-designated specialties, areas of practice focus, and any request by any agency or trading partner submitted before the first taxonomy release. This level of detail captured specialty information in categories detailed enough to support those trading credentialing information, yet broad enough to support those wishing to trade directory level specialization information.

In 2001, X12N asked the NUCC to become the official maintainer of the Health Care Provider Taxonomy code set. The NUCC has a formal operating protocol, including the Code Subcommittee's processes.  The NUCC is a diverse group of health care industry stakeholders representing providers, payers, designated standards maintenance organizations, public health organizations, and vendors.