EDI HEalthcare

What is Electronic Data Interchange (EDI) in Healthcare?

The healthcare industry is tasked with keeping all our health records, treatment, and identifying information private. Keeping track of the data, transmitting it securely, and interpreting it between parties can be quite daunting when you think of all the doctor’s offices, hospitals, insurance plans, and pharmacies that utilize this data to service their patients or members. Back in the early 90s there were over “400 electronic formats used” for transmitting claims, based on HealthAffairs data. Since then the amount of health data has expanded exponentially and organization and governing bodies have been put in place to standardize information exchange and protect the patient’s right to privacy. In the Healthcare Industry, Electronic Data Interchange (EDI) is used to send treatment and benefits coverage data between providers, clearinghouses, health data organizations, and health plan payers. EDI is a standardized way to transmit and store patient and treatment information for insurance billing and payment process. The various types of health information transmitted to facilitate the health insurance reimbursement process are grouped into transaction set types (HIPAA transactions). For example, claim information is transmitted via EDI 837 files and payment information via EDI 835 files. In this article we’ll highlight some of the significant parts of EDI in healthcare. Paperless data exchange provides increased efficiency and cost savings. This is especially true for those organizations who analyze data to enhance the quality of care. Next, Let’s take a closer look at some of the organizations and laws formed to facilitate more efficient healthcare electronic data exchange.


Health Insurance Portability and Accountability Act (HIPAA)

Established in 1996, HIPAA (Health Insurance Portability and Accountability Act) was signed into law by former president Bill Clinton to improve the efficiency and effectiveness of the healthcare system. It carries provisions to simplify administration and requires the Secretary of the Department of Health and Human Services (HSS) to adopt standards to adopt standards for electronic health care transactions (HIPAA transactions), code sets, unique health identifiers, and security. Due to the increased accessibility and ease of healthcare data transfer Federal privacy protections for patient identifiable information were put in place. HIPAA requires that security provisions be in place for safeguarding medical information. The law was formed in response to data breaches and cyberattacks on providers and healthcare payers. The HSS HIPAA Privacy Rule sets national standards for health plans, health care clearing houses, and health care providers that conduct standardized electronic healthcare transactions. The HSS HIPAA Security Rule sets national standards for protects confidentiality, integrity, and availability of electronic protected health information. The HSS HIPAA Enforcement Rule provides standards for the enforcement of all the administrative simplification rules.

  • The HSS HIPAA Privacy Rule sets national standards for health plans, health care clearing houses, and health care providers that conduct standardized electronic healthcare transactions.
  • The HSS HIPAA Security Rule sets national standards for protects confidentiality, integrity, and availability of electronic protected health information.
  • The HSS HIPAA Enforcement Rule provides standards for the enforcement of all the administrative simplification rules.

Who must follow HIPAA and what data is protected?

Organizations considered HIPAA-covered, including health plans, healthcare clearinghouses, and healthcare providers. If you need help determining if your organization is considered a covered entity of the HIPAA then try utilizing the Centers for Medicare & Medicaid Services (CMS) covered entity guidance tool. The information protected is referred to as PHI (protected health information) data. PHI data includes eighteen unique patient Protected Patient Identifiers:

Protected Health Information (PHI) Data List
  • Names
  • Web URLs
  • FAX numbers
  • Email addresses
  • Geographic data
  • Account numbers
  • Telephone numbers
  • All elements of dates
  • Social Security numbers
  • Certificate/license numbers
  • Internet protocol addresses
  • Patient medical record numbers
  • Health plan beneficiary numbers
  • Device identifiers and serial numbers
  • Full face photos and comparable images
  • Any unique identifying number, characteristic or code
  • Biometric identifiers such as: retinal scans and fingerprints
  • Vehicle identifiers and serial numbers including license plates

American National Standards Institute (ANSI)

Founded in 1918, ANSI is a private, non-profit organization. They are the standards organization that administers and coordinates the U.S. voluntary standards and conformity assessment system. They act as a trusted, neutral forum to facilitate the partnership between the public and private sectors. ANSI also continually organizes committee meetings to addresses gaps in existing healthcare EDI standards.

Accredited Standards Committee X12 (ASC X12)

ASC X12 was chartered by ANSI in 1979. The EDI standards focused organization sets US standards body for X12 electronic data Interchange. Their membership includes technologists and business process experts from many industries including healthcare, insurance, and government. Their X12N Insurance division is responsible for developing and maintaining for the insurance industry’s business activities. This includes all types of insurance including health insurance or HIPAA transactions.National

Council for Prescription Drug Programs (NCPDP)

Based in the United States (Scottsdale, Arizona), NCPDP is a not-for-profit, ANSI accredited organization. They are a multi-stakeholder, problem-solving forum for the healthcare industry. Their focus is to develop and promote industry standards for prescription drug programs. They work to improve patient outcomes and decrease the cost of care. Their standards are named in federal legislation including MMA, HIPAA, HITECH and Meaningful Use.

Workgroup for Electronic Data Interchange (WEDI)

Formed in 1991, WEDI is the leading authority on the use of Health IT to improve healthcare information exchange. They are named advisors to the Department of Health and Human Services. They facilitate a coalition that represents a cross-section of the healthcare industry. They represent doctors, hospitals, laboratories, pharmacies, dentists, clearinghouses, dentists, and EDI software vendors.

HIPAA Covered EDI 5010 Transaction List

EDI 837 - Claims Transaction Set

The Healthcare Claim is transmitted via EDI transaction 837I (institutions), 837P (providers), or 837D (dental). These HIPAA transactions are sent form providers to third party entities that pay claims and/or administer insurance products (payers). This transaction is used to transmit claims between entities where coordination of benefits is required. This could be between regulatory agencies that monitor billing or payment for healthcare services within healthcare insurance segments.

EDI 835 – Healthcare Claim Payment and Remittance Advice

Intended to be used for making payments. The Claim Payment Transaction set is sent directly from the health benefits payer or through a financial institution. This HIPAA transaction set is used in response to an 837-claim file. 835s are used to make a claim payment or send an explanation of benefits remittance advice.

EDI 834 – Healthcare Benefit Enrollment and Maintenance Transaction Set

Used by employers, government agencies, unions, and insurance agencies to facilitate the enrollment of members to a payer’s medical benefits plan. Health care payers can be preferred provider organizations, government agencies, or any contracted organization.

EDI 820 – Payroll Deducted and Other Group Premium Payment for Insurance Products

This HIPAA transaction set is used to make premium payment for insurance products. It is specifically for plan sponsors (companies providing healthcare benefits). A financial institution can receive an 820 as order of payment to a payee. 820s are typically used by businesses to provide payment instructions to banks, individual suppliers, or to insurance plans.

EDI 270 – Healthcare Eligibility/Benefit Inquiry

Inquires about health care benefits coverage/eligibility associated with a subscriber or dependent.

EDI 271 – Healthcare Eligibility/Benefit Response

Response from payer regarding benefit eligibility regarding a subscriber or dependent.

EDI 276 – Healthcare Claim Status Request

Used by providers or recipients of healthcare products or services to request the status of a claim.

EDI 278 – Healthcare Service Review Information Transaction Set

Transmits health care service information. This data can be for the purpose of request for review, notification, reporting, or certification of a health care services review.

EDI 999 – HIPAA Implementation Acknowledgement Transaction

A response confirming the receipt and reading of a transaction by the translator. It can report the exact syntax related issue that caused errors. It notifies the sender if the file was accepted or rejected. Using an EDI validation software can help to ensure more files are accepted (meeting standards and formatting guidelines) on the first pass. Acknowledgements results can be A- Accepted. R- Rejected, or E- Accepted with errors.

How does EDI Work in Healthcare?

EDI Healthcare Process FlowHealthcare EDI works to reduce paperwork and allow for a secure exchange of information between patients, providers, and healthcare institutions. HIPAA documents are converted to a standard computer (non-human readable) language. HIPAA transaction codes assigned to each documentation set. Using healthcare EDI software organizations can onboard trading partners for secure exchanges of information between parties in a standardized format. These EDI Capable healthcare organizations see significant cost and manual error reduction when processing claims, benefit enrollments, or payments.

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