What is EDI?

The value of electronic data interchange (EDI) in healthcare

Healthcare EDI Transactions provide a standardized messaging format for computer systems.  Those systems should be able to communicate healthcare transactions in a standardized way. This helps healthcare organizations do business together (trading partners) by exchanging information like EDI 834 – benefit enrollment files with speed and accuracy.

What is this type of computer information exchange worth? The practice of using electronic exchange instead of paper document exchange has many positive effects on a business. These benefits include to ability to reduce errors, act faster on data, reduce administrative costs, and develop better business partner relationships. The savings in time and money associated with investing in an EDI system becomes apparent after going through manual processes and dealing with invalid data. It’s important to know what differentiates a healthcare EDI software system. You’ll notice there are many more people and documents involved in the paper document exchange. The added touch-points and manipulations of a paper exchange increase the organization’s costs and chance for error.

But the inefficiencies of paper data exchanges are not the only reason to consider implementing a software solution.  Non-standardized electronic documents are not much better than paper exchanges.  Although the data is transferred electronically, a non-standardized format requires complex requirements gathering, development, and testing.  This was a major driver for developing the ANSI X12 format.  It ensures companies are exchanging the same format to eliminate incomplete and non-standardized processes.

What is the EDI format?

This data format helps EDI capable computers to communicate with each other directly. Therefore, it is imperative that information is easily formatted, communicated and stored to relational databases in healthcare. But, what can this do for us? Without a standardized format in place, every business organization would communicate using their own proprietary language. This is like speaking one language and expecting a response in a different one. Not all words have direct translations so it can be difficult to understand. In a similar-since, computers can distort data when multiple proprietary formats are used. Thankfully, the standardization of data documents minimizes wasted time and effort. The 5010 HIPAA transaction sets are the group of document standards for healthcare EDI transactions. To make the process lean and efficient, there are specific transaction types with unique formats depending on the industry in which information is being exchanged.

Utilizing healthcare EDI transactions, two organizations set up a successful trading partner relationship by agreeing to use the ANSI X12 5010 standardized format. These documents each have an industry purpose or transaction type.

Healthcare EDI transaction sets include:

  • 837 Claims
  • 834 Benefit Enrollments
  • 835 Payments
  • 270/271 Benefits Eligibility
  • 277CA Claims Acknowledgement
  • 276/277 Claims Status
  • 278 Authorization
  • 999 Acknowledgements

Healthcare EDI transactions are commonly used to exchange specific types of  healthcare data. The example below shows a sample EDI 834 file format used to exchange healthcare benefits enrollment data.

Healthcare EDI Transactions - EDI 834

What is a trading partner agreement?

Typically, when data is exchanged between two parties, one will produce a companion guide, or implementation guide.  This guide provides how the receiver or sender will accept the interchange.  Additionally, the receiver and send will typically have a software solution configured with that trading partner and agreement.  The agreement describes the envelope transport configuration and what types of transaction sets will be sent. Your transaction management system should include an EDI Parser to perform file format validations and database ingestion.

edi trading partner flow

Caliber Health develops powerful EDI solutions to store transaction data for insurance claims and benefits enrollment documents. Our software enables organizations to track messages at all stages of processing. Contact us for more information or to request a live demo. 

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