Electronic Data Interchange: What Is Edi in Healthcare Industry?

Healthcare and medical industry has been undergoing gradual changes. The changes which were inevitable because the world which is rapidly transforming into a totally new living place.

Not so long ago the healthcare and medical industry used to comprise tons of documents, paperwork, and claims made, claims rejected mounting enormous stress as well as paperwork to be looked after. But all of this changed with the introduction of EDI.

You might wonder what is EDI in healthcare industry. Well, to make it simple, EDI stands for Electronic Data Interchange (EDI). The usage of electronic data interchange in the medical industry has helped medical experts and organizations tremendously to easily secure the exchange of data without any delays.

We will be discussing EDI in detail in this article so read along!

What is EDI in healthcare and medical industry?

As mentioned above, the implementation of EDI in the healthcare industry has changed the dynamic of the medical field. It is one of the most crucial parts when it comes to delivering high-quality medical care.

EDI (Electronic Data Interchange) can provide the perfect solution to all healthcare problems. You can adopt software to implement EDI in your system.

What is EDI in healthcare and medical industry

So, in easier words, the electronic data interchange in the world of healthcare is a new and more sacred way of transmission of data between insurers, patients, and medical institutions by the methods of messages and other similar formats.

As far as the history of EDI is concerned, this technology was introduced in the healthcare industry back in the 1960s when about 400 standards of different kinds were already in practice to compile and record data.

All of the methods had different problems such as poor interoperability, conversion errors, security gaps, and expensive IT costs in those days.

The implementation of EDI in medical organizations helps the owners of the organizations tackle all of these problems along with ensuring that the transmission of data will be smooth and quick.

If we check the world of medical and healthcare today, all the major entities such as the clearing houses, care providers, and health plans are majorly covered by EDI and the officials and staff of the medical organization must exchange all the information electronically with the help of prescribed standards by the HIPAA EDI rules.

Compliance with HIPAA EDI means that the medical organizations are using ASC X12 protocol when they send the documents to the patients or insurers. The documents are considered to be in accordance with HIPAA which means that they contain health-sensitive details and information

The ASC X12 protocol is the only acceptable and approved format for HIPAA EDI transactions. This protocol by HIPAA ensures that the medical data compiled and shared further is completely secured and accurate as per the law. All the entities involved in the transmission of the data are supposed to follow the protocol prescribed by HIPAA.

The standard EDI documents come with standard HIPAA codes generated in the EDI software. These documents are further translated into different formats which are used by different organizations.

Some of the common types of EDI documents or transactions are listed below:

EDI transactions

Medical organizations working in the industry have the option of using ten different kinds of HIPAA Electronic data interchange (EDI) transactions. They are

  • Retail pharmacy claim – this allows all the healthcare experts and other regulatory ones to submit the claims regarding the retail pharmacy. This also helps them in transmitting the claims made for the retail pharmacy services as well as the information regarding bills to the payers
  • Healthcare claim (837) – the claims helps the patients and healthcare experts to submit the encounter information and the healthcare information to the organization
  •  Healthcare claim advice/payment (835)- this claim is mainly used by the insurers in order to make their payment as well as send the remittances regarding Explanation of Benefits (EOB) to the healthcare and medical providers.
  • Healthcare eligibility/benefit inquiry (270) – this is the transaction that is mainly used by the healthcare institutions in order to transfer the inquiries of the healthcare benefits to the subscribers and the eligibility to the government agencies and different financial institutions.
  • Benefits maintenance and enrollment transaction set (834) – this one is used by unions, employers, insurance agencies, government agencies, different associations, or medical organizations while paying the claims. The main aim is to enroll maximum members into the healthcare benefit plan.
  • Payroll deduction and other premium payments for the insured products (820) – this is the transaction set that will make the premium payments solely for the insured products being used by the healthcare institutions while sending crucial and accurate information to the financial organizations.
  • Healthcare claim notification status (277) – this is used to serve the purpose of reporting the statuses of the claims made previously by the providers. This kind of transaction is especially used by insurance companies and medical payers.
  • Health Care eligibility/benefit response (271) – this is the transaction set that is mainly used as a response to inquiries regarding the healthcare benefits and eligibility associated with a dependent or a subscriber. For instance, the previous transactions which are used by healthcare and medical organizations, these transaction sets help in forwarding the relevant information to government agencies and different financial institutions.
  • Healthcare claim notification – this transaction set serves the main purpose of making a report regarding the statuses of different claims which were submitted by medical providers previously. The EDI 277 is largely used by insurance companies and payers related to the medical and healthcare field.
  • Healthcare service review (278) – this one is largely used by the hospitals in order to make a request to the authorized body entitled to make payment on behalf of the patient for example the insurance company.

The transaction list of Electronic Data Interchange also includes the functional acknowledgment transaction set (997) but this one is not covered by any kind of semantic information which is further required to be encoded into any prescribed transactions set by HIPAA, the only necessary ones are processed further under the protocol of X12.

Benefits of integration of EDI in the medical and healthcare industry

Benefits of integration of EDI in the medical and healthcare industry

The electronic data interchange (EDI) has become a vital part of the supply chain industry of healthcare. It allows the medical and healthcare practitioners as well as insurance companies to communicate and operate more cohesively. Here are some advantages that EDI brings once it is implemented in a healthcare organization.

  • Decreases administrative expenses – the Electronic data interchange (EDI) largely decreases the costs of processing the documentation such as the purchasing of forms, supplies, paper, and postage costs because the majority of the data is in digital format. The workgroup of electronic data interchange (WEDI) has estimated that when an organization adopts EDI or implements it into its system it saves approximately $1 per claim as per the health plans, $0.86 for the medical organizations, $1.49 for health practitioners and $0.83 for miscellaneous other expenses.
  • Standardization – using standard formats applied by the HIPAA protocols ensures that the patient health information (PHI) is efficiently and securely transferred from one source to another. As the EDI was introduced into the healthcare industry, it has been noticed that the overall quality of data has been improved to greater measures as it pushes all the involved parties to follow the standards and obey the protocols. Productivity improvement – EDI in the healthcare and medical industry has definitely improved productivity. It has done that by enabling data transactions to different parties on an immediate basis. EDI has also helped in minimizing the rework and denial requests as well as the requirement of confirmation from the receiving party once it has got access to the information.

As a result of the integration of EDI into healthcare, the recipients can easily access to the required data and that too with complete accuracy resulting in less burden on the administrative staff, helping the workers of the healthcare organization to spend more time productively and efficiently.

Final thoughts

Integrating electronic data interchange into medical and healthcare organizations is a difficult and complex job. It requires a very high level of skills in programming as well as a practical knowledge of HIPAA protocols and standards. EDI cannot be successfully integrated without the help of a dedicated team that is fully experienced in the development department of healthcare by launching software that will perform all the tasks without leading to any kind of violation of HIPAA protocols and standards.

Invest in the software of EDI that is best adaptable to the healthcare organization to have a long-term impact on EDI in the organization as it is not a cakewalk to have compliance with EDI. It requires extensive expertise and knowledge in terms of documentation generation, validation, testing, and most importantly the transferring of EDI algorithms.