What is EDI

The EDI acronym stands for "Electronic Data Interchange". EDI is the computer-to-computer electronic exchange of business documents between two trading partners using a standardized format. EDI allows entities to exchange data securely, accurately and timely.

There are many EDI standards depending on your industry and/or region. The North American health care EDI standard format was developed and is maintained by the Accredited Standards Committee (ASC) X12, among many other industries. This EDI standard is referred to as ANSI ASC x12 (X12).

The health care industry recognized the benefits of EDI even before there was a standard that everyone was required to follow. Many in the industry utilized NSF (National Standard Format) or developed their own proprietary EDI formats. Think of the difficulty and complexity for anyone wanting to exchange data.

The first real health care initiative to standardize everything came when The Health Insurance Portability & Accountability Act (HIPAA) transaction regulation is published (HIPAA Transactions and Code Sets Standard - Final Rule Published August 17, 2000) adopting eight electronic transactions and for code sets to be used in those transactions. It also contained requirements concerning the use of these standards by health plans, health care clearinghouses, and certain health care providers.

Applications in HealthCare

• 837P/837I/837D - Electronic Claims (Professional, Institutional, Dental) submission
• 835 - Payment and Remittance Advice
• 270/271 - Eligibility Inquiry and Response
• 276/277 - Claim Status Request and Response

How it works

Step 1: Mapping

The first step involves preparing your data for building an EDI document. For example, a Medical claims clearinghouse has the distinct advantage of accepting claims from Medical Provider's in a variety of formats. One of those formats that the Provider's office might send would be the Print Image format (HCFA 1500 02/12).

The format referred to as 'Print Image' is nothing more than a ASCII text file. The clearinghouse would then use mapping software to extract the data elements and then write those to a database. The data has now been collected and organized, ready for translation.

Step 2: Translation

The next step is to build the EDI document utilizing the stored data that we mapped in step 1. This requires specialized translation software to map your data to corresponding segments and data elements in the EDI document.

Step 3: Communication

The final step is to securely transmit your newly created EDI document to the trading partner (i.e. For HealthCare, the trading partner would most likely be the insurance carrier - MDCR, BCBS, MDCD and COMM).

There are many communication protocols/methods. Here are a few of the most common used in the health care industry.

• SFTP
• FTP with PGP encryption
• Asynchronous telecommunications (56K bps) - Zmodem is recommended
• Dial-up FTP
• Network Service Vendor (NSV)

Benefits of EDI

• Improved speed and accuracy
• Reduction in costs
• Limited Paper use and storage
• Increased productivity and sales
• Enhanced customer satisfaction in accuracy and time