Jul 09, 2021 Admin

Healthcare EDI

Experience the Benefit of Outsourcing EDI Healthcare for Payroll Deducted and Other Group Premium Payment for Insurance Products

Experience The Benefit Of Outsourcing EDI Healthcare For Payroll Deducted And Other Group Premium Payment For Insurance Products. 

When planning for an EDI integration, there are various components that you will like to explore, ranging from healthcare insurance to retirement savings accounts.  To take advantage of benefits solutions, you may find a plethora of companies offering a wide range of EDI services, whom you can trust and rely on. Nonetheless, outsourcing EDI for healthcare requires knowledge of EDI standards, genuine EDI integration, EDI types, and further support. 

Additionally, administering outsourcing services needs a comprehensive understanding of the business objectives, company culture, & much more. 

Outsourcing payroll deduction and other group premium payment for Insurance products require an understanding of the basics of EDI 820. Here, we will learn about the basics of EDI 820, its uses, and format, which will later be followed by reasons/ benefits of outsourcing EDI

Understanding EDI 820 - Payment Order or Remittance Advice document

EDI 820 is a set transaction that follows the HIPAA 5010 standards. HIPAA generated 820 standards for payment via plan sponsors (companies offering healthcare benefits for employees) for individual or group premiums, insured products, and remittance advice electronically. The communication process of EDI 820 standard requires an EDI translator, which makes electronic communication seamless. 

To summarize, 820 is a payment order directed to a health plan. It is also similar to the transaction set of EDI 835.

How Does EDI 820 Work?

EDI 820 transaction sets can be used to send remittance advice and make payments together or individually. EDI 820 document contains information regarding the payee's and payer's bank, such as account IDs, invoice number, billed and paid amounts, and adjustments from an invoice. 

The payment order directed to the health plan in the first place, is reference information communicated to the health plan system. The health plan system then matches the payment with specific/ mentioned in coverage to push further process. 

The remittance advice within this transaction set underlines details of the data in order to perform cash application in the system of the payee.

Safely transmitting the EDI 820 transaction set requires a VAN. The intermediary VAN facilitates both parties, the payee and the payer, for safe transmission of payment or remittance advice. 

Also Read: Importance of Value Addition in Network Over EDI

Other than VAN, AS2 communication is another preferred connection mode for EDI 820 document exchange. The document or the information transmitted between the payee and the payer is encrypted. Through a reliable and requisite data decoder, the information can be translated.

Translating EDI 820 Encoded Information

Procuring data from the payee requires decrypting the data to make the information readable. The raw EDI 820 transaction data is unreadable hence must be converted into readable text. You can either use a decoder to obtain the data in a readable format or simply import the data to the ERP system.

An EDI 820 can be triggered automatically by the payee via an 810 or 850 receipt. Additionally, the financial institution, from the payee’s side, can issue the receipt of payment directly to the payer. Payers are also leveraged to send the document requested in any format as a response. 

In order to confirm the payment retrieval, the automated EDI system of the payee can generate the EDI 997 functional acknowledgment, which also marks the end of the payment cycle.

Integrating EDI 820 can streamline the payment or remittance advice process. The automated feature leverages the individuals to only address the accounts when any alert for an issue is raised. 

The accounting or payroll department is free from tracking all employee's accounts and retype data manually for each payment order while utilizing their time for strategic and critical tasks.

Also Read: Know How EDI Services Help an HR to Exchange Information with Insurer Carrier

EDI 820 Format Example

ISA*00* *00* *08*925485US00 *12*9622309900  *200415* *U*00501* *0*T*>






N1*PR*Walmart, Inc.*UL*04833904302

N1*PE*Test Company*1*056473625

















EDI 820 Transmission Example


When you start an EDI 820 transaction set, you get Control Number = 0001



This explains that the payment amount sent was $240, the payee's bank transit routing no was 1992999389 and its account no is 95315. The issued check or EFT was done on May 2, 2015.


The key service provider provides a unique check or EFT number, which is denoted as 70123.


The QHP identifier is being assigned by the exchange, which is 068732.


The QHP is also assigned by the Issuer, which is 85635334.


The name of the payee is Action Insurance while the  Federal Tax ID Number of the payee is 901736563.


The payment received by the individual is a Governmental body with a specified Identifier as 182BDE.

Integrating EDI 820 in Business

The EDI integrated solutions are possible with the support of an expert and dedicated IT professional services provider.  With the complete knowledge of EDI standards, you can benefit from them completely.

Why & How Outsourcing EDI 820 Benefits 

EDI outsourcing is easy and reliable, unlike yesteryears. The critical functionality and integration are possible due to the support of IT consultation services providers. Since purchasing and monitoring any software takes a lot of effort, time, and money, which is not possible for every kind of company. 

Today, outsourcing has become a practical option that makes EDI even more effective and business efficient in the competitive market. Other benefits or reasons for outsourcing your EDI 820 are aligned below.

1.      Quick Response to Customer

We know that people are driving more towards EDI. The technology integrated service is adopted by companies looking to expand their programs, add trading partners, and integrate new documents. Alongside new technology integration, companies face issues, and to mitigate them, they need a reliable and expert technology partner. The challenges are -

  • Meeting global customer requirements.
  • Fulfilling customer's new and changing needs.
  • Provide extensive support (outside regular business hours).
  • Infrastructure up-scaling for handling vast data.
  • Adding new trading partners & documents on time.
  • Adding & managing changes in implementation guides.

2.      Eliminate Complexities

Finance & banking departments do not completely rely on technology to perform their tasks. EDI undoubtedly can reduce their tedious and mundane invoices building and calculations but can be looked upon as a burden to integrate and learn new technology. EDI service providers can reduce complexities ranging from integration to automating receipts triggers to responding to the trading partners without the need for human intervention for small tasks.  

3.      Business-centric Activities

Managing EDI takes up a lot of time and energy, which is also imperative for continuous business flow. Employing in-house EDI support may not be possible for every company to keep track of trading partner's EDI requirements due to budget. 

Hence, to keep business out of a burden for EDI management, an outsource team can be a perfect fit here. You can have them till the time you need while concentrating completely on business activities that can increase your revenue and profits. 

4.      Reduce Casualties 

An EDI relationship maintenance with every trading partner is a part of the EDI business. Working with trading partners can sometimes invite unilateral penalties and charges from the customer, which the company has to incur. Common problems can be keying errors, the incorrect format of transactions, missing data, duplicate transactions, failure in acknowledging a transaction(advance ship notice - 856 is the most complex transaction), and not following data transport schedules or standards.  

Moreover, keeping up with the changing needs can lead to stress and pressure to meet them. This can sometimes cause a valuable resource to back off from their responsibilities leading to costly errors until a replacement is found. Outsourcing these complexities can eliminate such scenarios and save companies from these procrastinated events. 

5.      Minimizes Operational Costs

Having an in-house EDI system and updating them on time is the reason for overhead costs for companies. As aforementioned, penalties and charge backs are among the few challenges faced by the companies. 

Purchasing hardware, EDI software, and communications software inclusive of maintenance, support, & upgrades can range from $5000-$50,000 or even $150,000. The annual maintenance cost can be 15%-20% of the initial purchase price.

Recruiting a dedicated team offers a wide range of qa testing services, such as mapping and integrating new documents, coordinating with trading partners, testing, daily monitoring, troubleshooting problems, changing maps, and setting new partners (trading). 

Recruiting the number of staff depends on the size of the company. Where hiring an in-house EDI analyst and coordinator can range from $50,000 - $75,000 or more. An outsourced EDI consultant can ask for $150 or more as his hourly rate.

In a Nutshell -

Companies fear integrating EDI due to loss of cash or effect on floating time of payment. This is a myth, as integrating EDI with the help of an expert product engineering services provider, EDI can be integrated without the hassle and ensure a seamless and quick flow of payments. 

Healthcare claims are usually sent through EDI 835, whereas the financial reporting, sent to the bank, is through EDI 821. Summary of the financial transactions, in return for EDI 835, such as inability to process or changes in payment order is received through 827. EDI 820 involves accounting and treasury functions that can manage the exchange of these transaction sets and automate & reconcile payments from 810.

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