How EDI services are Transforming the Healthcare Industry?

When we say healthcare, what’s the first thing that comes to your mind? We are sure that all you can think of is lifesaving technologies, healthcare expertise, tirelessly working staff members and a healthy environment where everyone is trying their best to make patients’ lives better. But this industry is more than that, especially when it comes to processes and operations. Despite advanced procedures and technologies, the sector has to deal with an enormous amount of paperwork, including medication data, patients’ medical history & records, insurance claims, emergency service records, and more.

Origin of EDI Integration and Standards

As stated by Health Affair Report, in the 1990s, “more than 400 electronic formats were used to transmit claims and thousands of different claims processing systems”. If we take a look before the mid-90s, the federal limits on healthcare information processing and well-defined rights for patients to check their healthcare records were non-existent. Also, there was no national health privacy law. It was the time when paperless clinics, hospitals, and healthcare centers were a dream for the US healthcare system. It was looking for a more economical, efficient, and result-oriented option to address all the problems.

Hence, the HIPAA (Health Insurance Portability and Accountability Act) was enacted in 1996 that established national standards for healthcare EDI transactions. It provided a solution to paper-based medical forms and manual medical data culture. With the introduction of HIPAA, organizations adopted EDI software solutions and transformed data exchange to electronic data interchange protocol. This revolution was a game-changer that reduced data management costs and ensured more accurate records while addressing compliance issues.

The sector started transmitting data in standard formats via EDI protocol that also filled security gaps and patients’ lack of access to their medical records. The typical standard used in healthcare is ANSI X12 EDI transaction set. However, there are other transaction standards, such as EDIFACT to manage directories and standard messages.

What Made HIPAA Compliance Essential for EDI Providers?

As aforementioned, HIPAA defines the roadmap to process complex data such as insurance claims. HIPAA makes healthcare data administration more secure and efficient through EDI van services.

This secure method of electronic data allows even the most critical or confidant data to transmit without the overhead stress. This strict and secure passageway was prepared after realizing that different healthcare providers used local or proprietary codes, which turned out to be sometimes confusing and difficult to navigate.

These specified standards are meant to reduce the complexity of parties in the healthcare industry. With different transaction sets today in any service industry, can have customized EDI solutions to reach their objectives.

The National Provider Standard was also introduced to reduce the complexity of managing different transaction standards, such as claims, payments, enrollment, eligibility inquiries, and claim status requests for employers, healthcare providers, and individuals.

NPI takes a vital place in healthcare EDI transactions as only NPI allows you to submit the standard HIPAA transactions.

Although the technology brought great changes to the industry, it was still required to make sure that people use the right tools for utmost security and compliance. EDI is secured, encrypted, and allows electronic transmission between computer systems and applications which is a completely different concept then email exchanges. IT professional services providers strive to improve EDI more and more each day for organizations to take complete advantage and scale their business easily.

For better understanding, take a look at how healthcare EDI works and benefits the industry on a large scale.

How Does EDI in Healthcare Works?

Healthcare EDI allows quick and easy exchange of computer-processable data in a standardized and secure format between healthcare institutes, professionals, and patients as well. However, as we said earlier, it should not be confused with email or something similar. EDI is the electronic transmission between systems or applications that vary according to end-users and mode of delivery. It can be transmitted in:

  • P2P EDI (point-to-point EDI services)- where partners exchange messages directly
  • VAN EDI (value-added network EDI)- a third-party routing service where VAN receives a message, examines the data, and then sends it to the recipient.
  • Cloud-based EDI services
  • Mobile EDI, etc.

EDI relies on standard messaging formats for organizations to communicate with each other and the industry has exclusively designed standards. Now all the healthcare EDI transactions must adhere to HIPAA regulations and ANSI standards. The EDI software converts the document or file into computer language, assigns a transaction code to each of them with every transaction containing a unique name, number, and usage information. When received, the recipient’s software converts the file back into the original format.

The healthcare transactions included are:

  • Claims and encounters information
  • Payment and remittance advice
  • Claims status
  • Eligibility
  • Enrollment and disenrollment
  • Referrals and authorizations
  • Coordination of benefits
  • Premium payments

Here is now EDI plays a crucial role in healthcare IT solutions and benefits to the industry:


The primary benefit of EDI in healthcare is that it standardized electronic healthcare transactions. The HIPAA established national and global standards for communications and enhanced efficiency in patient transactions. It replaced the use of local or proprietary formats which created confusion and complexity and made all messages clear and comprehensible. Now, there are no more errors or need to spend time to decode received message formats as everything is consistent. Moreover, HIPAA EDI transactions made data exchange more accurate, organized, compliant, and efficient.

Enhanced Productivity

The use of EDI for healthcare can improve productivity by making data transmission faster, more efficient, and accurate. There is limited human intervention in the transmission which also reduces errors due to reduced manual data entry, illegible handwriting, and lost emails or faxes. Needless to say, that health institutes and centers can save a huge amount of time which is otherwise wasted in filling forms, transmitting information, correcting data, and confirming that the recipient got the forms or not. With electronic attachments, the data transmission process between patients, healthcare providers, government authorities, and insurers is streamlined. Furthermore, stakeholders and staff members can divert their attention to other core activities. With EDI managed services providers, organizations can utilize powerful tools for insurance claim documentation. There will be fewer denials or rework requests with transactions to multiple buyers done simultaneously.

Improved Security

Security is a major concern for many healthcare institutes and centers. They are sparing no effort to ensure that their data is secure and safeguarded from any theft or vulnerabilities. Healthcare organizations understand the importance of value addition hence abide by the rules and regulations set by HIPAA. Only authorized people can access data or patients’ personal information through EDI transactions which further mitigates the risk of HIPAA violations significantly and better data management. This not only protects patients but also lowers the risks of financial penalties.

Reduced Costs

EDI integration services for healthcare transactions reduce costs immensely along with adding convenience. Hospitals and healthcare facilities can cut document processing costs as the data is digitized with an automated system. Paper-based transactions are quite expensive as there are costs related to printing documents, buying papers, time spent to fill the forms, and storing all documents. As per WEDI data, EDI healthcare saves up to $1.00 per claim for health plans, $0.86 for hospitals, and $1.49 for physicians. Also, the transactions are sent and received faster which minimizes the operational and data processing time.  

Efficiency & Accuracy

Apart from saving time and money, consistency in healthcare also makes EDI transactions more efficient as no manual tasks or humans are involved in the entire process. To sum it up, less manual data entry means greater accuracy. With the assistance of a right EDI managed services provider, one can establish a robust connecting system.

Healthcare facilities don’t have to wait for information to be processed or entered, they can have a properly managed provider to assist them and train to handle EDI systems. This way organizations can learn to set transactions automatically in the system leaving small tasks to the computer. This drastically lowers the chances of mistakes that can be cost a fortune at times. Additionally, the information is reliable with EDI solutions empowering the healthcare industry.


EDI solutions have revolutionized the healthcare sector and you can expect major transformations in the coming years as well. Different types of EDI services are available to match the needs of the business. So, it’s high time that you adapt to the change and reap benefits offered by EDI. For trusted and reliable healthcare software solutions, connect with the team of A3logics now. Our experts will take care of all your specifications and requirements, delivering a product that meets all your expectations perfectly.