EDI for Healthcare Checklist: Important Factors To Know!


The healthcare industry deals with a large amount of data that revolves around medication records, patients information, insurance claims, and emergency services data. According to the Health Affairs report, more than 460 electronic formats were used back in 1900 to transmit claims and other information. In the middle of 1900, there were no settled claims for patients to obtain their healthcare information nor any federal deadlines on healthcare data processing. Not only this but there was no national health privacy to align to complete this excruciating process. Isn’t this strange? Yes, It is!

Apart from this, when we think about healthcare, a lot of things build up in our minds. From cutting-edge technology and life-saving operations to a diligent IT professional services staff committed to helping patients with better lives. But the other hidden part of the healthcare industry is a massive amount of paperwork, and this was quite distressing for the healthcare professionals because managing paperwork at once for the patients was a baffling situation for them.

Wait, we are not over here, there is much more that you need to hear! Let’s dive more deeply into this, the US healthcare system intended to take a step forward for a paperless procedure in the healthcare industry that helps in more precise and accurate search, data distribution, retrieval, and analysis.

Apart from this in 1991, The Workgroup for Electronic Data Interchange (WEDI) was introduced by the Secretary of Health and Human Services. Basically, WEDI was there to solve the challenges faced by the healthcare professionals to address expenditures and also to improve the efficiency and quality of IT Consultation services.

Additionally, in 1996, the Health Insurance Portability and Accountability Act (HIPAA) was validated and established  EDI for healthcare transactions. We know many of you are still not aware of EDI for healthcare. Thus, we are here to share the wonderful insight with you for this term. Make sure you are reading it till the end.

Wait, how can we forget about the MDM Solution for Healthcare? Well, we shall discuss this later. Back to the point!

What Is EDI for Healthcare?


Let’s start with the abbreviation of EDI first. It stands for Electronic Data Interchange which is a  cutting-edge electronic communication method. It is a smart way of sharing data and other vital information across smart systems that own pre-determined communication standards and protocols. Apart from this, EDI for healthcare is also considered as the most secure, convenient, and reliable way of data processing that allows medical providers with claim processing through a secure electronic data interchange. Here, all the information is exchanged between the patients, healthcare institutions, and care providers only.

On the other side of the spectrum, EDI has been in the healthcare industry for decades to access benefits verification and coverage. Many organizations are relying on EDI solution providers, to reduce challenges on both parties in the healthcare industry. Apart from this, EDI standards also work according to the claims, reimbursement, eligibility, inquiries, enrollment, and even the claim status requests.

However, as we are talking about the EDI, do you remember we took a name about HIPPA at the start? Let’s understand this too! Your next question must be what does healthcare EDI have to do with HIPAA compliance? We will tell you how!

EDI for Healthcare & HIPAA Compliance

HIPPA stands for Health Insurance Portability and Accountability Act, it instructed healthcare organizations to support EDI’s standard protocol to submit and process insurance claims. One of the primary reasons behind this regulation is to direct securities and robust healthcare administration in the US.

Not only this, previously the working landscape of the healthcare industry was segregated and was not aligned with the rules and regulations. Due to this, healthcare providers were having their own proprietary and local codes for transmitting the information which led to discrepancies in the system. Therefore, this law has enforced many healthcare institutions and organizations to execute and comply with HHS privacy regulations for secure data processing and transmission.


What Are the Key HIPAA Rules of EDI for healthcare?

We are sharing the HIPAA Compliance rules below:

  • The HIPAA Privacy Rule — It protects patient information
  • The HIPAA Security Rule — It helps in setting a model for patient data security
  • The HIPAA Enforcement Rule — This rule sets the guidelines for investigating HIPAA violations

Therefore, the above-mentioned HIPAA rules help in safeguarding the critical information of patients. Before HIPAA, there was a paper-based method that was being followed and it was not secure. In addition to this, unauthorized information was also shareable and it was creating discrepancies between the data and system.

Therefore, enterprise software development companies and other healthcare institutions are relying on EDI services to share information with data encrypted in transit.

What Are The Advantages Of EDI for Healthcare?

We understand that you can’t quickly get started with Electronic Data Interchange without knowing its advantages. Keeping this in mind, we are sharing the top benefits of EDI integration services that will help you in a broader way.

EDI Improves Efficiency

It is the world of technology, where smart devices can handle every workflow and process efficiently. Apart from this, many Cloud Managed Services are helping in compliance and reporting in the healthcare industry. This processing transaction is now vital with Healthcare EDI as the data transmissions are more precise, effective, and agile. EDI is the best way to boost productivity during the process of data transmission.

EDI Offers Accuracy

Manual data work can chew up a lot of time and can exhaust healthcare professionals to exchange information with insurer carriers. Therefore, an automatic working environment is a must for these professionals. This leads to trustworthy data exchange between the two parties through EDI solutions.

EDI Is Cost-Saving

Efficiency and accuracy move forward with fewer costs and savings. Paper-based documents and processes are more costly than digital EDI transactions. Apart from this, EDI 834 in healthcare helps hospitals and other facilities to slow down the handling cost of digitized documents. EDI is the best way to share information by reducing time and operating costs. Not only this, but the Medical Practice Management Software is also handling administrative work simultaneously along with other medical operations.

EDI Supports Enhanced Security

EDI is the state-of-the-art data encryption platform that offers authenticated and authorized data access between two parties. Only allowed parties can view, access, and share the healthcare data. This is one of the best solutions to demolish security concerns in the healthcare industry.

EDI Empowers Standardization

EDI services are the best way to follow the universal standard format in the healthcare industry and even product engineering services and their transactions. Earlier there were many discrepancies in local or proprietary formats and parties were following the same monotonous formats to exchange information. Now the healthcare industry is following the universal standard with EDI partners.

How EDI Works?

Let’s clear the air first. EDI managed services are not only about sharing emails and scheduling meetings. Electronic Data Interchange revolves around the data transmission of two parties. We have mentioned the working of EDI into below-mentioned steps:

1. EDI Mapping


Here, a partner will start the EDI mapping process by generating standardized EDI documents that align with HIPAA requirements for important processes. HIPAA X12 837 Healthcare Claim. This step involves EDI Mapping for transferring business files into EDI Formats. This is an important step to consider because EDI formats are not in readable formats.

2. B2B File Transfer

According to HIPPA laws, the file transmission between two parties should be encrypted, and completely authenticated with a managed file transfer (MFT) platform. The files should be sent securely from one party (a care provider) to another (a payer, pharmacy, or government agency) The managed file transfer (MFT) platform uses secure protocols such as AS2, SFTP, and MLLP to share EDI documents. Apart from this healthcare providers are also using secure networks over EDI.

3. Testing and Validation

Once the party generates the EDI documents, the next step is to validate and test the accuracy. It is extremely important to rigorously test the EDI data at every level. Healthcare EDI practices Snip levels, which revolves around the seven-level of segments to verify the documents and helps with necessary data and information. This is another vital part that one should know before starting with EDI services.

4. EDI Integration

Here, the EDI document is received by the recipients and they will use the EDI software to translate the documents into business formats. Now, the recipients will begin to route the data into key applications such as ERP systems, accounting software, and other healthcare administration platforms.

The Recap

Well, we are not over yet! EDI is a vast platform that consists of so many amazing features and benefits that can help you in flourishing your healthcare business at the best possible. Apart from EDI, there are key healthcare areas that can make a huge impact in the industry through Smart IT Solutions.