Information Technology Directory

EDI Standards in the Healthcare Industry – a Vital Part of Today’s Healthcare System

One industry where electronic data interchange (EDI) plays a vital role is in healthcare. Uniform standards across the industry are used in processing payments from private and government sponsored health insurance providers to healthcare providers.

EDI standards in the healthcare industry are mandated by the Healthcare Insurance and Portability and Accountability Act (HIPAA). Passed in 1996, the HIPAA law provides standards for both automating business processing and keeping patient records secure and private.

EDI is the standard designated by HIPAA to exchange patient data. Healthcare providers used proprietary standards before the inception of HIPAA but now all of their products and services support the HIPAA EDI standard.

Rather than using paper forms to organize information, EDI uses standard transaction sets

So how does this whole system work? What are the processes doctors use to submit claims to insurers and be paid for their services?

  1. Business Application – Practice Management System (PMS)

    The first step in the process is the EDI software system the doctor uses. There are literally hundreds of different business applications available like the BizTalk server to help doctors manage their practices.

    PMS systems store patient data information and when requested by the doctor, transmit claim data to the insurance provider or payer for processing. During this process, the claim data is translated into EDI format.

  2. Data Translation

    The next step in the process is translating the claims data from the healthcare provider to the EDI format. Payers will not accept, nor will they even understand any other format as a result of the HIPAA law.

    Since healthcare providers had their own proprietary standards in place before the HIPAA law, many EDI healthcare providers simply map their proprietary formatted data into EDI format before transmitting it.

  3. Data Integration

    To avoid having to re-key figures, data integration between the doctor’s PMS and EDI is essential. Mapping, which is similar to data translation, is the most common form of data integration. Data translation enforces EDI rules while mapping enforces the doctor’s PMS system rules.

    Mapping defines where each piece of EDI data goes in the PMS system. After mapping, the PMS sends or receives the EDI data.

    An alternative method to mapping is an Application Program Interface (API). Some more modern applications provide an API to avoid the need to import/export. API is a more efficient integration than mapping since the API is directly connected to the business application’s database.

  4. Data Transport

    This is how the transaction gets from the healthcare provider to the payer. The doctor’s PMS connects with the provider using either a point-to-point (P-to-P) connection or a clearinghouse.

    P-to-P connections require the doctor’s office setup and maintain a separate connection to each payer. However, only a single connection is required to a clearinghouse who then connects to each provider separately.

    Providers with a low volume of transactions can now use a website to enter claims into the clearinghouse or directly to the payer.

Learn more about electronic data interchange (EDI) and the essential role it plays in delivering the everyday products and services we take for granted. Check back with the information technology knowledge center soon.



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