Healthcare EDI

Electronic data interchange (EDI) in the healthcare system is a secure and efficient way of transmitting data between healthcare institutions, insurers, and patients. This is done by using an established message standard and data format, as well as secure connectivity methods to protect the transmitted files.


To generate standardized EDI documents and translate them into common business formats that different systems and stakeholders can easily process, organizations use Healthcare EDI software solutions. Using EDI transactions within the healthcare industry ensures secure data transmissions between authorized parties, suppliers, insurers, and patients. It also allows for improved traceability, accountability, and accuracy. 


Here are a few examples of possible areas where Healthcare EDI software solutions can be of benefit:


  • Supplier/Customer document exchanges
  • Inventory management document exchanges
  • Healthcare / Retail pharmacy claim transactions,
  • Healthcare claim payment/advice transaction,
  • Benefits enrollment and maintenance,
  • Payroll Healthcare eligibility/benefit
  • And more


What does “EDI” stand for in the medical billing department?

Medical billing is a good example of a typical health care use case where EDI (electronic data interchange) can provide huge benefits. Medical billing is a very complex process due to the complexity of options, exceptions and coding, as well as the many different groups that need to be involved. Standardization is extremely important to avoid getting overwhelmed by the huge number of services and procedures.


Healthcare providers use Healthcare Claims to request payment from health insurance providers. The medical billing process starts with an inquiry from the care provider and ends with a payer response. Here is how it typically happens:

  • First step: The Inquiry. The healthcare providers make an inquiry that includes member ID number, hospital ID number, date of birth, and Payer ID. In most of the cases, it goes through a gateway company, an intermediary used to help reformat claims to conform to the HIPAA standard, but it can also reach a payer directly. The role of the gateway company is to facilitate inquiries to the payers.
  • Second step: The Response. When a payer (insurance company, distributors) receives an inquiry, they respond to the intermediary (gateway company), which, in turn, sends the data to the Healthcare provider’s system. If there is an error within the data, the Healthcare provider corrects it and resubmits it again to the gateway. 

Without the use of standardized medical electronic data interchange (EDI), all these transactions would be much more difficult to deal with because of the different systems of providers and insurers using different data formats and processes. This used to be a massive issue, and healthcare payments and remittance processes took weeks to close out, potentially longer when there were errors in the process. Simplifying and streamlining the medical billing process was not the only positive feature of implementing EDI either. Let’s look at some other advantages an organization can expect when it uses HIPAA EDI formats.


The advantage of EDI integration

Healthcare electronic data interchange has become a vital part of the healthcare supply chain, permitting healthcare providers and insurance institutions to operate and communicate more efficiently. Let’s look at the main advantages that EDI implementation brings to the table.



The use of standardized formats ensures the integrity and efficient transfer of patient health information (PHI). Since the introduction of healthcare EDI, the overall quality of data has improved dramatically as it pushes all parties to follow universal standards instead of using a wide variety of formats.


Lower administrative expenses

EDI in healthcare reduces document processing costs (e.g., employee time, purchases of paper, forms, supplies, and postage) because of EDI automation and its associated process improvement. The Workgroup for Electronic Data Interchange (WEDI) estimates that adopting EDI can help healthcare organizations save $1 per claim for health plans, $1.49 for physicians, $0.86 for hospitals and $0.83 for other parties. Additional direct and indirect savings are equally likely, depending on the current workflows and error handling/dispute resolution costs.


High level of security 

Employing Electronic Data Interchange (EDI) transactions for the healthcare industry ensures secure data transmissions between authorized parties, providers, insurers and patients. First, through EDI mapping - the process of transforming business files into EDI formats. Because the information is not transmitted in an easy to translate human-readable manner, some risks are reduced. Secondly, HIPAA laws require that only authorized users can access the information and they establish high standards for all aspects of the transmission, handling, processing and storage of the data. Finally, all files are shared using secure B2B file transfer protocols, such as AS2, MLLP and SFTP.


Enhanced accuracy

HIPAA EDI software options can streamline critical transaction processes in healthcare organizations. They not only increase efficiency, but also reduce the number of human errors, including typos, incorrect entries or lost faxes/emails and physically mailed documents. In addition, all EDI files are subjected to a very precise testing and validation processes. A process called Snip Levels is used to validate healthcare EDI files on seven levels to ensure that they provide all necessary information.


Improved productivity

Healthcare EDI increases efficiency by providing immediate data transactions between multiple parties, as well as allowing for the reduction of user entry inputs and some manual tasks. It also minimizes rejections and re-processing requests and eliminates the need to confirm that the receiving party has received the information. Consequently, recipients get the required data faster and with less errors, reducing the administrative workload and helping healthcare workers use their time more productively.


In conclusion, the implementation and integration of EDI is a complicated task that requires a top-level programming skill and practical knowledge of HIPAA standards. Without a team of experienced healthcare developers, organizations risk investing in software that won’t properly perform its functions and may even lead to HIPAA violations.


As an industry leader in EDI solutions, Meade Willis can be relied on as your trusted and strategic EDI provider.