BLOG: What is EDI? Understanding Electronic Data Interchange in Healthcare


Business processes in a large variety of industries are becoming increasingly digitized.  In the new era of the paperless office, it is not uncommon for all kinds of data to be transferred electronically rather than on paper.  The healthcare industry is no exception, and electronic attachments for insurance claims are just one type of EDI in healthcare.  But what is EDI?  Electronic data interchange is more than just email; it is a structured way to transmit data between computer systems, governed by standards that are extremely important for medical claims.

Organizing and sending data between parties in the medical and dental industries has always been a complicated process, particularly in the management of both patient medical records and health insurance reimbursement details.  However, thanks to increases in efficiency, EDI implementation has proven to both save time and save money.  An important element in EDI is that of standards. Each EDI document has a standardized format, which ensures that data can be quickly sent and interpreted on both sides.  It is particularly important that providers and payors utilizing healthcare EDI transactions follow HIPAA regulations and ANSI standards.  EDI formatting specifications are like blueprints for data, EDI guides that serve to make transitions between different data trading partners as smooth as possible.

The reason that EDI has become especially important with respect to insurance claim documentation is the proven increase in efficiency seen with the use of electronic attachments.  Not only do electronic attachments streamline the process, but CMS and commercial payors also require medical necessity documentation for certain procedures or events.  When supporting documentation is included along with an initial electronic claims submission, both providers and payors can see the benefits, such as fewer denials and rework requests and an increase in ROI.  In fact, even though attachments only represent a small part of the electronic claims process (perhaps 10% of claims); they have been shown to have a significant impact on the speed of insurance reimbursement.

With new government mandates just around the corner, EDI requirements may be an important part of healthcare business practices moving forward, and the success of systems like MEA|NEA’s FastAttach™ suggests that this is a step in the right direction.