EDI in Healthcare Insurance: All You Need to Know

Source: demigos.com

Healthcare and insurance are two components that are always a crucial part of any individual. The importance of these two can be understood by the fact that the measure of how strong the healthcare system of the country defines the status of prosperity and growth for that country. Usually, when you visit a healthcare facility with a concern, all you face is a receptionist waiting with a smile to assist you with everything from consultation to insurance claims. You are often unaware of how the process is being carried out and that is the beauty of all the technology being used in the healthcare field.

One key technology is electronic data interchange, which is called EDI. In this post, you are going to learn about a very important aspect of healthcare and EDI which makes your insurance claims smooth and handy. Healthcare insurance and claim is one of the basic amenities that every individual utilizes at least once. Ideally. All you have to do is share your insurance details for the claim and the rest is done by your insurance carrier and the healthcare facility that you have chosen for treatment however, it is not that simple. There is a lot of aftermath to the process and EDI plays a vital role in that process.

What is the use of EDI in healthcare insurance and how does it ease your life? Well, find out more in this post by A3logics so make sure you read it till the end. Without further ado, let’s get started.

What is Healthcare EDI? An Overview

Source: mxotech.com

You may be already familiar with the core principle behind EDI. It is a technology that allows businesses to interact with each other for official purposes. There is a lot of communication that takes place at every point of any process between two trade partners. All this communication should be error-free, swift, and smooth. EDI provides a channel that is not only technical but also the ultimate standard of documents. Before EDI, all the communication used to be manual but with EDI services, everything has become centralized which is why more and more businesses are adopting it.

The concept of healthcare EDI is a vast one as the data interchange finds its place in almost every step of healthcare. When a patient is admitted there is a lot of sensitive data that is generated with respect to the health status, basic details as well as classified information that should not land in any other hands. In order to transmit such data, you need a fast and secure communication channel, which is provided by EDI.

Similarly, when a healthcare provider has to establish commercial connections with pharmaceutical companies for supplies and necessary equipment, everything from inventory management to invoices is generated through EDI which helps them keep track of everything they need. Another critical application of EDI in healthcare is EDI insurance claims and communication with the insurance carrier for the patients. How does that work now? Check out the next section for a detailed explanation!

Healthcare, Insurance, & EDI – How does it all Work?

Source: demigos.com

Now that you are familiar with the concept of EDI insurance and its connection to healthcare, let’s take a look at how it helps in insurance-related queries. In any medical case where insurance claims are required, the healthcare facility and the insurance carrier need to establish a connection through which your claim request can be authenticated. The hospital that you have chosen doesn’t need to be in business with your insurance carrier. However, if they both have EDI systems (which they usually have), they can get in touch in real-time without you having to think about it. This means Insurance EDI makes the entire communication process simpler and much faster for both organizations.

Why do they have to connect? Well, the basic answer to that is to authenticate your insurance details from the carrier to understand what type of cover you have in your plan. Insurance companies also have to understand what exactly is the treatment you are going for so that they can pay for it perfectly and understand that it is not any sort of malpractice from your end. There is a lot of giving and taking between the insurance companies and healthcare facilities. Your treatment center generates the healthcare claim transaction set through EDI which is ent to your insurance carrier. Later, after receiving the authorization, the process starts.

All in all, there are 7 steps involved in healthcare insurance processing. These are –

  • Checking Claim Eligibility
  • Sharing Preliminary Information about the Claim
  • Enquiring Information Related to Enrollment of Insurance
  • Checking for Prior Authorization By Insurers
  • Enquiring Status of the Claim
  • Checking for Information on COB ( Coordination of Benefits)
  • Receiving Proof of Payment (Remittance Advice)

Between all the communication, there are tons of crucial documents that have to be shared to ensure that the claim is genuine. Insurance carriers ask for all the reports and these reports hold confidential data about the employee which is why it is necessary to ensure that the data does not fall into wrong hands.  Each of these steps is being carried out safely with the help of EDI insurance claims.

There are multiple standards in EDI as well, some organizations work on EDIFACT while some use X12.however all of them follow the HIPAA guidelines which make EDI insurance billing a standardized process for both parties.

Source: demigos.com


The entire process of getting your insurance implemented at a healthcare facility has a lot of complex steps that are required to be followed. If all these are done manually, the chances of misinterpretation, incorrect information, and data leaks are comparatively high which can delay the process by a huge margin. EDI in insurance reduces the hassle and speeds up the entire process which results in smooth insurance processing.

EDI services used to look typical in the beginning as it took resources and technical expertise to implement them however now the case has completely changed. There are several professional EDI experts who can assist in establishing the channel and since EDI is also available as a SaaS platform, it is easy to maneuver. Simply reach out to these experts and you can get your solutions sorted.

This brings us to the end of the post, hope you might have got an understanding of how EDI Insurance claims work in healthcare and the crucial role that it plays in making the process hassle-free. There are multiple providers available in the market who can give you a better brief on the use cases so if you are considering implementing EDIs, you must consult with them. Good Luck!