Healthcare Claims through EDI: Benefits & Why Your Business Needs It!

  • April 13, 2021

Electronic Data Interchange (EDI) is the automation of exchange of information in real-time between stakeholders in any ecosystem. In this blog as we’re looking at the healthcare sector the stakeholders will include care providers, physicians, research labs, insurance companies, and patients among others.

One of the main reasons for businesses in the healthcare sector to adopt EDI is for its improved business cycle speeds with accuracy. Having the ability to quickly send and receive information, often at a lower cost makes it the go-to solution.

A Huge Challenge: Confusion in the Billing and Claims Management Area

The healthcare business faces a huge challenge which is to track, maintain and retrieve accurate records. Whether it is administrative records, staff records, patient clinical records or healthcare claims, the healthcare industry demands a system that benefits patients and care providers.


Manual processes supporting this journey can be complicated, laborious and tiring. With different people accessing, analysing and reporting patient’s records, the primary challenge has always been to overcome accuracy issues – accuracy of organising and distributing data.

On these lines, to protect and secure healthcare information, the Workgroup for Electronic Data Interchange (WEDI) was formed in 1991 by Secretary of HHS, Dr. Louis Sullivan in an effort to identify opportunities to improve the efficiency of health data exchange and was also listed in the Health Insurance Portability and Accountability Act of 1996 (HIPAA) regulation. The introduction on WEDI was a huge success in streamlining 400+ paper-based medical forms and eliminating multiple formats.

Apart from HIPAA regulations, there are multiple manual steps that data/claim must go through before it reaches the payer accurately. And manual steps can leave room for error. However, there are ways such as automation, artificial intelligence, machine learning, etc., to ensure accuracy. Let’s take a deeper look at this.

How Does Healthcare EDI Work?

Healthcare EDI

A sender’s EDI software converts documents into computer-readable format, then it assigns transaction codes to each document. The recipient’s EDI software reverts the computer-readable format back to human-readable documents.

All EDI transactions are defined by EDI message standards. Standards are the basis of EDI conversations and are vital to uphold data quality. Typically, EDI transmissions are of two types:


This is direct communication between two systems with secure protocols. It does not have an intermediary over the internet.

Value-Added Network (VAN)

Here a third-party network manages data transmission with a mail boxing paradigm.

The B2B world runs and depends on EDI technology. The emergence of secure EDI transports, coupled with Mobile EDI, Cloud EDI and Managed Service Platforms have removed many EDI barriers. With respect to the healthcare industry, EDI utilizes standards designed specifically for claims, payments, enrollment, eligibility inquiries, and claim status requests; preventing any errors or misinformation.

6 Benefits You Can Reap by Using Healthcare EDI

If you would like to forget about data complexities; store, locate, reconcile and stream large amounts of healthcare data, you will want to choose healthcare EDI. Additionally, EDI is secure and helps in maintaining HIPAA compliance.

Whether you’re looking for a solution for a medical claims processing department that bills for many healthcare professionals or for individual private practice, EDI will simplify billing and claims process overall.

Types of EDI Transactions

  • 270/271: Eligibility and Benefit Inquiry and Response
  • 276/277: Claim Status Inquiry and Response
  • 278: Authorization and Referral Request
  • 278l: Prior Authorization and Notification Inquiry
  • 278N: Hospital Admission Notification
  • 835: Electronic Remittance Advice (ERA)
  • 837D: Dental Claim
  • 837l: Institutional Claim
  • 837P: Professional Claim or Vision Claim
Reduces Errors and Claim Rejections

You can save thousands by replacing manual processes which are prone to error, like keying the wrong numbers or illegible handwriting. EDI drastically improves efficiency while it also eliminates costly re-work. Also electronic claims are automatically checked for HIPAA and other specific requirements. Thereby, reducing the number of rejections or corrections that might usually occur.

Lower Administrative Expenses

The advantage that EDI brings is connectivity. And as care providers and payers shift from paper-based claims to electronic healthcare transaction processing, a high level of connectivity is established. This in turn reduces the use of faxing, printing, sorting, manual entering data into a system, and other administrative burdens and it provides greater efficiency and profitability.

Minimise Account Receivables

Revenue cycle operations are critical for a hospital’s financial health. The faster they get paid, the better the operations. Automating processes and using EDI will reduce compliance risk from increasingly complex payer contracts. It will improve collection efficiency, allowing the care provider to collect a copayment at the time of service.

Reduce Time Spent on Draining Tasks

Most times people are stuck on a phone call to get information about the claims, members, referrals, claim payments, authorizations and more. By implementing EDI, you can complete transactions for multiple payers at the same time. So, your staff can spend less time on these mundane tasks and provide more time on patient care.

Improve Traceability and Processing Times

As you’ll use a machine to do your work the turnaround times will be quicker than manual processes. For example, a claim request can be sent, an eligibility inquiry can be received and responded to on the same day. And as the system records all actions, you can always go back and check it.

Cater to Multiple Payers

When you automate processes, the system enables you to process multiple requests, claims at the same time. You can set up the transactions to be part of everyday workflow.

EDI enables standards cross trading partners, ensuring to achieve benefits consistently. We at Monitor Pro support healthcare industries and all EDI documents.

If you’d like to learn more about our EDI products and capabilities, feel free to write to us here or schedule a call at your convenience.