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How to Make Your Healthcare System EDI Compliant 

Picture of Himanshu Gautam

Himanshu Gautam

Founder | IT Advisory and Consulting | Product Innovation

EDI has revolutionized healthcare by transforming documents into electronic format using standardized, electronic systems. EDI compliance guarantees that healthcare systems can communicate with partners like insurance providers, drug stores, and other healthcare entities, thus resulting in refined and accurate data, fewer mistakes, and high operational performance.  

However, this reference offers a step-by-step guide to making your healthcare system EDI compliant. Maintaining the compliance of your healthcare system through the role of EDI in Modern Healthcare is important for compliance with legal requirements, optimization of processes, and financial economy.  
According to a report by Markets and Markets, the global healthcare EDI market revenue was estimated at $3.0 billion (about $9 per person in the US) by 2020 and is expected to reach $4.4 billion (about $14 per person in the US) by 2025, with a CAGR of approx 7.8% over the 2020 to 2025 forecast period. 

global healthcare EDI market revenue - AppVin Technologies

Here, you will find detailed information on how EDI functions in healthcare and what needs to be done to meet all the requirements. In this article, we will examine the important role of electronic data interchange (EDI) and explore how EDI works in healthcare. We will unpack its usefulness, implementation importance, and transformative potential, highlighting how it facilitates seamless communication between healthcare professionals. Additionally, this blog will also examine its efficacy, accuracy, etc., highlighting its critical role in a quality healthcare business model. 

Understanding EDI and Its Importance in Healthcare 

What is EDI in healthcare? 

EDI stands for Electronic Data Interchange. It is a data sharing and utilization model that is achieved among computer systems. The focus of EDI is to support the exchange of healthcare data between health organizations like hospitals, insurance covering institutions, government agencies and software development and software service companies. HL7 (Health Level Seven International) and X12 are usually the most applied in the case of healthcare EDI. 

Moreover, the role of EDI in Modern Healthcare means exchanging business documents like patient information, billing, and insurance electronically between providers and payers. This system replaces conventional paper transactions with standard formats, enhancing data transfer across systems and organizations efficiently. 

Importance of EDI in Healthcare | AppVin Technologies

Importance of EDI in Healthcare:

EDI offers a wide range of benefits to healthcare professionals. It facilitates the efficient and secure exchange of information between healthcare providers, insurers, patients, and other stakeholders. Therefore, role of EDI in Modern Healthcare plays a pivotal role in the healthcare industry by: 

Improving operational efficiency:

EDI saves time and effort by replacing manual data entry and paperwork associated with traditional paper-based communications. EDI healthcare communication streamlines business processes by automating manual processes such as claims processing, eligibility verification, and payment. This eliminates the need for paper-based documentation, reduces errors, and accelerates time to transaction. 

Enhancing data accuracy:

Storing information in databases and automating procedures reduces errors and inaccuracies typical of manual entry. EDI systems greatly reduce errors associated with manual data entry, such as typing errors or illegible handwriting. This improves the accuracy of the data and reduces the likelihood of claims being denied and payment delayed. 

Facilitating regulatory compliance:

EDI systems adhere to industry standards and policies, ensuring compliance with HIPAA and other healthcare regulations. In addition, EDI uses encryption and authentication techniques to protect sensitive data, and protects patient information from unauthorized access and breaches 

Enhancing patient care:

By leveraging EDI health communications, companies can dramatically improve patient care. Health care providers can devote more time and resources to patient care by streamlining workflows and reducing paperwork. Expedited claims and payment processing also ensures timely payment, enabling healthcare organizations to maintain quality care. 

Reducing costs:

EDI in Modern Healthcare eliminates paper-based transactions, hence, cutting expenses such as printing, mailing and storage. EDI connectivity in healthcare helps organizations reduce operational costs by reducing manual data entry, paper handling, and mailing costs. Additionally, faster processing of claims and payments improves revenue and reduces the need for administrative resources. 

Also Read: Exploring the HL7 Integration in Healthcare Businesses

Regulatory Requirements and Standards 

HIPAA Standards 

HIPAA stands for the Health Insurance Portability and Accountability Act. It is a federal law protecting the sharing of personally identifying health information. HIPAA requires the adoption of EDI standards for several administrative and financial transactions in the healthcare sector, including claims, remittances and eligibility verification. 

EDI is based on HIPAA rules from ASC X12 and NCPDP formats, outlining electronic transaction structure and content. 

Other Relevant Standards 

In addition to HIPAA, healthcare organizations must comply with other relevant standards and regulations, such as: 

HL7 (Health Level Seven):

A range of industry-standard specifications for clinical and administrative data exchange in healthcare applications. 

CAQH CORE (Committee on Operating Rules for Information Exchange):

A set of operating rules that support HIPAA standards and ensure the coherence of approaches to delivering EDI across healthcare entities. 

State and local regulations:

Some of the state and local governments may have extra measures or recommendations concerning healthcare EDI. 

Healthcare EDI Transaction Types 

A healthcare EDI interface refers to standardized electronic data exchanged between entities in the healthcare industry. These networks are defined by specific policies and standards in place to ensure interoperability and cooperation. Here are some of the most common healthcare WIDI connections. Typically, healthcare organizations engage in 10 distinct categories of HIPAA electronic data exchange activities: 

Healthcare claim transaction set (837):

This allows healthcare professionals and patients to submit healthcare claims and related encounter data. 837 Networks are used to transfer health information to health care providers (such as hospitals, clinics, doctors) Electronic device information to insurers (such as health insurance companies or government payers such as Medicare or Medicaid) This type of transaction contains patient demographic information, assessment codes, procedure codes and other relevant reimbursement information. 

Retail pharmacy claim transaction:

Facilitates healthcare providers’ submission of claims and regulatory entities, exchanging billing information with payers. 835 Communication Units, also known as electronic stimulus advice (ERA), are used to electronically transmit health care payments and associated information from payers to providers, these costs money payments, changes, reasons for cancellation, and other payment information. 

Healthcare claim payment/advice transaction set (835):

Insurers use this set for payments and to provide Explanation of Benefits (EOB) guidance to healthcare providers. Health care providers use 270 services to inquire about a patient’s insurance eligibility and benefit payments. 271 Attribute 270 is a response to a questionnaire, which provides information about the patient’s coverage status, benefits, and other eligibility information 

Benefits enrollment and maintenance set (834):

Employed by employers, unions, government agencies, insurers, associations, and healthcare organizations to enroll individuals in healthcare benefit plans. The 834 network is used to electronically enroll and transfer individuals to health care plans. It enables health plans to send enrollment information to employers, insurers, and benefit administrators. 

Payroll Deductions and Other Group Payments for Insurance Products (820):

Used to share information with healthcare organizations and financial institutions and to pay for insurance plans. This ensures accurate, timely processing of group claims and helps maintain the financial stability of insurance policies for employees. 

Health Care Eligibility/Benefit Checks (270):

Used by health care organizations and financial institutions and government agencies to inquire about health benefits and patient eligibility. This helps to show billing information, patient recruitment and ensures consistency in billing and service delivery. 

Health Care Eligibility/Benefit Information (271):

Used to answer questions about health care benefits and patient eligibility, and to exchange information with financial institutions and government agencies. This provides health care providers with accurate information about reimbursement, helping to improve patient care and manage finances. 

Claim Status Request (276):

Used by health care providers to request or verify the accuracy of health claims submitted for payment such as insurance companies. This streamlines the payment process and ensures that providers are notified of payment progress and any issues that need to be resolved. 

Claim Status Information (277):

Reports on the status of previously submitted claims (EDI 837 transactions) by issuers. It is used by health care professionals and insurance companies. This ensures providers are kept updated on progress and outcomes, helps with budgeting and resolves any discrepancies promptly. 

How EDI In Healthcare Works 

EDI in healthcare involves health providers exchanging structured electronic documents, replacing traditional paper-based methods. However, it involves capturing data forms from patients and billing systems and then mapping the data into the EDI format and then electronically sending relevant data to trading partners such as insurance companies through AS2, FTP, and SFTP. 

Consequently, the receiving party then translates the EDI data back into the format that is useful for operating internal affairs. Moreover, this approach leads to the systematic and efficient management of data exchange, minimizing errors in healthcare transactions. However, the process involves: 

  1. Data Preparation: Gathering and organizing information from various sources, including patient records, billing systems, and insurance details. 
  1. Translation: Converting the collected data into EDI-compatible formats like ANSI X12 using EDI Translation Software. 
  1. Transmission: Securely transmitting standardized data to trading partners via AS2, FTP, and SFTP protocols. 
  1.  Reception and Processing: The receiving party interprets EDI data, processes information, and may send acknowledgement/response. 
Choosing the Right EDI Solution | AppVin Technologies

Choosing the Right EDI Solution 

EDI solution implementation requires selecting the right EDI solution to ensure compliance and increase operational efficiencies. Here are some key considerations: 

Integration Capabilities 

The selected EDI solution should seamlessly integrate with your existing healthcare information systems, including Electronic Health Records (EHRs), practice management applications, and billing software. This integration facilitates the transfer of information between systems, minimizing the need for manual data entry and improving the accuracy of information input. 

Evaluating Vendor Options 

Some recommended strategies for selecting a vendor include choosing reputable EDI vendors or providers who offer healthcare solutions. Assess their experience, performance and capacity to cater for the precise EDI transaction kinds and norms relevant to your organization. Also, evaluate their services, especially in terms of support, cost structure, and their ability to grow to meet future needs. 

Implementation The Strategy for EDI in Healthcare 

Implementation The Strategy for EDI in Healthcare 

To achieve successful integration of an EDI solution in your healthcare system there are certain strategies. Here are the key steps: 

Project Planning:

Build a project schedule highlighting goals, deliverables, timeframes, and resources. The role of EDI in Modern Healthcare and responsibilities must be clearly stated and the communication plan set. 

Data Mapping and Translation: 

Identify internal data formats and set up translations to required EDI formats. It may include data harmonization, data validation and augmentation to fit a GXP standard and/or quality standard. 

System Integration: 

Ensure your EDI solution is compatible with EHRs, practice management systems, and billing systems. This integration should allow the information to be passed freely between these systems and require little interaction from other people. 


Therefore, perform functional and integration tests to ensure that data translation, transmission, receipt, and processing of the EDI are done correctly. With the correct protocols, mock data and various real-life situations can be used to trace any error that might be uncovered after going live. 

Training and Education: 

Ensure that employees who will participate in the EDI process are trained and educated about EDI. Make sure that they know the workflow, the type of data needed and the compliance procedures. 

Go-Live and Monitoring: 

After system testing and stakeholder training, proceed to the go-live phase. Supervise the EDI system to ensure optimal performance, keep tabs on the EDI metrics and quickly rectify any hitches in the system. 

Uses and Benefits of EDI 

Uses and Benefits of EDI 

Implementing EDI in your healthcare system offers numerous benefits, including: 

Improved operational efficiency:

EDI not only increases productivity but also reduces manual data entry errors, streamlining operations. Automation streamlines administrative tasks, freeing up employees to focus on patient care and other important tasks. 

Improved data accuracy:

Standardized formats and automatic data conversion reduce the risk of errors when transferring information between systems. This results in more reliable data, reduces variance, and improves overall data integrity throughout the organization. 

Regulatory Compliance:

EDI helps comply with HIPAA and other regulatory standards governing data exchange. By ensuring secure communications and standards, EDI helps ensure compliance, reduces the risk of data breaches, and the associated penalties. 

Cost reduction:

By eliminating the use of paper, EDI reduces costs associated with printing, mailing, and storage. Additionally, it reduces operating costs by reducing the need for manual operations and enabling more efficient distribution. 

Faster payment processing:

Electronic submission and processing accelerates payment times, improving healthcare provider revenue. This allows faster payments, reduces budgetary pressures, and improves revenue management. 

Better Patient Care:

By qualifying or eliminating administrative costs, the health care provider can provide ultimate patient care. Streamlined processes and data standardization will allow providers to better focus on patient needs, resulting in higher quality care and better patient outcomes 


Therefore, EDI compliance can be a crucial solution in enhancing healthcare data exchange capabilities and reliability. EDI is useful in minimizing paperwork, avoiding mistakes and meeting legal requirements thus improving the quality of patients’ care. Appvin, a healthcare mobile app development services company, is involved in this shift significantly. Through enhancing the implementation of reliable EDI solutions in the organization specific mobile applications, Appvin supports effective data exchange and enhanced compatibility for all supply chain organizations. Their experience guarantees that healthcare providers can utilize modern solutions to attain and sustain EDI compliance and work towards improving the condition of the healthcare sector. 


Q. What is EDI in healthcare? 

A. EDI in healthcare refers to the electronic exchange of standardized business documents, including patient records, billing details, and insurance information. 

Q. Why is EDI important in healthcare? 

A. EDI is crucial in healthcare for its ability to enhance efficiency, accuracy, and compliance while reducing costs. By automating data exchanges, EDI improves patient care and operational workflows. 

Q. What are the key HIPAA EDI transaction sets? 

A. Key HIPAA EDI transaction sets include 837 for claims, 835 for payment/remittance, 270/271 for eligibility, 276/277 for claim status, and 278 for referrals/authorizations. 

Q. How do I choose the right EDI solution for my healthcare system? 

A. Choose an EDI solution based on integration capabilities, flexibility, compliance features, and vendor support. Evaluate vendors’ experience, customer feedback, and overall costs to make an informed decision. 

Q. What are the benefits of EDI in healthcare? 

A. Implementing EDI in healthcare provides benefits such as increased claim efficiency, improved accuracy, cost reduction, regulatory compliance, enhanced patient outcomes, and seamless integration 

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