The basics of submitting EDI healthcare transactions

Does it ever feel like the language around healthcare transactions is purposely confusing? Do you find yourself googling terms…and still not understanding what they mean? It’s not you. It’s us—the healthcare IT industry. We need to do a better job explaining our business processes in clear, simple language. 

Availity’s new EDI 101 series is our attempt to reduce confusion by explaining things as simply as possible. 

What is EDI in healthcare?

EDI stands for Electronic Data Interchange, and it refers to exchanging information electronically between payers and providers. In the late 1990s as part of an effort to modernize the healthcare industry, Congress passed the Health Insurance Portability and Accountability Act of 1996 (you may know it as HIPAA), which required the Department of Health and Human Services (HHS) to establish national standards for electronic transactions. That’s where the ANSI ASC X12 Standards come in.  

We promise no confusing acronyms, but healthcare doesn’t make it easy. Here’s what ANSI ASC X12 stands for¹:

• ANSI, or American National Standards Institute, is a non-profit organization that controls the development of standards for processes, services, and products in the United States.
• ASC is the Accredited Standards Committee, which developed and maintains the X12 standard.
  X12 a set of standards and rules that determine a specific syntax for structuring and transferring business documents electronically between partners. 

In healthcare, these business documents are the tasks you run each day:

Check eligibility and benefits	X12 270/271
Submit a claim (professional and institutional)	X12 837
Access a payer remittance	X12 835
Check the status of a pending claim	X12 276/277

Submitting EDI transactions  

How do you send EDI transactions from your office or practice to your payers? Through one of the following two channels:    

Direct data entry (DDE) through a payer portal: Payers are required to offer providers a way to submit electronic transactions for free through a channel that doesn’t require additional software. Some payers maintain their own proprietary portals and others participate in a multi-payer portal—such as the Availity Provider Engagement Portal. Portals let you to enter EDI transactions by typing the information directly into a user interface—this method is often referred to as direct data entry (DDE).

Payer portals are a good, economical option if you don’t process a lot of monthly claims. But it’s not a scalable solution—unless you don’t mind entering 500 claims one at a time.     

Clearinghouse: Clearinghouses are the other option for submitting EDI transactions, but to use one you must have a third-party software system, such as a practice management/EHR or revenue cycle management, capable of creating a batch EDI file (a group of EDI transactions). Clearinghouses serve as an intermediary between providers and payers; they aggregate transactions, scrub them for errors to reduce denials, and send them on to the payer.   

Maintaining the connectivity between the software and the clearinghouse can be complex, so many software vendors include clearinghouse services as part of their offering. The vendor manages the transmission to the clearinghouse and helps troubleshoot issues. Bundling your clearinghouse service with your software vendor can be a good option, especially if your organization lacks internal technical resources. But if you’re comfortable creating batch files, you may find contracting directly with a clearinghouse to be a cost-effective alternative.  

Stay tuned

When it comes to demystifying healthcare, we’re just getting started. Stay tuned for another illuminating article.