The health industry consists of many different components and processes. We often do not talk about data, but it is undoubtedly an integral part of practice management. Processing the high volume of health informatics needs a standardized system.   

Electronic data interchange (EDI) transactions securely transfer data across healthcare institutions, insurers, and patients with established message formats and standards. The EDI system addresses conversion errors, improves healthcare interoperability, and reduces data exchange and interpretation costs. Health plans, clearinghouses, and healthcare providers who exchange medical records electronically are obliged to implement uniform standards for all EDI transactions in healthcare HIPAA-compliant. EDI solutions ensure the security and accuracy of electronic health records. To integrate medical EDI, all entities must follow particular data specifications. For instance, if the information is transmitted to a receiver computer, it is converted into non-human language with the software for electronic data exchange. All documentation sets utilized by electronic data solutions are assigned standard codes.  

Healthcare EDI types

Healthcare EDI types

Healthcare organizations use ten types of HIPAA-compliant electronic data interchange software:  

  • Healthcare claim transaction – allows providers and patients to submit claim information and access and share the data.  
  • Retail pharmacy claim transaction– enables healthcare professionals and regulatory agencies to submit retail pharmacy claims. Additionally, this EDI software solution transmits claims for retail pharmacy services and medical billing payment information to payers.  
  • Insurers utilize the healthcare claim payment/advice transaction to make payments to healthcare providers.  
  • Benefits enrolment and maintenance- This healthcare EDI software is used by unions, government agencies, insurance agencies, associations, or healthcare organizations paying claims.   
  • Payroll deducted and other group premium payments for insurance products- This EDI transaction in healthcare makes premium payments for insurance products. Providers use the electronic data interchange in healthcare to share information with financial organizations.  
  • Healthcare eligibility/benefit inquiry- The electronic data interchange system helps healthcare organizations to send inquiries for healthcare benefits and subscriber eligibility to financial institutions and government agencies.   
  • Healthcare eligibility/benefit response- The primary purpose of this electronic data interchange solution is to respond to request inquiries about the healthcare benefits and eligibility associated with a subscriber or dependent.   
  • Healthcare claim status- This EDI healthcare allows healthcare providers to request or verify the status of healthcare previously submitted to a payer, such as an insurance company.  
  • Healthcare claim status notification- The healthcare EDI enables reporting on the status of claims previously submitted by providers. Healthcare payers and insurance companies use this EDI in healthcare.  
  • Healthcare service review Information- Hospitals use the EDI in medical billing to request authorization from a payer, such as an insurance company.  

Benefits of EDI

Benefits of EDI
  • Better efficiency  

Processing EDI transactions in healthcare conduct efficient and secure payment transactions. Since a computer handles everything in EDI standards for healthcare, healthcare organizations no longer wait for manually entering information. As a result, the data can be automatically entered into the necessary systems using EDI transactions.  

  • Improved accuracy  

Electronic data interchange transactions enhance the accuracy of data management with healthcare automationCloud-based EDI enables various parties to receive trustworthy information and successfully achieve population health management consistently.   

  • Standardization  

Electronic data interchange standardization avoids confusion between different formats available. Similar to telehealth and mHealth practices, EDI standards ensure that all parties follow a universal format for sharing and sending documents across EDI partners.  

  • Cost efficiency  

EDI transactions in healthcare offer efficiency and greater accuracy, which results in cost savings. An EDI system can save $1.49 per claim for clinicians. As per the research from CAQH, these savings can add up to $1102 billion each year for healthcare providers, with an additional $13 billion per year in savings.  

  • Enhanced productivity  

EDI transactions in healthcare can lower costs through increased productivity. With EDI solutions, recipients can obtain the data required with minimum errors by health analytics, and it increases staff productivity and improves overall performance efficiency.  

  • Increased security  

EDI medical should integrate high-quality encryption at rest and in motion and authentication and restricted data access. Since only authorized parties can access patient data, it safeguards data privacy and increases patient engagement.  

How EDI works

How EDI works

EDI transactions in healthcare involve a couple of steps, and let’s look at them.  

1. EDI Mapping

EDI mapping refers to transforming business files like PDFs, Excel, and Google Sheets created in healthcare admin applications into formats for EDI transactions in healthcare. EDI mapping and translation are important because EDI documents would not be readable and would be difficult to use without them. Healthcare EDI transactions come with built-in EDI mapping and translation connectors for HIPAA and HL7 documents, saving time invested in custom scripting.  

2. Testing and Validation

When EDI documents are created, they must be tested and validated to ensure accuracy. EDI transactions demand rigorous testing that uses a system known as Snip Levels. It involves verifying files across seven levels to ensure that every document contains all the essential data.   

3. B2B File Transfer

Standard EDI healthcare documents are sent from one partner to another, say the provider to the payer, pharmacy, or government agency. HIPAA regulations insist that EDI documents be exchanged to reach only the intended partner and no one else. Transfer of EDI files emphasizes encrypting, authenticating, and robustly securing file transfers.  

4. EDI Integration

Care providers and partners utilize electronic billing transactions with EDI software to translate them into usable formats through healthcare automation. This automation is a crucial ingredient of integrating EDI transactions because it promotes streamlined, end-to-end EDI data flows, reducing manual errors, improving accuracy, and saving time.  


EDI transactions in healthcare are crucial to improving patient care quality, including integrated care or collaborative care services. EDI integration may seem complex, but it requires a high level of programming skills and practical knowledge of HIPAA regulations. Team OSP has the necessary experience and skillset to build a custom EDI software that would perform well and comply with HIPAA regulations. We can help you successfully implement EDI transactions in healthcare. 

OSP is a trusted healthcare software development company that delivers bespoke solutions as per your business needs. Connect with us to hire the best talents in the industry to build enterprise-grade software.


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