EDI Basics

What is an EDI ?

EDI X12 (Electronic Data Interchange) is data format based on ASC X12 standards. It is used to exchange specific data between two or more trading partners. Term ‘trading partner’ may represent organization, group of organizations or some other entity. In most cases it is just organization or company.

EDI X12 is governed by standards released by ASC X12 (The Accredited Standards Committee). Each release contains set of message types like invoice, purchase order, health care claim, etc. Each message type has specific number assigned to it instead of name. For example: an invoice is 810, purchase order is 850 and health care claim is 837.

Every new release contains new version number. Version number examples: 4010, 4020, 4030, 5010, 5030, 6010, etc. Major releases
start with new first number. For example: 4010 is one of the major releases, so is 5010. However 4020 is minor release. Minor releases contain minor changes or improvements over major releases. At the time of this writing 5010 is most widely used release.

How EDI Works

Doctor diagnosis the patient and provide the treatment for the identified disease. Billing Team prepare the bill(claim) and the claim is transmitted into an EDI Document format called as 837 Health care claim. Then the EDI 837 Document securely transmitted to the insurance company via clearing house.
Then the Insurance company processes the claim which comes in the electronic format and provide the necessary reimbursement for the provider for the treatment given to the patient.
Why You Need EDI – the Benefits

• Lower costs
• Higher efficiency
• Improved accuracy
• Enhanced security
• Greater management information

Please read more on this excellent blog