Uniform EDI standards in the healthcare industry are vital to delivering these necessary services and ensuring doctors receive payment from private and government sponsored health insurance providers.
These standards are mandated by law through the Healthcare Insurance and Portability Accountability Act (HIPAA). This law, passed in 1996, provides standards to not only automate EDI standards and business processes, but keep patient records secure and private.
The HIPAA law requires electronic data interchange (EDI) be the standard doctors and insurers use for handling insurance claims. Before HIPAA, healthcare providers used proprietary standards but now all of their systems support the HIPAA EDI standard.
Instead of inefficient paper forms to organize information, EDI uses standard transaction sets for more efficient processing
So how does the system enable smooth processing of a healthcare insurance claim? How do doctors submit requests to insurers and receive payment for their services?
First is the IT business application the doctor uses, or practice management system (PMS). There are many different systems to choose from like Microsoft’s BizTalk server to help doctors manage their patients.
The PMS system stores patient data information and when requested by the doctor, transmits claim data to the insurance provider or payer for processing.
Next, the claims data has to be translated into EDI format if it isn’t already. Due to the HIPAA law, payers cannot accept any other format. But many healthcare providers had their own standards before the inception of HIPAA so many of them simply convert their data into EDI format before transmitting it.
Next, to avoid having to re-key data, integration between the doctor’s PMS and EDI is essential. Mapping, which enforces PMS system rules, is the most common form of data integration and is similar to data translation, which enforces EDI rules.
After the mapping process is complete, the PMS sends or receives the EDI data.
An Application Program Interface (API) is an alternative method to mapping. To avoid the need to import/export, many modern applications provide an API, which is more efficient than mapping since the API is connected directly to the business application’s database.
The final step is transporting the data between the healthcare provider and payer. The PMS system connects to the provider via a point-to-point (P-to-P) connection or a clearinghouse.
P-to-P connections require the doctor to setup and maintain separate connections with each payer. But with a clearinghouse, the doctor maintains only one connection to the clearinghouse who then connects to each provider separately.
Smaller healthcare providers with a low volume of transactions now have a website available to them where they can enter claims into the clearinghouse or directly to the payer.
Check back with the information technology knowledge center at Carnal Software again soon to learn more about electronic data interchange and the essential role it plays in delivering everyday products and services we take for granted.