EDI – Electronic Data Interchange (Complete Guide)

What Is EDI in Healthcare?

EDI (Electronic Data Interchange) is the standardized digital communication system used in healthcare for exchanging claims, eligibility checks, remittance information, claim status updates, and enrollment data between providers, payers, and clearing houses.

EDI eliminates manual paperwork, reduces errors, speeds up processing, and ensures HIPAA-compliant communication across the healthcare revenue cycle.

📌 Why Do We Use EDI?

• Reduces manual data entry and paperwork
• Sends claims instantly in HIPAA formats
• Decreases denials caused by formatting errors
• Speeds up the entire billing process
• Automates claim tracking and payment posting
• Ensures secure encrypted communication

⚙️ How EDI Works (Simple Explanation)

1. Provider system creates an EDI file (e.g., 837 claim)
2. File is sent to a clearing house
3. Clearing house scrubs and formats the data
4. Valid claims are forwarded to the payer
5. Payer adjudicates the claim and returns EDI responses
6. Providers receive payment info and update AR

📄 Major EDI Transaction Types

📨 Claim Transactions
• 837P – Professional Claims
• 837I – Institutional Claims
• 837D – Dental Claims

💵 Remittance Advice
• 835 – ERA (Explanation of Payment)

🔍 Eligibility Check
• 270 – Eligibility Request
• 271 – Eligibility Response

📡 Claim Status
• 276 – Claim Status Inquiry
• 277 – Claim Status Response

👥 Enrollment / ERA Setup
• 834 – Enrollment
• 820 / 828 – Premium Payments

🧠 What Does an EDI File Contain?

• Patient details (name, DOB, member ID)
• Provider details (NPI, taxonomy, TIN)
• Service lines (CPT, ICD-10, modifiers)
• Date of service & place of service
• Claim charges & units
• Payer and plan details

🔄 EDI Processing Workflow

1. EDI file generated from PMS/EHR
2. Sent to clearing house for scrubbing
3. Converted into ANSI X12 HIPAA format
4. Sent to payer → verified → adjudicated
5. Payer returns EDI responses (999, 277CA, 835)
6. Provider posts payments and works denials

🌟 Benefits of EDI

• Faster claim submission & payment cycles
• Automated eligibility verification
• Lower denial rates & fewer human errors
• Standardized communication across RCM
• Reduced workload & operational cost
• Huge improvement in AR performance

📘 EDI File Structure (ANSI X12 Format)

• ISA – Interchange Control Header
• GS – Functional Group Header
• ST – Transaction Set Header
• NM1, REF, N3, DTP – Patient & Provider Info
• CLM – Claim Information
• SV1/SV2 – Service Line Info
• SE / GE / IEA – File Footers

⚠️ Common EDI Errors

• Missing or invalid NPI / taxonomy
• Incorrect ICD-10 or CPT combinations
• Subscriber not found / inactive plan
• Missing patient demographics
• Invalid payer ID or routing
• Incorrect claim formatting

📊 EDI vs Manual Billing

EDI: Fast, automated, accurate, secure, standardized.
Manual Billing: Slow, paper-based, high error chance, inefficient.