Nicole Wilson
August 27, 2023
5 min read
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EDI (Electronic Data Interchange) began in the healthcare industry years before the Clinton administration's Health Insurance Portability and Accountability Act (HIPAA). In 1991, the Bush administration established the nonprofit Workgroup for EDI (WEDI) to address rising healthcare costs.25 independent healthcare groups, such as the American Dental Association (ADA), the American Medical Association (AMA), health insurance companies, among others composed WEDI. Their mandate was to reduce healthcare costs by 10%. WEDI implemented EDI by 1996 as the routine business practice for medical institutions. They estimated EDI would lead to savings of up to $42 billion. The work of WEDI served as the foundation for the Clinton's HIPAA.Under HIPAA, the biggest obstacle was the perception of the invasion of one's private health records and rights. To address this concern, in 2005, HIPAA enacted security provisions for all except small health plans. All EDI software were required to have technical security that covered access controls, integrity controls, audit controls, and transmission securities. Noncompliance of these security protocols would result in significant fines and possible prison sentences.EDI's ROLEToday, over 85% of electronic transactions use EDI within the healthcare industry. EDI allows quick and easy access to vital information from anywhere in the world. Shifting to an EDI software results in a 50% reduction in shipment costs and cycles as well as ensures greater accuracy in data transmission. The need to print, store, file, or use courier services continues to decrease. Different departments or facilities can work with the same file thereby preventing duplication.In addition to the lower long-term costs of using EDI, forms and rules are now standard. If a US doctor needs medical information from a patient hospitalized in Europe, the standards and protocols of transmissions are identical, minimizing problems and delays.A looming issue in the healthcare industry is a shortage of nurses and doctors. By 2022, the Bureau of Labor Statistics estimates, there will be a shortage of over 500,000 nurses. They also say that by 2025, there will be a lack of 90,000 doctors.EDI is already helping the healthcare industry by freeing nurses from burdensome paperwork. And, doctors just transmit information via EDI instead of having to keep voluminous hardcopy records.


When filing an insurance claim, instead of submitting a paper claim and waiting hours for approval, the claim is filed electronically.An electronic claim means:

  • You do not need to visit the insurance office or speak to an agent
  • Your claim is done via EDI using simple forms
  • You can track your claim (although the process is much faster and may not need tracking)
  • You get approval and reimbursement faster (no more need for mail paper claims)
  • You don't have to keep hardcopy files (files are stored electronically)

EDI's efficiency also makes healthcare more affordable. Accurate patient data and streamlined claim processing translate to lower premiums and a better quality of healthcare.The benefits healthcare establishments experience because of EDI cannot be overstated. there is less red tape, fewer phone conversations, and reduced receivables. Healthcare employees may also respond quicker, and mistakes with patients' records are seldom. Patients can dial direct numbers for specific claim information, freeing phone lines and providing more efficient patient care and service.

Nicole Wilson
Content Manager

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