Health Insurance Reform: Standards for Electronic Transactions. A. Electronic Data Interchange


Electronic data interchange (EDI) is the electronic transfer of information, such as electronic media health claims, in a standard format between trading partners. EDI allows entities within the health care system to exchange medical, billing, and other information and to process transactions in a manner which is fast and cost effective. With EDI there is a substantial reduction in handling and processing time compared to paper, and the risk of lost paper documents is eliminated. EDI can eliminate the inefficiencies of handling paper documents, which will significantly reduce administrative burden, lower operating costs, and improve overall data quality.

The health care industry recognizes the benefits of EDI and many entities in that industry have developed proprietary EDI formats. Currently, there are about 400 formats for electronic health claims being used in the United States. The lack of standardization makes it difficult and expensive to develop and maintain software. Moreover, the lack of standardization minimizes the ability of health care providers and health plans to achieve efficiency and savings.