How EDI Benefits the Healthcare Claims Process

Many healthcare partners, payors, and vendors choose EDI as a safe, fast, and cost effective method for automating the business processes that take place.   From the consumer perspective, using EDI

  • helps keep healthcare affordable.
  • improves the accuracy of information exchanged between healthcare participants, improving the quality of healthcare delivery and its supporting process.
  • makes enhanced information available to all healthcare participants as appropriate. This access ensures accurate, fast, reliable, secure and detailed information on patients and healthcare partner plans.

From the business perspective, if you are not taking advantage of all available electronic transactions, you are not maximizing your savings and organizational efficiency. Using EDI you can:

Send and receive information faster.  Providers typically experience quicker turnaround times. A payor can receive your claim the same day you send it. In addition, an eligibility inquiry can be received and responded to in seconds, faster than you could pick up the phone and dial.

Identify submission errors immediately and avoid processing delays.  This process decreases the number of reasons a claim may be rejected once received by the payer. This same level of automated data verification cannot be performed on paper claims.

Lower your receivables.  Integrating EDI into your office workflow and software systems may make a positive impact on your bottom line. Automating electronic transactions such as eligibility will enable you to have current coinsurance, deductible and benefit information readily available while the patient is present, and prior to filing the claim. All EDI transactions may help increase your cash flow due to the expediency and accuracy of information exchanged.

Cut administrative expenses.  Whether time you want to save from phoning, faxing, printing, sorting and stuffing envelopes, or its purchases you wish to avoid (paper forms, supplies and postage) EDI can increase productivity and lower costs.

Spend less time on the phone. Many of the calls received by a payor can be answered by performing one of the following EDI transactions:

  • Eligibility (270/271)
  • Claim Status (276/277)
  • Notifications (278N)

The information returned comes from the same system used by representatives that answer your calls. You can gain administrative cost savings by reducing the amount of time spent on the phone.

Go Green and reduce paper, mail time, and postal costs.  Payors receive electronic transactions in real-time. This eliminates both mail time and the cost of postage and envelopes. EDI is also good for the environment because it reduces the volume of paper you receive from payors. Receiving electronic confirmation of claim submissions, electronic remittance advice (ERA/835), electronic funds transfer (EFT) and other EDI transactions can save time and trees.

Estimate Your Cost Savings from Increased Efficiency. A study by Milliman, Inc. calculated the cost of manual and electronic transactions.  You can use the estimated savings per transaction from the table below to calculate your potential savings.

Estimated Per-Transaction Costs and Savings Opportunity by Transaction Type

Estimated Health Plan Cost Estimated Provider-Facility Cost Estimated Total Industry Cost Potential Savings Opportunity
Claims Submission
   Manual $0.74 $1.84 $2.58 $2.03
   Electronic $0.26 $0.28 $0.54
Eligibility & Benefit Verification
   Manual $3.28 $3.55 $6.83 $6.61
   Electronic $0.06 $0.16 $0.22
   Manual $3.95 $18.53 $22.48 $17.10
   Electronic $0.18 $5.20 $5.38
Claims Status Inquiries
   Manual $3.84 $2.25 $6.09 $5.81
   Electronic $0.06 $0.23 $0.29
Claims Payment
   Manual $0.66 $1.83 $2.49 $1.98
   Electronic $0.21 $0.30 $0.51
Remittance Advice
   Manual $0.45 $1.83 $2.28 $1.77
   Electronic $0.21 $0.30 $0.51

Sources: CAQH, Index; Millman Inc.; United Healthcare


One thought on “How EDI Benefits the Healthcare Claims Process”

  1. I found this to be an incredibly accurate article and breakdown of the financial benefits one will receive by transitioning from a faxed, scanned, or emailed paper based ordering and invoicing system to an integrated EDI solution. The time and cost savings alone guarantee a significant ROI but when you account for the increase in efficiencies and the decreases in inefficiencies, the magnitude of positive impacts an organization gains becomes very apparent. Thank you for the information. If any of your readers would like to know more about the role of EDI in Healthcare please have them contact me at 1 (800) 469-0877 ext 118.

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