EDI use coming sooner rather than later - electronic data interchange

Healthcare Financial Management, August, 1991 by Dan Rode

Six months ago, it looked as if day-to-day use of electronic data interchange (EDI) in health care still remained a year or two away. This estimate has turned out to be overly conservative, and providers and payers should begin to think and learn about EDI.

In February, the American National Standards Institute's (ANSI's) Accredited Standards Committee X12 elevated its insurance task group to full subcommittee status. Founded in 1918 to coordinate national standards in the United States, ANSI is a voluntary group including professional societies, trade associations, and other organizations.

By upgrading the status of its insurance group, ANSI acknowledged that health care required its own transmission standards. [Transmission is the link of electronic data between two business partners' computers, or, in the case of value-added networks (such as claims clearing houses), between those two parties. EDI does not affect the internal system ofr a receiver or sender.]

ANSI subcommittee

The X12N (ANSI's title for its insurance subcommittee) has been at work for about two years. Along with health insurance, its task groups are addressing other forms of insurance. Despite the "insurance" title, however, EDI transmission standards would apply to all forms of healthcare coverage, including governmental and managed care.

In June, the enrollment task group released its enrollment transmission mission (the 834 enrollment transaction) for vote by the fullX12 committee. This enrollment set will allow employers to enroll or modify insurance and retirement benefits of an employee and his or her dependents with an insurer or third-party administrator.

An enrollment transmission standard also will assisst with Medicaid and similar programs. A county government using the 834 standard, for instance, could transmit data to its state for Medicare purposes much more efficiently than under current procedures. The 834 offers an easy and inexpensive way to keep enrollment information up to date and, as a result, leads to higher-quality eligibility and claims processing.

The enrollment group has begun to address the need for a standard way to determine patients' eligibility from different payers. The group also will be addressing certification and authorization processing.

The claims task group is designing a transmission set that would allow claims to be sent in either summary or detailed form and would allow use of either the uniform billing form (UB-82) or the Health Care Financing Administration's (HCFA's) 1500 form. It also could accommodate standard attachment data, such as end stage renal disease forms and forms used for rehabilitation data. This data set is expected to be completed in February 1992. With the National Uniform Billing Committee considering a new uniform billing form, timing is good for a claims transmission set.

Once the claims standard is approved for draft use, it will be used by HCFA to replace its electronic 1500 form. Because of the flexibility of the claims standard and its ability to handle detail and attachments electronically, many other organization likely will use it. The 837, as this transmission set will be called, will include managed care data for preferred provider organization and health maintenance or ganization billing.

A new task group is developing workers' compensation and disability transactions and creating an electronic format for processing items such as "first notice of injury."

The claims payment task group recently established the 835 electronic payment and remittance advice. This transmission allows for an electronic payment or remittance from a payer to a provider. (a) Several Blue Cross and Blue Shield organizations as well as several electronic networks and at least one electronic claims clearinghouse already have begun work on the 835 standard.

HCFA acceptance

At press time, HCFA was strongly considering using the 835 standard for FY92. HCFA officials have told HFMA that they are committed to EDI as a way to become fully electronic. HCFA is expected to accept the 835 unless its start-up is delayed, which likely will not happen except as a result of HCFA's haste in developing some form of national electronic payment advices.

If HCFA proceeds with the 835 standard, a Medicare Part A provider or fiscal intermediary (FI) would be introduced to EDI as soon as a provider not currently using an electronic remittance advice requests or is required to use one. Because of the limited amount of money expected in the budget for HCFA's contractors, HCFA will be requesting that providers use an electronic remittance advice in FY92. HCFA plans to move all Part A providers to its new standard remittance advice within the next three years.

Many payers are expected to move to the EDI standard if HCFA adopts it this year. Payers have been watching progress of the 835 and the 834 and will be using them whenever feasible.

Although the healthcare industry has been observing EDI developments for about four years, it has not fully embraced or understood the concept. Approximately 2,000 hospitals use some sort of "EDI" in their purchasing or materials service departments or accounts payable departments. Not every EDI system, however, will adapt to a provider's receivables, because many providers use proprietary software rather than the ANSI X12 versions, which are in the public domain.