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Use EDI and HIPAA standards to streamline data-handling, cut costs at your organization

HIPAA Training Advisor, September 8, 2005

Under HIPAA, organizations can deploy EDI-the exchange of data in a standardized format between computers without manual human involvement-as a key tool for streamlining business, financial, and administrative operations, which can eventually lead to reduced costs, enhanced patient care, and an improved bottom line.

To help you streamline your healthcare data transmissions using EDI and HIPAA standards and experience the benefits, we've compiled a checklist of tips your organization should review and implement as necessary:

Tip #1: Know the HIPAA standard transactions. The HIPAA administrative simplification and transactions and code sets (TCS) provisions cover nine types of administrative and financial transactions:

  1. Healthcare claims or equivalent encounter information
  2. Health claims attachments
  3. Enrollments and disenrollments in a health plan
  4. Health plan eligibility inquiry and response
  5. Healthcare payment and remittance advice
  6. Health plan premium payments
  7. First report of injury
  8. Healthcare claim status inquiry and response
  9. Referral certification and authorization

These standards apply to all covered entities that conduct healthcare business electronically. For example, they affect entities that pay healthcare claims, as well as the providers and clearinghouses exchanging electronic payment information with each other.

Be on the lookout for ongoing developments from the HHS. EDI standards for first report of injury and claim attachments have not yet been adopted, but they are in the works.

Tip #2: Understand the TCS portion of HIPAA. The HIPAA TCS rule defines EDI format and content standards for each specific administrative and financial transaction. These standardized transactions replace hundreds of proprietary, nonstandard transactions previously in use. (For example, the X12 837 claim/encounter transaction replaced the HCFA 1500 claims form/file.)

Each of the HIPAA standard transactions has a name, number, and business or administrative use.

The industry has not yet maximized the benefits of standard transactions. For example, many providers have not yet implemented the remittance advice (X12 835), which would allow claim payment to automatically post back into the payment system and provide additional automated feeds into accounting systems.

Because not all providers are on the same page in terms of TCS, remain wary of nonstandard transactions.

Tip #3: Know the EDI implementation guides. Published EDI implementation guides contain technical specifications for each of the healthcare transactions for which HIPAA has adopted standards. These implementation guides are available at http://aspe.hhs.gov/admnsimp/index.shtml (scroll down to "National Standards/HIPAA Implementation Guides").

Don't worry when you open the guides and see loads of information. The guides for each transaction can number in the hundreds of pages. This is where you should involve the information technology (IT) department. Work with IT to understand, from a technical standpoint, how you can implement these standard transactions, how long it will take, and at what cost.

Also remember that HIPAA standards are technology-neutral. In other words, having a lower level of technology at your organization will not prevent you from implementing these standards. In fact, your technology level will determine how you must comply.

Editor's note: Adapted from "Use EDI and HIPAA standards to streamline data-handling, cut costs at your organization," Briefings on HIPAA, July 2005.

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