Sample Paper on Health Insurance Portability and Accountability Act and Electronic Data Interchange in the Healthcare Services

Define EDI

The advancement in technology across industries has contributed to the need for digitalized business practices. The healthcare industries are now moving towards paperless offices which are an attempt to organize and integrate data of the service users and providers. Electronic Data Interchange is a structured way of transmitting data between different computer systems, regulated by standards and important in medical claims where a switch occurs in basic units referred to as transactions, which relate to standard trading documents such as healthcare claims or remittance advice (Robertson, 2007). Simply put, EDI is a mode of electronic exchange of information between two business partners in a specified, prearranged design.

 Explain how using EDI facilitates electronic transactions

Similar to any other transactions, organizing voluminous data is always a challenging and complex process especially in sorting a patient medical history record and health insurance reimbursements. However, EDI comes with its own standards where each document has a specific format making it easy to send and interpret. EDI acts as a guide between providers and insurance payers and ensures that the transactions are done accurately, speedily, and at low costs.

The standards transactions format was created by Accredited Standards Committee (ASC) X12N and under the authority of the Health Insurance Portability and Accountability Act (HIPAA), the Department of Health and Human Services (DHHS) adopted a series of standard EDI transaction formats (Moynihan & Moynihan, 2001). EDI facilitates easy electronic transactions especially when the trading partners understand the different formats for specific transactions. There are several standard formats that have been adopted by the Department of Health and Human Services. This includes X12N 276/277 Claims Status Request and Response, X12N 835 Claim Payment/Remittance Advice, and X12N 837 Dental, Professional, and Institutional Claims among others (Moynihan & Moynihan, 2001).

Explain how HIPAA has changed how health care information is transmitted in EDI.

HIPAA was enacted in 1996 and it provided for the creation of national standards for electronic health care transactions and statewide records for providers, insurance issuers, and employers. This is achieved through a set of medical codes which translated digits into diagnosis, drugs, equipment, and procedures (Robertson, 2007). The different formats for different functions have really transformed the healthcare information system. These changes can be illuminated using two examples.

First, HIPAA and EDI are complemented by the adoption of specific format X12 and messages (Robertson, 2007). For instance, Medicaid has established different methods for providers to send and receive EDI transactions.  Once a specified format has been identified, proper steps have to be followed (Robertson, 2007).

Another example is with regard to EDI Health Care Claim Transaction, set 837 which is used to transmit health care claim billing (Robertson, 2007). The EDI can be sent by providers of health services to payers either directly or through middle channel billers (Robertson, 2007). Moreover, The EDI can be used to send health claims and billing payment data between payers with different payment obligations such as when the alignment of reimbursement is required among payers and agencies to oversee the issuance and calculation of health care services within a specific industry.

Thus, the HIPAA and regulations under it have a structured X12 transaction set processing. The healthcare systems have now been made efficient and effective through the simplification, organization, and standardization under HIPAA. The industry was riddled with dishonest claims and denials but the HIPAA and EDI, it has facilitated accurate storage of information, reduction in the number of denials, accurate payments made, and improved security.

Describe the relationship between Electronic Health Records, reimbursement, HIPAA, and EDI transactions.

Having already discussed the impact of HIPAA and EDI in the healthcare service, Electronic Health Records (EHR) and reimbursements are other components that complete digitalized care (Moynihan & Moynihan, 2001). As such, Electronic Health Records is the paperless medical history of a patient kept by health service providers. The EHR comprises a patient’s diagnosis treatment, prescribe medications, allergies, lab data, and even previous medical history. And importantly to these other components, EHR supports other related care services through interfaces, administrative management, and reporting. EHR has made other providers access the medical information of a patient easily and has reduced medical errors. HIPAA and EHR have reduced instances of security leakages, especially of the service users’ medical history.

HIPAA and EDI have adopted a standard transaction that rendered redundant the multiple standards transaction that had to verify payers.  Under reimbursement, the HIPAA EDI communicates to providers, health plans, and clearinghouses (Robertson, 2007). The standard transactions enable the entities to submit and recover HIPAA authorized transactions the Medicaid.

Therefore, Health Records, reimbursement, HIPAA, and EDI have connected digitalized functions that run on a single system, in which a standard transaction is sent to other entities. The system provides a complete history of service users and providers and when necessary the deductions, premiums, and even reimbursements can be standardized.


Moynihan, J., & Moynihan, M. (2001). The basics of EDI and HIPAA for clinicians, healthcare executives and trustees, compliance officers, privacy officers and legal counsel [PowerPoint slides]. Retrieved from:

Robertson, D. (2007). Chasing compliance: HIPAA’s electronic data interchange requirements. For the Record, 19.1, 16.