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Minnesota AUC Administrative Simplification
 

Electronic Transaction Sets

Overview:

Electronic Transaction Sets are the defined formats in which data is exchanged for each specific administrative and financial transaction. Electronic data interchange (EDI) is the exchange of data, in a standardized format, between computers without human intervention. It allows partners to exchange information and transact business in an efficient and cost-effective manner.

Background:

A considerable portion of every health care dollar is spent on administrative overhead. In health care, this overhead includes many tasks, such as:

  • filing a claim for payment
  • enrolling an individual in a health plan
  • paying health care premiums
  • checking insurance eligibility for a particular treatment
  • requesting authorization for services
  • responding to requests for additional information to support a claim
  • coordinating the processing of a claim across different insurance companies
  • notifying the provider about the payment of a claim

Today, these processes involve numerous paper forms and telephone calls, non-standard electronic commerce, and many delays in communicating information among different locations. This situation creates difficulties and costs for health care providers, health plans, and consumers.

To address these problems, the health care industry, has worked to develop standards to improve the way in which health care data are exchanged electronically. HIPAA seeks to simplify and encourage the electronic transfer of information by replacing many of the current nationally-used nonstandard formats with a single set of electronic transactions that would be used throughout the health care industry.

The administrative simplification section of the HIPAA law requires the implementation of standards for electronic transmission of health care transactions. The purposes of these provisions are to improve the efficiency and effectiveness of the health care system by encouraging the use of electronic methods for transmission of health information.

Standardized formats and data content are required for the following transactions:

  • premium payments
  • enrollment and disenrollment in a health plan
  • eligibility inquiry and response
  • referrals and authorizations
  • claims/encounter data
  • claim status inquiry and response
  • payment and remittance advice
  • claim attachments

This standard applies to all health plans, health care providers who chose to do business electronically and all clearinghouses. Entities that pay health care claims, as well as the providers and clearinghouses exchanging electronic payment information with each other, are affected by these requirements.

Benefits:

There are significant benefits to be realized from EDI:

  • administrative cost reduction
  • marketing advantage
  • accurate and timely processing
  • streamlining business to business transactions
  • assurance of security and confidentiality of individual data
  • provision of an opportunity to establish joint ventures with key trading partners

Impact:

The HIPAA requirements have a significant impact on all aspects of health care delivery. Standardizing these transactions will impact everyone who is involved in exchanging health care information. The scope of this legislation may require a total systems renovation for some entities depending on the age and architecture of the individual applications. . HIPAA preparation will impact resource availability on a broad scale. The initial costs will be very significant, perhaps in the millions of dollars range for some entities. The overall savings will be achieved over a significant period of time.

Technology has experienced tremendous growth, making EDI an essential tool for conducting business in today’s market. Two factors have contributed to this: the Internet and standardization. The development of standards has increased EDI capability with Internet protocols. By engaging in EDI health care partners can improve relationships with their current trading partners and increase electronic business to others who have been unable, or unwilling, to do business electronically in the past.

  
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