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The Federal Government of the United States of America, under the Health Insurance Portability and Accountability Act (HIPAA) regulations, mandates that all transmission of healthcare information that is electronically transmitted be formatted in a specific structural format.  This has broad implications to the HealthCare Industry.  This mandate by the Federal Government states that all electronic healthcare transactions (whether for claims, payment, inquiry or status/adjudication inquiry) be formatted according to the American National Standards Institute (ANSI) specification designated ‘X12N’.  This X12N formatting standard has been promulgated by a series of committees and is derived from the existing X12 Electronic Data Interchange (EDI) formats designated “X12N version 5010”.


This new X12N standard super cedes the existing X12 ANSI standard for pre-existing formats of healthcare EDI transactions.  The new standard formats are hierarchical in nature and are much more complex and all-encompassing than previous EDI formatted transactions.  Other formats for data exchanged by healthcare entities (HCFA-1500, UB92, ADA-94, and proprietary forms) must be replaced by the formats defined under the X12N Guidelines.


Previous (and current) exchange of healthcare data has been carried out by many institutions and service agencies using a wide variety of data formats, procedures and controls.  This is all about to change.  No longer will ad-hoc formats utilized to transport healthcare information be used.  Now structured arrangements focused on standardized formats will mandate the building of relationships between healthcare entities wishing to exchange electronic healthcare information.  In the EDI world, this is called a ‘Trading Partner Relationship’ and involves a highly (often controlled/governed by legal contract) evolved business relationship.  The HealthCare industry is about to embark on a new adventure: Standardization and Control of electronic transaction processing between un-related entities.


In order to successfully implement an EDI transaction based enterprise solution, a complete understanding on the business functions of the companies involved is necessary.  An understanding of the Electronic Business Flow Management (EBFM) structures and concepts is required to understand and document the transaction dynamics involved in an electronic trading partner relationship. 


Key to this understanding this critical component of electronic commerce is that the process will forever change the healthcare business enterprise.  It is absolutely critical to understand the business dynamic of healthcare from the patient to the physician and all included entities, activities and processes.  This understanding encompasses the payment processing, treatment and patient accounting procedures and practices whose impact will be affected throughout the enterprise.  Furthermore, it is paramount to understand the inter-relationships between the healthcare entity and the trading partners linked by these electronic transactions.  The security and privacy concerns which gave rise to the HIPAA regulations are also integral components in electronic healthcare information processing.


Integrating EDI into the healthcare business process requires this in-depth understanding of the business rules.  It is much, much more than a simple creation of an EDI 'map' (the component that translates transaction documents electronically into a standardized format for electronic exchange).  Since many of the normal controls will now be encompassed by an electronic process, well documented and understood automated controls have to be implemented to compensate for the manual controls previously rendered during the manual or semi-automated transaction processing operation.  These controls need to be designed by a professional who understands the business process flow (insurance processing, patient records management, institutional care, drug manufacturing and distribution, and accounting) as well as the technical requirements of the EDI process.  If there is not sufficient expertise within your organization, it is a good idea to consult with experts in the field of EDI implementation to train staff and transfer knowledge into your organization.  Once established in a well-controlled and documented environment, the EDI process tends to be extremely stable and relatively easy to maintain.


EDI systems, building on existing supply chain models and other integrated electronic transaction processing systems, provide an automated approach to address the 'pull/push’ flow of data. The creation of the EBFM business process model is important in the development of control systems for an organization. The constant information flow between multitudes of sources provides the ability to create smooth healthcare claims processing, adjudication, payment, and inquiry information flow. This process will enable a smooth and consistent performance of both the service and business cycle from healthcare plan enrollment through delivery of patient services and insurance claim payment.


Many of the major ERP companies have established EDI interfaces within their application system products.  Healthcare transaction processing should be much the same.  These interfaces are often ‘flat file’ data constructs that predefine data elements acceptable to each application system (enrollment, eligibility, claim, payment, etc.).  EDI transactions are ‘mapped’ to these data constructs and then transported (via VAN [Value Added Network], FTP, sneaker-net, or other method) to an application bridging system for processing.  In most cases these interface points are similar to the entry point for manual document processes.  Few healthcare transaction processing system designs adequately address and incorporate the EDI dynamic of electronic transaction processing between trading partner entities.


The general design of an EDI transaction flow process includes a central point of inflow/outflow for all transactions.  These transactions flow through the interface constructs or repository to the application systems required to process each type of transaction.  Many healthcare entities have separate application systems that process each different type of healthcare transaction.  These application systems are often not closely coupled or linked, so will require transport mechanisms between them or the ability to access a common EDI repository to receive and transmit HIPAA formatted transactions.


This new focus on workflow, and shift from stand alone application systems to business flow planning will dramatically impact how the healthcare business community processes information and HIPAA based documents.  The implementation of Electronic Business Flow Management (EBFM) principles will provide extensive cost savings (enrollment, claim submission, adjudication time, etc.) that can be obtained by the proper implementation of these new approaches to traditional EDI.  With the lower cost of equipment, software and the pervasive use of computer technology, a national healthcare EDI infrastructure is being formed.