Electronic Data Interchange

Electronic Data Interchange is the process by which companies share important information between them. A manufacturer for example, who is working on an order for a client would receive an inquiry about the status of the order. In response, the manufactorer would issue an order status report. While these items can be done via a phone call, imagine that the manufacturer is manufacturing lightbulbs and generates over 100,000 differnet lightbulbs in a day for different companies and stores. Attempting to do this inquiry using people would be both costly and slow. It is infinitely more efficient to allow the computers of the manufacturer and the clients share information through the use of EDI documents.

In the US. We use the X12 specification and the two documents involved above would be:

869 - Order Status Inquiry
870 - Order Status Report

The following resources are useful for further study of EDI

• EDI presentation
  
• List of X12 EDI Documents
  
• Example of EDI Document 813 - Electronic Filing of Tax Return Data
  

Lets use another example of a person (Anna) going to a hospital (Bethsida Medical) because she has a headache.

1. Anna give her insurance card to the receptionist at Bethsida Medical
2. Receptionist uses (X12/EDI 270 Eligibility, Coverage or Benefit Inquiry) to determine that Anna has coverage.
3. The doctor sees Anna and wants to get her previous health records. He uses (X12/EDi 275 Patient Information)
4. Bethsida Medical submits a claim to Cold-Cross, Anna's medical insurance using (X12/837 Health Care Claim).
5. 2 weeks later, the Cold Cross insurance pays Bethsida Medical using (X12/EDI 835 Health Care Claim Payment/Advice)

This is a snapshot of the daily usage of X12 data.