From retail and manufacturing to logistics and healthcare, electronic data interchange (EDI) streamlines the exchange of information by reducing paperwork, cutting costs, and improving accuracy. The healthcare industry benefits significantly from EDI when dealing with vast amounts of patient information, insurance claims, and payment processing methods.

Healthcare providers rely heavily on EDI 834, 835, and 837 to ensure smooth operations. These formats cover benefits enrolment, healthcare payments, and medical claims. Healthcare organizations can leverage these EDI standards to manage numerous transactions, maintain data accuracy, reduce administrative burdens, and ensure a faster reimbursement process.

This blog explores these transaction sets in detail to highlight how they contribute to the healthcare system. 

Managing Healthcare Claims Electronically

Conventional claim management in healthcare was paper-based and relied on individuals to correctly carry out manual processes. Consequently, it was highly inefficient and prone to human errors.

The shift from traditional paper-based claim management to EDI represents a significant upgrade in healthcare administration. Unlike manual processes, EDI leverages standardized formats and protocols to streamline data exchange. 

Healthcare EDIs are guided by the ANSI X12 (American National Standard Institute X12) and HIPAA (Health Insurance Portability and Accountability Act). EDI systems automate and secure the exchange of information, reducing the risk of mistakes and accelerating processing times. Data exchange thus takes place using standardized formats and protocols. EDI addresses the inefficiencies of the paper-based system and enhances compliance. The result is a faster and more accurate system for processing benefits, payments, and claims.  

Each EDI file contains information encoded using EDI Transaction Sets or EDI Transaction Codes. For context, a transaction set is the digital equivalent of a paper document. Each set or code is assigned a unique three-digit identifier known as a transaction set ID. 

 Here’s a closer look at EDI 834, 835, and 837:

EDI 834: Benefit Enrolment and Maintenance

Employers use EDI 834 to enroll their employees for healthcare benefits. It’s also used extensively by trade unions, insurance agencies, and government agencies to enroll their members. Under the HIPAA 5010 standards, EDI 834 electronically exchanges information regarding benefits, the subscribed plans, and the enrollee’s demographic details.

The EDI 834 transaction set can cover any of the following functions of healthcare plans:

• New enrollments 
• Modifications in existing enrollments
• Reinstatement of benefits enrollment
• Disenrollment (termination)  

Once an EDI 834 is submitted, the recipient must acknowledge it with an EDI 999 Implementation Acknowledgment. This document confirms receipt of the EDI 834 and provides additional information regarding the latter’s compliance with HIPAA standards.

Receiving a 999 Acknowledgment does not guarantee that an EDI 834 transaction will be processed. The 999 Acknowledgment can lead to one of three outcomes for an EDI 834:  

• Accepted (A)
• Rejected (R)
• Accepted with errors (E)

EDI 835: Healthcare Claim Payment and Remittance Advice  

EDI 835 focuses on exchanging healthcare payment and benefits information. The updated version of the HIPAA standards, HIPAA 5010, specifies this transaction set’s format, structure, data fields, and elements. Healthcare insurance plans use this document while communicating with healthcare providers to make payments, furnish Explanations of Benefits (EOBs), or a combination of both. It contains the following information:

• Details of charges (which ones were paid, denied, or reduced)
• Information on deductibles, co-pays, or co-insurance (if applicable)
• Whether any claims or line items were bundled or split
• Whether the payment was made directly from the insurance provider to the healthcare provider or indirectly (through a clearinghouse)

EDI 837: Healthcare Claim File  

The EDI 837 transaction set focuses on healthcare claim information. Healthcare providers send it to payers either directly or indirectly. These payers can include insurance providers, government agencies, or health maintenance organizations.

Each EDI 837 document covers a single care encounter between a healthcare provider and a patient. It includes amounts for the following:  

• The patient’s information
• A description of the treated condition
• The services provided as treatment
• The treatment’s cost  

An EDI 837 document has several variants:  

• Dental practices use 837D
• Institutions use 837I
• Healthcare professionals use 837P 

The EDI 835 transaction set is sent in response to an EDI 837 document and provides context on the payments listed in the latter. However, EDI 835 and 837 documents don’t always align completely. As a result, a single 837 transaction can sometimes require multiple 835 documents in response. Alternatively, one EDI 835 can cover various EDI 837s.

EDI 835 vs. 837

A typical payment cycle in healthcare starts with EDI 837 initiating the claim and EDI 835 closing the loop. In simple terms, EDI 837 is the bill, and EDI 835 is its receipt. Here’s a side-by-side comparison between the two:

EDI 834, 835, and 837 Sequence Flow

Step 1: Enrollment and Eligibility (EDI 834)  

Scenario: A healthcare facility enrolls a new patient named John Doe in a health plan.  

Example: The newly hired John Doe chooses a healthcare plan offered by his employer. The employer sends an EDI 834 transaction to ABC Health Insurance, which processes the enrollment and sends it back to the employer.  

Step 2: Claim Submission (EDI 837)  

Scenario: John Doe visits a healthcare facility for a medical check-up.  

Example: The healthcare facility submits an EDI 837 transaction to ABC Health Insurance for John Doe’s check-up, detailing services such as physical exam, bloodwork, and other lab tests.  

Step 3: Claim Payment and Remittance Advice (EDI 835)  

Scenario: The healthcare facility receives payment for the services provided to John Doe.  

Example: ABC Health Insurance sends an EDI 835 transaction to the healthcare facility, indicating a payment of $400 for John Doe’s check-up, with an adjustment for a $40 co-pay and a $60 discount.

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Benefits of EDI 834, 835, 837 Files  

Increased Efficiency and Speed  

• EDI 834 streamlines enrollment, ensures that member information is promptly added and updated, and minimizes the need for manual data entry.   

• EDI 835 helps with automated payment posting and reconciliation, expediting the payment process.  

• EDI 837 optimizes the claims submission process by decreasing the time and effort required to process and adjudicate them.  

Transparency and Compliance  

• EDI 834 ensures consistent, standardized communication between employers, health plans, and other entities, helping them remain HIPAA-compliant.  

• EDI 835 offers detailed information on claim payments, adjustments, and denials to improve transparency. It aids in regulatory compliance through standardized transaction formats and codes, such as Claim Adjustment Reason Codes (CARCs) and Remittance Advice Remark Codes (RARCs).

• EDI 837 ensures that all claim submissions include all the required details, leading to greater clarity and reduced likelihood of errors arising from incomplete information. EDI 837 follows standardized claims formats to stay HIPAA-compliant, protect patient data, and lower the risk of penalties.  

Cost Savings and Resource Utilization  

• EDI 834 decreases administrative costs and labor requirements by automating the enrollment process. This allows administrative personnel to focus on more value-adding tasks instead of manual data entry.  

• EDI 835 enables healthcare providers to manage their cash flow more effectively through the availability of timely and error-free payment information. It minimizes the need for manual reconciliation, ensuring a faster turnaround between service delivery and payment receipt.

• EDI 837 decreases the time and labor costs associated with printing, postage, and physical storage of paper documents, as well as manual processing and follow-up. Accurately formatted claims with complete information also decrease the risk of rejection or delays, which leads to faster reimbursements and fewer corrections by administrative teams.

Summing It Up  

Leveraging EDI 834, 835, and 837 allows healthcare organizations to create more optimized workflows and reduce the chances of errors. They can enjoy a more efficient data exchange framework as a result. The saved time and effort deliver great returns when invested in improving patient care and treatment protocols.

How Astera Helps Organizations with EDI 834, 835, 837

Astera EDIConnect is an enterprise-grade B2B data exchange solution that allows organizations in the healthcare sector to build and process EDI documents, ensure compliance with HIPAA, HL7,and ANSI X12, and maintain high data quality throughout. Support for EDI parsing enables healthcare facilities to leverage the data contained within EDI documents.

Best of all, Astera EDIConnect does all this with zero code and a highly intuitive visual interface.  

Discover a better way of working with EDIs — sign up for a demo today or contact our team for more information.