EDI Testing in Healthcare Industry: What It Is and Why It Matters

Timothy Joseph
Timothy Joseph | October 25, 2022

EDI Testing in Healthcare Industry: What It Is and Why It Matters

Electronic data interchange, or EDI, is a way for business documents to be easily communicated between computers in a standard format. This unified format allows healthcare professionals to carry out efficient automation of work processes and increase positive client experiences. With the digitalization of the healthcare industry, it’s imperative that you implement EDI in your healthcare systems to improve overall data analytics and save costs. In this article, we answer the question, “what is healthcare EDI?” You will also learn how to incorporate EDI testing and comply with modern EDI standards.

Why Is Healthcare EDI Implementation Important?

Since their advent in 1991, EDI standards have rapidly changed, but what challenges does EDI in healthcare manage to solve? Here are some reasons why EDI is crucial for developing your healthcare systems.

  • Managing Test Data

    Thousands of financial transactions, claims, and payment records take place within healthcare systems in the span of a single minute, and EDI systems can handle voluminous chunks of this type of data at once. However, you must ensure that data stockpiles do not contain confidential information, and the information contained must combine smoothly with real-world numbers.

  • Frequent Regulatory Updates

    The regulatory body responsible for consistently refining EDI standards is the Accredited Standards Committee X12. In 2020, X12 announced the next version of EDI standards to be implemented for use by late 2022. With this, a newly-upgraded EDI system aims to routinely provide quick and dependable data transport, which promotes both business success and client satisfaction within your healthcare systems.


Benefits of Healthcare EDI Implementation

EDI in the healthcare industry has its foundations in how the existing supply chain facilitates better communication between health professionals and insurance companies. Listed below are five ways that EDI can positively affect your healthcare organization.

  • Standardization

    EDI establishes a unified set of national and global standards for electronic transactions in the healthcare industry. Thus, healthcare EDI implementation decreases the amount of confusion caused by digital documents transcribed in formats that are difficult to comprehend or blatantly clash with other existing formats used within the system.

  • Security

    Cybersecurity breaches are posing a major risk to proprietary information nowadays. To mitigate this issue, EDI-based communications aim to increase safety in digital healthcare transactions by utilizing secure data transmission. This method blocks unauthorized third parties from gaining access to personal identifiable information, safeguarding clients from harmful monetary penalties.

  • Reduced Administrative Costs

    Aside from keeping data safe and standardized, EDI-based healthcare transactions also intrinsically lower administrative costs by conducting data transfer on a digital platform. This reduces the need for a high volume of office supplies and stationery, with data now made easy to access using computers and digital software.

  • Improved Productivity

    Streamlining basic healthcare transaction processes while significantly reducing errors caused by manual data input, EDI infrastructure is a suitable way to improve productivity and save more time for other important aspects of your system, such as in-depth quality assurance testing, which you can comfortably customize at an affordable price.

  • Fast Processing

    Lastly, EDI-based healthcare quickly provides patients with a repository of all their health information, eliminating the tendency for slow claims and benefits processes. This is especially important considering that client satisfaction increases in proportion to the timeliness with which healthcare services are provided.


How Does Healthcare EDI Work?

The overarching EDI technology used across various industries is similar to that used in EDI healthcare solutions. An EDI healthcare transaction can be outlined in four steps.

  • EDI Mapping, Translation, and Document Generation

    First, standardized EDI documents are generated for requesting compensation from either an insurer or payer. Creating documents is a complex task that involves EDI mapping, or the translation of proprietary information encoded in formats like Excel spreadsheets and CSVs to a unified EDI format like HL7 or idocs.

  • Snip Level Testing and Validation

    After the EDI documents have been created, the information contained within the files must be thoroughly counter-checked for accuracy. This is especially crucial for healthcare systems, where rigorous testing must be performed to keep medical data like patient history intact. Healthcare EDIs have a specific system called Snip Levels, which runs files through seven levels of validation to ensure correctness.

  • B2B File Transfer

    When the EDI documents have passed quality standards, they are now ready to be sent from one partner (e.g., healthcare professional) to another (e.g., a government health agency). Security is absolute for business-to-business (B2B) file transfer, and so this system uses a managed file transfer platform for secure document exchange.

  • EDI Integration

    Inbound EDI-generated documents can now be translated by the recipients from their native encrypted format into any general business format. This enables the data to be transported to their respective applications, such as storage in online databases or evidence in strategizing effective healthcare policies.


EDI Testing Procedures

The use of EDI in healthcare involves different testing procedures responsible for ensuring that the information generated in documents stays up to par with regard to validity and accuracy.

  • Integrity Testing

    Through integrity testing, the native syntactical integrity of the provider’s original EDI file is maximized, which is crucial for subsequent file transfer and integration.

  • Line of Service or Product Type Testing

    Line of service or product type testing assesses the transaction’s validity based on specific criteria outlined in the official HIPAA Implementation Guide used for specialized health care services, including durable medical equipment.

  • Inter-Segment Situation Testing

    Inter-segment situations that are specified in the HIPAA Implementation Guide must also be thoroughly assessed. This type of testing is suited for transactions involving accident claims where information like an accident date needs to be present.

  • Balancing Testing

    Verification of balancing makes sure that summarized data is appropriately consistent with the more fine-grained numbers, as mentioned in the HIPAA Implementation Guide.

  • Implementation Guide Requirements Testing

    Other types of requirements such as validation of data elements may be specified in a transaction’s specific HIPAA Implementation Guide, and so this must be considered before EDI systems can proceed to the next level.


Two Approaches to Implement EDI in Healthcare: Direct EDI Software vs VANs

There are two well-known approaches to incorporating EDI in healthcare systems, each with their own pros and cons: value-added networks (VANs) versus direct EDI software.

  • Value-Added Networks

    At their core, VANs act as third-party messengers for sending EDI-based data to the intended recipient. VANs generally involve organizations entering information by hand into a web form, which causes these systems to be highly tedious and prone to human error. Aside from this, costs can rack up annually given that fees are charged on a per-transaction basis.

  • Direct, Peer-to-Peer EDI Messaging Software

    Direct EDI software solutions eliminate the need for manual data entry, as they allow business partners to communicate directly with each other’s systems using a single platform. This type of messaging software, usually known as AS2, does require an initial setup, but in the long run, time and money are saved with a scalable automated routine.


How We Make Your Healthcare Infrastructure EDI-compliant

Quality assurance (QA) automation focuses on successfully fulfilling client needs through highly regulated processes. In EDI testing, you must verify that certain EDI standards are constantly transmitted and recorded as needed. Thus, for EDI testing in the healthcare industry, systems can be structured using QA automation such that they are scalable, ensuring additional claims can easily be accessed in future requests.

Here at QASource, to allow your healthcare infrastructure to be of the highest quality, we implement several ways to have EDI systems comply with present healthcare standards.

  • Develop a Robust System Infrastructure

    A robust system architecture not only enables users to easily store and retrieve EDI information, but it also prepares for emergency scenarios by implementing backups and provides immediate responses to transactions. By upgrading obsolete system architecture, we make sure that your healthcare systems comply with rigorous modern standards.

  • Use Encrypted Communication

    Based on present Centers for Medicare and Medicaid standards, healthcare providers must ensure that the digital systems they use are safe and properly encrypted to decrease losses caused by breaches in confidentiality with regard to patient information. Our goal is to keep your data secure using protected communication channels and infrastructure out of reach from cybercriminals.

  • Use Role-based Access

    To keep information retrievable only to intended parties, utilizing role-based access is crucial in maintaining health care system integrity. We carefully divide users into various sectors, such as administrators, healthcare professionals, and patients, and give them roles that allow them to access data only they are authorized to obtain.

  • Keep PHI Safe

    Lastly, protected health information is key to the growth of a healthcare data management system, and to ensure that private data is safely stored, we implement modernized solutions such as smart keys and biometrics. Furthermore, we also have emergency precautions like security alerts and data restoration processes to ensure that the EDI transfer algorithm is as safe as it can be.



EDI integration can be a very complex process, and requires extensive practical knowledge of HIPAA and a high level of programming skills. Without a team of experienced testers, healthcare providers risk investing in non-performing software that might even lead to HIPAA violations.

At QASource, our testers have extensive experience of successfully completing healthcare projects, implementing EDI, and creating custom-tailored healthcare management solutions that cater to your business goals. To learn more about how we can help, get in touch with us today!!

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This publication is for informational purposes only, and nothing contained in it should be considered legal advice. We expressly disclaim any warranty or responsibility for damages arising out of this information and encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.