Electronic data interchange (EDI) is the structured transmission of data between organizations by electronic means. It is used to transfer electronic documents or business data from one computer system to another computer system, i.e. from a medical practice to an insurance payer.
A Physician billing system should utilize the following three common EDI functions: submission of Electronic Claims, utilization of Real Time Eligibility (RTE) and receipt of Electronic Remittance Advices (ERA's). Lets look at each one of these further.
Electronic Claims replace the standard HCFA 1500 paper claim forms that are printed and mailed to the payer. The claims are batched in the medical billing software and then transmitted in an electronic format directly to the payer or to a clearinghouse. If a clearinghouse is used, they serve as the middle man for all the EDI transactions. Unlike with paper claims where you have no way to verify receipt by the payer, electronic claims can be tracked through each stage of the process, from receipt by the clearinghouse to the acknowledgement and acceptance by the payer. Additionally, electronic claims are pre-screened for certain errors with notices being sent back to the medical practice within days for quick correction and resubmittal. Due to their formatting, electronic claims are much more quickly processed by the payer, reducing the wait for reimbursement in some cases from weeks to days.
The Real Time Eligibility function in the medical billing software allows the medical practice to verify patient insurance coverage before services are rendered. The details provided in the RTE response also confirm or provide other valuable data such as, patient address, health insurance identification number and group number, and effective dates of coverage. All of this information eliminates denials for lack of coverage and provides great assistance in submitting clean claims that will be processed quickly.
Electronic Remittance Advices are the electronic equivalent of a paper Explanation of Benefits (EOB). The medical billing software imports the ERA from the payer or clearinghouse and often can adjudicate the payments automatically in the indicated patient's accounts. Amounts that are designated Contractual Obligations are written off, patient responsibilities such as co-pays and deductibles are allocated to the patient balance, and other open balances are applied to any appropriate additional payers. Even information regarding denials is attached to the designated services with complete details allowing medical office staff to research and choose the best action in order to resolve the denial with the payer.
If your medical system software is not utilizing all of these functions, it may be time to look for a better solution, Iridium Suite by Medical Business Systems.