Is your hospital prepared for EDI challenges?

By Tim Stunz
SBPA Systems

Q: What are the most common misconceptions health care organizations have about electronic standards?

A: Electronic data interchange (EDI) in itself is not the panacea some may believe. While many larger organizations have achieved productivity gains by switching millions of transactions from paper processing to EDI, some expected efficiencies have not been realized.

For example, numerous large health care organizations have been using a standard EDI format for several years. However, up until [the requirements of the] Health Insurance Portability and Accountability Act (HIPAA) of 1996, there hasn’t been much incentive for small- to medium-sized health care organizations to adopt EDI. In fact, for most, the reported benefits just didn’t appear to justify the incremental costs of translating native formats to EDI formats.

Consequently, those companies who have adopted EDI can’t always count on their trading partners to have the standards in place. Sporadic implementation has resulted in mixed efficiencies.

Q: What standards do you think will be accepted by the Department of Health and Human Services in Washington, DC?

A: I expect the suggested X12 standards (a set of uniform standards for interindustry interchange developed by the American National Standards Institute in Washington, DC) will be accepted. With the many different standards in practice to date, the proposed X12 standards seem to show the most promise regarding data content. The biggest challenge is getting everyone prepared and trading data this way.

The most important thing to remember here is when the final rules are published there is a 24-month implementation grace period. I believe all involved parties should at least have a plan in place before then.

Q: How difficult do you think it will be for providers to implement the standards for providers who don’t use standard EDI formats now at all?

A: Many health care organizations that haven’t yet implemented EDI believe that once they adopt the standard, transaction processing will magically fall into line cleanly and without a hitch.

The reality of an EDI implementation can hold more than a few surprises. Our advice always is to start as soon as possible and make sure your system is configured correctly before trying to implement EDI.

We have been working hard on integrating EDI with our system software product for many years. It’s a challenge to do it right from the start, but we think that the benefits of adopting EDI standards will be worth the work upfront for all health care organizations.

Q: Are there common steps to follow?

A: Establish your current capabilities in trading data electronically. Determine the clients you can trade electronic data with. Pick a client who most represents your core business interest to start trading with, preferably one who is currently doing electronic business. Run a parallel system until you’re comfortable that the electronic data are at a good level. This time frame should not be more than eight weeks, but this depends on the quality of the data being sent. When the trading partners agree, then "flip the switch" and stop the paper flow.

Q: What implementation surprises do you anticipate providers having?

A: We initially developed an EDI module for our clients in 1994. But they were not ready for it. We have since put the product into production and are currently customizing it for several clients.

We are finding that each of our clients faces unique challenges with regard to implementing EDI. And all of these challenges have to be handled individually before EDI is implemented.

Most health care organizations can expect to spend considerable time and resources working out numerous kinks. EDI implementation is generally a slow process because effective use of EDI requires that data being exchanged from one trading partner to the other must be clean and consistent.

Q: What special challenges will providers have who already use other standards?

A: Many providers who already use other standards may not know what standards they are currently using. A significant challenge to providers who submit data electronically will be their software vendor. The providers need to find out if the software vendor they are using has a plan in place to address the HIPAA issues. One must remember, though, that clearinghouses can receive data in any format but must re-format this data into the chosen standard.

Q: How long should it take for most providers to implement the standards?

A: Implementation of the EDI standards could take anywhere from several months to a year or more. Variables that would impact the amount of time required include the current level of expertise with EDI, the ability of their software/systems to handle the emerging standards, the willingness to bring in additional expert resources, and the level of electronic automation of the providers’ current processes.

Q: Who should be involved in the implementation project, what kind of equipment will they need, and what kind of cost should they expect?

A: In addition to the obvious membership of experts in information technology and EDI on any EDI project team, the team also must include representatives from parts of the organization that are the source of and users of EDI transactions. In many cases, it will be necessary to alter systems and processes throughout the organization. Therefore, it is essential that individuals who use and are impacted by those systems and processes be a part of the team.

Because equipment and part costs vary due to the nature of customization, we can’t specify an average dollar amount.

[Editor’s note: SBPA Systems is a health care benefits administration software company.]