EDI 834, 835, and 837: Simplifying Healthcare Data Exchange

EDI 834, 835, and 837: Simplifying Healthcare Data Exchange

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Astera Marketing Team
Updated

Electronic data interchange (EDI) streamlines the exchange of information by reducing paperwork, cutting costs, and improving accuracy in sectors such as retail, manufacturing, logistics, and healthcare.

The healthcare industry benefits significantly from EDI when dealing with vast amounts of patient information, insurance claims, and payment processing methods.

Healthcare organizations rely heavily on EDI 834, 835, and 837 to ensure smooth operations. These formats cover benefits enrollment, 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.

How EDI 834, 835, and 837 Work Together
Diagram showing an employer sending EDI 834 enrollment to a health plan, a provider sending EDI 837 claims to the health plan, and the health plan returning EDI 835 payment and remittance to the provider

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 EDI transactions are governed by the ANSI X12 (American National Standards Institute X12) standards 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. 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, also called EDI transaction codes. For context, a transaction set is the digital equivalent of a paper document. Each set 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 Enrollment 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 reports whether the transaction complies with the HIPAA implementation guide.

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. Health insurance plans use this document when communicating with healthcare providers to make payments, furnish Explanations of Benefits (EOBs), or 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 claim in an EDI 837 covers a single care encounter between a healthcare provider and a patient. It includes:

  • The patient's information

  • A description of the treated condition

  • The services provided as treatment

  • The treatment's cost

The EDI 837 transaction set has three variants:

  • 837P (Professional): Used by physicians and other healthcare professionals to bill for their services.

  • 837I (Institutional): Used by hospitals and other facilities to bill for inpatient and outpatient services.

  • 837D (Dental): Used by dental practices.

The EDI 835 transaction set is sent in response to an EDI 837 document and provides context on the payments for the claims it contains. 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. EDI 837

A typical EDI 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:

Aspect

EDI 835 (Healthcare Claim Payment/Advice)

EDI 837 (Healthcare Claim)

Purpose

Electronic remittance advice that explains how a claim was paid

Submitting healthcare claim information

Information flow

From payer to provider

From provider to payer

Key functions

Payment details, adjustments, denial reasons (if applicable)

Patient details, service details, billing information

Payment information

Includes details about payments made to healthcare providers

Not applicable

Claim information

Not applicable

Includes patient demographics, services provided, diagnoses, and charges

Types of claims

Not applicable

Professional (837P), institutional (837I), dental (837D)

Adjustment codes

Claim Adjustment Reason Codes (CARCs), Remittance Advice Remark Codes (RARCs)

Not applicable

Compliance

HIPAA-mandated standard format for remittance advice

HIPAA-mandated standard format for claims

Usage

Insurance companies, government healthcare programs, healthcare clearinghouses

Healthcare providers (hospitals, doctors, clinics)

Impact on workflow

Automates payment posting and reconciliation

Streamlines claim submission and processing

Industry use

Payment cycle and remittance advice

Claim submission and processing

EDI 834, 835, and 837 Sequence Flow

EDI 834, 835, and 837 Sequence Flow
Three-step EDI sequence flow: an employer enrolls John Doe with EDI 834, a facility submits a $500 claim with EDI 837, and the insurer pays $400 with EDI 835 after a $60 discount and $40 co-pay

Step 1: Enrollment and Eligibility (EDI 834)

Scenario: An employer enrolls a new employee, 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 returns an EDI 999 acknowledgment 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 a 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: The facility billed $500 for John Doe's check-up. ABC Health Insurance sends an EDI 835 transaction to the facility showing a payment of $400, with a $60 contractual discount and a $40 co-pay for John Doe to pay.

Automate Your EDI 837 Flows with HealthEDIStreamline EDI 837 file exchange. Explore a no-code HIPAA-compliant solution for seamless healthcare EDI transactions.View Demo

Benefits of EDI 834, 835, and 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 claims.

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 claim submissions include all the required details, leading to greater clarity and reducing errors caused by 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 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. As a result, they can enjoy a more efficient data exchange framework. The time and effort saved can be reinvested in improving patient care and treatment protocols.

How HealthEDI Helps Organizations with EDI 834, 835, and 837

HealthEDI, powered by Astera, is an enterprise-grade healthcare EDI data exchange solution that allows organizations 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. HealthEDI also offers holistic integration capabilities to ensure seamless connectivity with your entire healthcare ecosystem.

Best of all, HealthEDI does all this with zero code and a highly intuitive visual interface. It also offers advanced automation features, so you can save hours spent on repetitive tasks such as sending acknowledgments, receipts, and email confirmations.

Discover a better way of working with your EDI documents: sign up for a demo today or contact our team for more information.

EDI: Frequently Asked Questions (FAQs)

Electronic data interchange (EDI) is the computer-to-computer exchange of business documents in a standard format. It replaces paper documents, such as purchase orders, invoices, and insurance claims, with structured electronic files that systems can process automatically.
EDI 834 is the Benefit Enrollment and Maintenance transaction. Employers, unions, government agencies, and other plan sponsors use it to send member enrollment information to health insurance plans.
An EDI 834 file contains the member's demographic details, the plans and coverage they've selected, and the type of change being made: a new enrollment, a change to an existing enrollment, a reinstatement, or a termination.
EDI 835 is the Healthcare Claim Payment and Remittance Advice transaction. Health plans send it to providers to explain how claims were paid, including amounts paid, adjusted, or denied, and the reasons for each.
EDI 835 lets providers post payments and reconcile accounts automatically instead of keying in paper remittance details. Standard adjustment codes (CARCs and RARCs) explain every reduction or denial, so billing teams can spot problems and follow up on claims faster.
EDI 837 is the Healthcare Claim transaction. Providers send it to payers, directly or through a clearinghouse, to bill for care. It includes the patient's details, diagnoses, services provided, and charges.
There are three types: 837P for professional claims from physicians and other practitioners, 837I for institutional claims from hospitals and other facilities, and 837D for dental claims.
The provider sends an EDI 837 to bill for care, and the payer responds with an EDI 835 that explains the payment. They don't always match one-to-one: one 835 can cover claims from several 837s, and one 837 can lead to more than one 835.
The EDI 999 confirms that a transaction, such as an EDI 834 or 837, was received and reports whether it complies with the HIPAA implementation guide. It shows whether the transaction was accepted, rejected, or accepted with errors. It doesn't confirm that the enrollment or claim itself was approved.
HealthEDI lets organizations build, parse, validate, and exchange EDI 834, 835, and 837 files in a no-code interface. It checks files against HIPAA and ANSI X12 standards, integrates EDI data with other systems, and automates repetitive tasks such as sending acknowledgments.