What is the HIPAA EDI Rule?

The term “EDI” stands for “Electronic Data Interchange.” The HIPAA EDI rule is a set of data transmission specifications. These specifications govern how data is electronically transferred from one computer to another. The rule defines the types of EDI transactions subject to HIPAA, and specifies the exact format for each transaction record. The HIPAA EDI rule is discussed in greater detail below.


What are HIPAA Electronic Transactions?

Under the HIPAA EDI rule, a HIPAA electronic transaction is an electronic exchange of information between two parties to carry out financial or administrative activities related to healthcare. For example, a healthcare provider will send a claim to a health plan to request payment for medical services.

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Under the HIPAA rule, the Department of Health and Human Services (HHS) has adopted  standard rules for the electronic exchange of healthcare data between covered entities, and covered entities and business associates. These transactions include:

Payment and remittance advice (PDF)

Claims status (PDF)

Eligibility (PDF)

Coordination of benefits (PDF)

Claims and encounter information

Enrollment and disenrollment

Referrals and authorizations

Premium payment

What are Transmission Specifications?

Under the HIPAA EDI rule, whenever one computer translates data to another, the sending entity must follow specific data transmission specifications. The receiving entity must follow these specifications as well. The HIPAA EDI rule requires that covered entities use the X12N EDI data transmission protocol. The transmission protocol requires covered entities to use specific data code sets. The current code set standard format is referred to ASC X12 Version 5010, or HIPAA 5010.  

What are the Advantages of HIPAA EDI?

The most significant advantages of the electronic data interchange rule are security and accuracy. The HIPAA EDI rule allows the exchange of computer-processable healthcare data in a standardized format and secure manner among healthcare professionals, healthcare institutions, and patients. For example, the rule enables healthcare providers to send claim status requests and obtain information in return, in a secure manner. The entity responding to the claim status request must use the same format in responding to the request. This helps to ensure accuracy. 

HIPAA EDI offers other benefits as well. Using EDI for healthcare transactions improves productivity, by enabling increased efficiency and speed. Since there is limited user input, fewer errors are made. Previously, before a standard electronic protocol was enacted, manual data errors, shipping errors, and billing address errors were not uncommon. These errors delayed payment, treatment, and processing of healthcare claims.

 What are Code Sets?

Code sets are shared lists of codes that are used in place of longer names or explanations. Healthcare transactions use medical code sets to quickly identify:

Treatments, procedures, and tests

Medical equipment and supplies



Healthcare transactions use non-medical code sets to quickly identify:

Organizational routing information

Claim payment adjustment information

Claim status information

ZIP code information

Using code sets in standard transactions streamlines the administrative process by reducing time spent translating information into different formats.

Different healthcare activities have different code sets:

The code set for diagnoses (ICD-10-CM) is the CD-10 – International Classification of Diseases, 10th edition.

The code set for procedures (ICD-10-PCS) is the International Classification of Diseases, 10th edition.

The code set for outpatient services/procedures is CPT – Current Procedural Terminology 

For a list of additional code sets, please click here.

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