Why iPaaS Is the Best Solution for Healthcare EDI

By Boomi

The world has undergone a significant digital revolution in the nearly two decades since the signing of the federal Health Insurance Portability and Accountability Act (HIPAA). Advances in technology make essential administrative functions more manageable and more widely accessible. The public now expects digital access to every touchpoint of their healthcare journey.

That means businesses in the healthcare sector must balance that desire for access to more information with stringent requirements for privacy.

HIPAA created national standards for protecting sensitive patient information. The far-reaching legislation covers entities such as healthcare providers, pharmacies, insurers, and third-party billing services that electronically transmit identifiable healthcare information. Under the law, organizations that transfer that data must use a secure electronic data interchange (EDI) process.

An integration platform as a service (iPaaS) with EDI functionality is the modern way to protect personal information. To understand why iPaaS technology is uniquely positioned to transmit data safely, we must first examine EDI and how it works in the healthcare industry.

What Is EDI?

EDI is the automated exchange of data in a standardized format between two computer systems. That enables reliable data sharing between business entities by ensuring the information being sent can be parsed appropriately by the receiving software, regardless of language and formatting practices. This system-to-system exchange doesn’t require human intervention, improves speed, and ensures accuracy.

The actual transmission of this secure data is managed by either a software solution or a third-party provider.

This process is used widely across all industries and has been the business standard for decades. Retailers use EDI to transmit purchase orders, shipping notices, and invoices. Manufacturers use it to exchange documentation for logistics, supply chain, procurement, and production.

EDI in Healthcare

Due to the tightly regulated nature of the healthcare industry, HIPAA mandates one specific format –  ASC X12N – for all EDI transactions. This means software developed for the industry that handles sensitive patient information must be EDI-capable.

There are several functions within the healthcare ecosystem where EDI plays a crucial role in transmitting sensitive data.

Plan enrollment

Patients using a web portal to enroll in a healthcare plan must submit detailed, vital information to be considered for coverage.

Payroll deductions for premium payments

These are deducted from payroll via transactions between healthcare and financial institutions.

Electronic medical records (EMR)

The ability to access accurate and timely information from a patient’s EMR enables a multitude of services. They include patient referrals, transferring patients to a new care provider, and even moving patient data between practitioners within the same facility. Patients can also access their EMR through secure web portals.

Pharmacy services

Healthcare organizations submit claims for pharmacy services to insurers, including patients’ personal information.

Revenue cycle management

The revenue cycle management process begins when a patient enrolls for care and concludes with the final payment for service. In between are all the stages of claims processing and billing. EDI plays a significant role in transmitting claims and billing information.

EDI Issues in Healthcare

A common problem with connecting applications inside and outside organizations is onboarding new EDI functionality within the existing application ecosystem. Most applications will be independent of one another. So, creating interoperability between disparate systems is always challenging.

Other factors can make transitioning from paper processing to a virtual environment difficult. Startup costs can be high for EDI, and there may be some need for customization for specific healthcare organizations. Training on complex systems can be time-consuming and costly. Maintenance and upgrades are expensive and often result in costly downtime.

Cybersecurity in healthcare EDI

One of the biggest challenges facing healthcare organizations today is the threat of cyberattacks. Healthcare is one of the most targeted industries for data theft, second only to financial institutions.

EDI transmissions are highly susceptible to attack. While the data carried across EDI flows is encrypted, there are vulnerabilities within certain EDI providers that can allow cyber criminals to infiltrate their systems and divert data involving patient records. These attacks can result in costly and devastating ransomware attacks, crippling a healthcare facility’s operations and placing patients at risk.

iPaaS for EDI in Healthcare

Integration platform as a service (iPaaS) is a cloud-based solution that connects applications, data, and people. A comprehensive, unified platform can provide many connectivity services, including integration, API management, and EDI management.

For many years, EDI connections relied on expensive on-site software solutions to launch and maintain. Cloud-based solutions like iPaaS not only reduce costs – they have many other benefits as well.

Cloud-based benefits

Reduced IT burden

Cloud-based solutions eliminate the need for on-premise installation and maintenance. Updated functionality happens automatically within the cloud without requiring user action. That reduces downtime and frees on-site IT personnel to attend to other critical tasks, such as on-site cybersecurity.

Faster start-up time

Another benefit of cloud-based EDI connectivity is reduced implementation time. What would have taken months to roll out as a software solution can be completed in just weeks using an iPaaS.

Faster regulatory compliance

When regulations change, a cloud-based system ensures the current compliance of every data touchpoint.


iPaaS is scalable and designed to grow with your organization as you add new personnel, departments, and facilities.

Improved cybersecurity

The centralized nature of an iPaaS solution means that EDI data flow is protected at every stage by the same robust cybersecurity measures.

Broaden Your EDI Capabilities

If your healthcare organization has delayed transitioning to paperless workflows for certain functions due to the scope of converting to EDI-capable applications, an iPaaS solution might be what you’ve been awaiting.

Not all iPaaS providers are equal or even possess modern EDI capabilities. So, it’s essential to do due diligence and select an experienced and respected provider with broad regulatory compliance experience.

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