© copyright innovate e-commerce inc., - its 2001. electronic data interchange (edi) training

©Copyright Innovate E-Commerce Inc., - ITS 2001.

Electronic Data Interchange (EDI) Training


Agenda

• Change Management

• Getting Started

• Outsourcing or Insourcing

• Building an EDI Infrastructure

• Responsibilities and Job Descriptions

• Return of Investment (ROI)


Change Management

• Usually the Biggest Challenge for an EDI Project• Create a Cross-Functional Team to Minimize Resistance• Outside Expertise May be Needed• Prepare Education for Internal and External People• Resistance to Changing the Old Ways of Doing Business

• Fear of Change• Fear of Technology

• Electronic Interchange Fundamentally Changes Entire Business Processes

• Good News is that EDI Provides a Tremendous Opportunity to Reengineer the Business Process

• Opportunity to Improve or Eliminate Inefficiencies


Change Management

• You May Not Have to Comply to the HIPAA Requirements but Your Trading Partners Do

• HIPAA Requirements May not All Be Defined, but Time is Running Out

• Implementation of New Processes and Technologies

• Training and Retooling of Staff May Be Required

• New Policies and Procedures Will Need to be Adopted


Getting Started

• Document Business Process

• Document Information Flow

• Develop an Implementation Guide

• Develop a Trading Partner Agreement

• Identify Your Trading Partners

• Perform Gap Analysis


Assessment Model

Analysis of Trading Partner

Requirements

Analysis of Trading Partner

Requirements

8 Stages for An Effective Assessment8 Stages for An Effective Assessment

Analysis of Current EDIDocuments

Analysis of Current EDIDocuments

Perform Communications

Assessment

Perform Communications

Assessment Analysis of

Audits andControls

Analysis of

Audits andControls

Analysis of Information

Flow

Analysis of Information

Flow

Analysis ofBusiness Process

Analysis ofBusiness Process

Analysis ofApplicationInterfaces

Analysis ofApplicationInterfaces

Analysis for Pre/PostProcesses

Analysis for Pre/PostProcesses

Business Process - Contracts

Contract is signed with Provider

Contract infoentered into

MOMS

NCAS VendorInfo

If Vendor onFile

MOMSSystem

Vendor Info Sent toOSC

Vendor InfoDownloaded Daily

into MOMS

No

Enter Provider Info

Yes

Claims can now bemade against

contract

If ClaimsRejected

Contractmay be

reviewedby

Purchasing

Quarterly Meeting Heldto discuss policies and

procedures

Yes

NO

UN AuthorizesWhat Proceduresare approved at

this Facility

UN Authorizes anyException Drugs

Contractmay be

canceled

Vendor InfoEntered into NCAS

Utliliation NurseGoes to Provider

Business Process – Page 1

Claim Received byProvider

DC702 Form isreceived by DOC

Prison Creates DC702 Form to

Authorize Payment

Claim is Date Stamped

Claim isbatchedby Date

Claims areplaced into

Inventory by date

A full dayof claimsare taken

to beprocessed

If RegisterClaim info inentered into

MOMS

ExaminerreviewsClaim

Status is setto 2

No

Yes

CritialErrors arecorrected

WarningErrors

arereviewed

If ExaminerOverrides

ExaminerOverrides

Error

ManagerOverrides

Error

If Audit

If okay forPayment

Flag is set to evaluateExaminer or Register

work

Yes

No

Yes

No

Examiner SetsStatus to 3

MOMS processesClaim for Payment

Page 2Audit Report is

Printed

WarningMessages

are reviewedto determine

if criticalerrors

Claim mailed to Prison

Claim is Mailed to DOC

Status is set to 1

If Okay

Yes

No

A

Business Process – Page 2

Claims stored off-site

Page 1MOMS Uploads to

NCAS 3x week

DOCClaimssent toNCAS

NCAS Pays Claimbased on infofrom MOMS

If FundsAvailable

Claim is in Queuefor Payment

If Okay to Pay

Claimsinfo sent

toMOMS

Claim status ischanged to 4

(Fully Processed)

If ClaimApproved

Rejected ClaimsReport

Explanation ofPayment goes to

Provider

Explanation is Mailedto Provider

A

Yes

Yes

No

Yes

No

If > 1 year

Claims arestored for

One Year atDOC

Pay to $

Check cut for Provider

Check Mailed to Provider

Claim is rejectedfor payment

B

B

No


Paper Claim


Perform GAP Analysis

• Identify All Fields on Paper Claims

• Identify All Fields in Application File or Database

• Identify Manual Intervention within Process

• Determine Which Data Fields Are Needed

• Mandatory Application Fields

• Mandatory EDI Fields

• Mandatory by Trading Partner

• Determine How to Automate

• Cross Reference Tables

• Available from Trading Partner

• Fixed or Predefined Value


Identify Your Trading Partners

• Conduct a Trading Partner Survey

• Prioritize Your Trading Partners

• Volume

• EDI Readiness

• Willingness to Help You Overcome Learning Curve

• Obtain Trading Partner Specifications

• Develop Implementation Guide for Trading Partners

• Develop Trading Partner Agreements


Gap Analysis of Data

Fields from Paper Claim Fields from Database EDI

Claim Type BHT06

UR Authorization

Group Number

DRG Code

Primary payer subscriber: Department of Corrections

Subscriber address: street N301

City N401

State N402

Zip N403

Sex: Inmate - Male/Female

DOB: Inmate - Date of Birth

Federal TIN

Contract ID

Services ID

Patient Control Nbr

Admission Date

DC 702

Accrual Indicator

Medicare Ins. ID

Payer ID #


Findings to Date for Department of Corrections (DOC)

• 6700 Claims were Processed within a Two Month Period

• May 15 - July 15

• Claims had 9300 Line Items

• Even with One Person Doing Data Entry (Register) and One Person Reviewing (Examiner) Keying Errors were Made

• A $25,000 Payment was Approved for a $2,500 Claim

• Error was Caught through an Audit before Check was Cut

• 15 Warning Errors can be Manually Overridden

• 22 Critical Errors Can Occur During Manual Entry

• Gap Analysis is Still in Process


Insourcing Versus Outsourcing


Outsourcing - Clearinghouses

• A Clearinghouse Facilitates the Movement of Electronic Claims From the Producer of Claims (the Billing Service, Usually a Medical Office) to the Payer of Claims (Mainly Insurance Companies). In the Process, the Claims Are Edited and Validated to Insure They Are Error Free. The Claims Are Then Reformatted to the Specifications of the Payer and Sent Electronically to the Payer.

• Not All Clearinghouses Are Created Equally - Some Clearinghouses cannot Process All Types of Claims or EDI Documents


Outsourcing – Application Service Provider (ASP)

• An Outsourcing Facility Is Usually an Industry Leader in the Field of EDI, Specializing in EDI Implementation and Systems Integration. One of Its Most Popular Services Is Outsourcing, in Which Services Become the EDI Department for Your Corporation, Running Your Daily EDI Operations From Their Offices or Facilities.

• EDI Requires an Amount of Tedious Work That Has to Be Done, From Archiving and Retrieval Services for Transactions to Setting up Trading Partners. By Utilizing an Outsourcing Company Your Staff Can Focus on Becoming More Versed in Business Processes, Not Technical Details.


Insourcing - ITS

• Insourcing Establishes an IT Capability In-house As a Core Competence Inclusive of Staffing, Organizational Design, Process Definition, and Establishment of Services and Associated Service Level Agreements .

• INSOURCING Involves Choosing IT Specialists Within ITS to Develop and Support Your System.


Clearinghouse - Advantages

• Provide Paper to Electronic Submission for a Faster Claim Process

• Provide Software Specific Modules Per EDI Claim

• Provide Standard Set of EDI Maps

• Tend to Be Specific to Healthcare Industry

• Are or Will Be HIPAA Compliant

• Claims Are Edited and Validated to Insure They Are Error Free.

• EDI Specialists Available


Clearing House Disadvantages

• Provided Software Requires Training and Additional Time for a Learning Curve

• Limited by the Standard EDI Templates of the Clearinghouse

• Dependant on Data Entry Services of Clearinghouse, for Paper to Fax Submissions

• Free Software Provided May Not Be Accepted by All Your Trading Partners

• Claim Information Sometimes Must Be Entered a Second Time to Use Carrier-supplied Software

• Claims Are Edited and Validated to Insure They Are Error Free. This Is Done Manually and Requires an Additional Point of Entry

• Risk Management May Be Increased


Outsourcing Advantages

• The EDI Skill Set Is Focused on Messages and Data, Not Necessarily Requiring Your EDI Staff to Be In-house

• Additional Resources Readily Available Compared to the Value of the In-house Staff of EDI Experts

• Allows Your Agency to Focus on Staff Budget With the Exclusion of the EDI Development Staff

• EDI Requires an Amount of Tedious Work That Has to Be Done, From Archiving and Retrieval Services for Transactions to Setting up Trading Partners. Outsourcing Reduces the Time Your Personnel and Staff Is Distracted From Current Business Processes and Practices at Hand.

• Risk Management May Be Reduced. Outsourcing Companies Will Not Alter Your Secured Data

• Audits and Tracking Software Is Availability• Single Point of Contact for Entire EDI Solution and Support• EDI Specialists are Available• May Already Have Relationship with Your Trading Partners


Outsourcing Disadvantages

• Outsourcing May not be the Less Expensive Solution

• An Outsourcing Company, Which Has No Organizational Ties Your Company Will Handle All Your Documents with Your Trading Partners. This Is a Visible and Important Function You Place in the Hands of a Third Party

• Has Expertise in EDI but not Your Agencies’ Processes

• Does Not Know Your Internal Policies and Procedures

• May not Have an End-to-End Audit and Control System

• Your Implementation Schedule May be Delayed if You Do Not Give the Outsourcing Company Ample Notification

• May not Provide an Enterprise Wide Solution


In-house Advantages

• Your IT Staff’s Responsibility and Security Protects Your Investment and Provides Complete Control Within Your Secured Environment

• Overall Cost Is Reduced to In-house Staff• No Additional EDI Training Required within the Agencies• State Processes Are Understood Within ITS• Knowledge of Statewide Policies and Procedures• Knowledge Transfers Are Not Needed Within Each Agency or Department• Developing an E-Commerce Gateway• Developing End-to-End Audits and Controls for All EDI Documents• Provides an Enterprise Solution• Outside Expertise is Part of Initial Team for Knowledge Transfer• Identified Other Agencies with EDI Requirements


In-house Disadvantages

• EDI is a New Application to ITS

• EDI Translation Software has not been Selected

• Project Scope not yet Defined

• Developing a Project Team

• Learning Curve of Agencies’ Applications

• Define New Information and Processing Requirements

• Overall More Time and Resources Dedicated In-house

• Lack of Best Practices Knowledge


Core EDI Processes

CommunicationsCommunications

• EDI VAN• Direct Connections• Internet• Mailbox• VPN• Dial-up• Frame Relay• Leased Lines• Async, Bisync

TranslationsTranslations

Application Integration

Application Integration

• EDI • XML• Proprietary Files• Flat File• Financial Transactions

• File Interfaces• Scheduling• Interprocess Transfers• Tracking to Application

Community Management Process Optimization Interface File Optimization

Audits and ControlsProactive Problem Resolution Help Desk

Formatted Message Exchange

Consolidated EDI Infrastructure • EDI/XML Server• Message Management• Mail-boxing Service• Communications Gateway• Audit and Controls• Support Management• EDI Translator• E-Payment Gateway• XML Parser

FirewallInternet

VANs

Direct Connects

Trad

ing

Partn

ers

In

tern

al P

artn

ers


Building an EDI Infrastructure

• Communications Gateway

• Mapping Capabilities

• Application Gateway

• Audits and Controls

• Security

• Data Center Support


Communication Gateway

• Value Added-Networks (VAN)

• Internet

• Support Multiple Protocols

• TCP/IP, Bisync, Async, PPP, SL/IP, Frame Relay, ISDN, T1, Web Connections


Mapping Capabilities

• Translation Services

• Mapping

• Trading Partner Enrollment

• Develop Implementation Guides

• Problem Resolution


Application Gateway

• Integrate to Third-Party Software• Integrate to Application-Specific Intermediary Files (In-

house Developed)

• Integrate from EDI Interface Files to Business Applications

• Auto Restart Capabilities to Resend or Repull Application Data When a Failed IP Connection Is Restored

• Schedule and Manage Export and Load Programs by Application


Current Audit and Control Realities

• Many E-Commerce Transactions are Lost Due to a Lack of Integrated Tracking and Reporting Capabilities

• Most E-Commerce Infrastructures Lack Complete End to End Tracking of E-Commerce Transactions

• Multitude of Back End Applications, Data Manipulation (Translators) and Communications Vehicles Are Employed in an Enterprise

• New Data Types Including XML and Web-Based Forms Add Significant Complexity

• Lack of Integration Between Systems Means Data Is Difficult to Integrate

• Tracking of Documents/Transactions Is Usually a Manual Process

An Integrated System to Track and Provide Exception Reporting on ALL E-Commerce Transactions is Required


Audits and Controls

• End to End Tracking of ALL E-Commerce Transactions• Translator, Application, and Communications Mechanism Independent• Scalability Across Multiple Servers• Needs to Provide Hooks to Back-End Applications• Triggers Specific Applications on Agencies Servers • Integrates Tracking of Transactions Down to Document Level• Monitors Entire Process for Exceptions• Proactive Exception Notification • Preemptive Problem Notification Processes for Detection of Missing Application

or EDI Data Files, Failed IP Connectivity and Absence of a Business Response for Data That Was Pushed to Agencies’ Servers.

• Cradle to Grave Business Data Tracking Capabilities to Ensure That No Data is Lost at Any Point in the Business Documents Life Cycle

• Integrated Communication Software Error Log Tracking

Manual Audits and Controls

Claims

Payments

Dist

Whse

EDI

XMLWeb-Forms

Direct ConnectDial-up

Providers

Manufacturers

Citizens

Suppliers

Internal Applications

Fin

External Application

CommunicationsTranslations

ProprietaryFormats

Ship

VAN’sInternet

Etc.

Data

AuditAudit

AuditAudit

Insurance Companies


Automated Audits and Controls

• Provides End to End Tracking of ALL E-Commerce Transactions

• Includes EDI, XML, Web, Flat File, Proprietary Formats, etc.

• Translator, Application, and Communications Mechanism Independent

• Scalability Across Multiple Servers

• Provides Hooks to Back-End Applications

• Client/Server-Based with Web Front End in Development

• Can Share Data Internally or with Key Trading Partners

• Can Trigger Specific Applications on Multiple Independent Servers

• Integrates Tracking of Transactions with Fine Granularity – Down to Document Level

• Monitors Entire Process for Exceptions

• Proactive Exception Notification via E-Mail, Pager, Phone, etc.


Audits and Controls Architecture

Transaction Information

Claims

Payment

Dist

Whse

EDI

XMLWeb-Forms

Direct ConnectDial-up

Hospitals

Manufacturers

Citizens

Suppliers

Internal Applications

Fin

External Application

CommunicationsTranslations

Local Users

Remote Internet

ProprietaryFormats

Audit and Control Backbone

Ship

VAN’sInternet

Etc.

Providers

Six Checkpoints for Data Tracking: INBOUND

Business ApplicationBusiness

Application

Internal

File

IntermediateFile

EDI Translator

Data Communications

EDINetwork

End

Successful retrieval of all

data from network

EDI DataFile

Start 1Start

2

3End

4StartEnd

56 ApplicationInterfaceSystem

Ten Checkpoints for Data Tracking: OUTBOUND

Business ApplicationBusiness

Application

Internal

File

IntermediateFile

EDI Translator

Data Communications

EDINetwork

End

EDI DataFile

Start

5End

4

3Start

2EndStart

1 ApplicationInterfaceSystem

67Processed &

Posted

T.P. DataCommunications

Picked

Up

8T.P. EDI

Translator

9

T.P. Bus.Application

10


Integrated Tracking and Reporting

• Performance Reporting Capabilities Determine Business Document Throughput Performance Throughout the Business Documents Life Cycle.

• Proactive Exception Only Error Notification Via Client Monitored Display, Email or Pager (Status Monitor). Multiple Notifications to Individuals or Groups.

• Preemptive Problem Notification Processes for Detection of Missing Application or EDI Data Files, Failed IP Connectivity and Absence of a Business Response for Data That Was Pushed to Customers’ Servers.

• Cradle to Grave Business Data Tracking Capabilities Ensure That No Data Is Lost at Any Point in the Business Documents Life Cycle


Audits and Controls Requirements

• Manage File Transfers to Ensure Successful Completion• Manage Trading Partner and Application Timed Data Delivery• Monitor Transactions/Documents to Successful Application

Completion• File Storage and IRS Compliant Data Retention• Monitor System and Intra-Server Connection Availability• Custom Reporting and Data Control Files• Exception-Based Reporting• Build, Manage and Enhance Inter-Server Connection Programs • Proactive Notification via Pager and Email for Critical Issue

Resolution• Reconciliation of Application Data Between Agency and Trading

Partners • Monthly Data Archiving Capabilities With up to Three Months of

History Data Available for Query Searches


Data Center Support

• Disaster Recovery

• Data Backup, Backout, and Recovery

• Fault Tolerance

• Backup Hardware

• Backup Communications

– Dial-up backup

• Support of RAID Disc Drives

• Data Center Availability

• 24 x 7 x 365

• System Monitoring

• Escalation Procedures


Roles and Responsibilities

• EDI Resources

• EDI Coordinators

• EDI Mappers

• Communication Specialist (s)

• Infrastructure Specialist

• Business Resources

• EDI Liaison

• Business Analysis

• Application Specialists



• EDI Coordinator – Interface between the Agencies and Trading Partners and the EDI Team. Priorities projects and trading partner requests.

• EDI Mappers – Creates Implementation guides, design, develop, and test EDI maps. Monitors day-to-day processes.

• Communication Specialist – Supports all communications to both the trading partners and the agencies

• Infrastructure Specialist – Enhances Audits and Controls system, upgrades EDI software and supported applications



• EDI Liaison – Interfaces between the Agency and the EDI Team. Expertise in the Business Application

• Business Analysis – Understand the Business processes, prioritizing projects, and interfaces between the Users and the Application Specialists

• Application Specialists – Designs and modifies the application in support of the Agencies’ initiatives.


Differences from Other Infrastructures

• Links Trading Partners’ Applications to Your Application

• This has never been accomplished before

• Needs to Meet IRS Requirements

• Communications Gateway – Internal and External

• Need for End-to-End Audits and Controls

• Integration to Multiple Applications

• Integration to Applications Never Before Linked

• Driven by Trading Partner Requirements Not Necessarily Agencies’ Requirements

• Expertise in EDI Standards, Versions and Supported Documents

• Continuously Upgrading to New Technologies


Direct Benefits

• Easiest to Identify

• Quantification of Intuitive Benefits

• Process is not Modified, Simply Electronically Enabled

• Typical areas include:

• Costs of Paper and Processing

• Staff Reassignment

• Handling Discrepancies in the Process

• Document Storage Costs


Strategic Benefits

• Benefits That Can Not Be Obtained Without Electronic Commerce but Don’t Always Flow Directly From It

• Provide Better Service to the Citizens of North Carolina Are Typically in This Area

• As Are Increased Efficiencies in the Processes

• More Importantly Are Benefits Derived From Process Redesign or Complete Process Elimination


Payback Areas

• Hard Benefits

• Process Simplification (Cost Reduction)

• Elimination of Costly Errors (Cost Avoidance)

• Replace Paper Documents (Cost Avoidance)

• Better Cash Management (Cost Reduction)

• Reduce Number of Checks Written (Cost Reduction)

• Reduce Number of Rejected Claims (Cost Avoidance)


Payback Areas

• Soft Benefits

• HIPAA Compliant

• Enhanced Relationship with Citizens

• Improve Efficiencies with the Processes

• Reputation of the State


Return on Investment

• Additional Costs • Floor Space • Telephones • VAN Charges • FAX • Communications - Non-Direct • Communications - Direct Connects • Administrative Support • Office Supplies • Disaster Recovery Expenses


Return of Investment (ROI)

• Training

• Staff Training

• Methodology Implementation

• Staff Computing Costs

• PC/Laptops/LAN/Email/Help Desk

• Pagers

• Cellular Phones


Industry Metrics

• Costs of Processing a Paper Document

• Average $25 to $50 per Document

• Costs of Processing a Check

• Through a Lock Box - $3

• Through Electronic Funds Transfer - about 50 cents

• Average Keypunch Errors - 3-5% of Keystrokes

• 10% of those errors are “Material” in Nature

• Cost of a Customer Service Phone Call

• $125 per Call

• Cost of the Paper Purchase Order Process

• $100-150 per PO


Common EDI Terms

• Element – EDI Data Field• Segment – EDI Record• Functional Acknowledgement – Acknowledged that EDI was received and

either passed or failed compliance checks • Value Added Network (VAN) – Provides a one to many communication

gateway to trading partners • Transaction – An EDI document• Delimiter – Separates EDI elements and segments• Control Number – EDI Header number generated by an EDI Translator used

to track the number of transmissions sent or received. • ASC X12 – Governing Body that sets the Standards for EDI• Interchange – Main Envelope Identifying the sender and receiver • Functional Group – Envelope Identifying the Type of Documents


Next Steps

• Selected EDI Translation Software

• Document Business Processes within Each Office or Division of DHHS

• Document Information Flow

• Perform Gap Analysis

• Conduct Trading Partner Surveys

• Develop Implementation Guides


Questions and Answers

© copyright innovate e-commerce inc., - its 2001. electronic data interchange (edi) training

Documents

trading partnerdetermine

trading partnerfixed

trading partnersconduct

data fields

business process page

inmate date

paper claimfields

paper claimsidentify