EDI Shack

The Cost of EDI

The biggest question in EDI is always: What does it cost?

Of course there is no one answer, it depends on who you're dealing with. Are you dealing with a VAN, an integrator, or doing it in-house? Costs vary wildly, and paying more doesn't guarantee you a better system.

 

VANS - A lower cost and a more expensive cost structure

Below is a fairly typical lower cost structure

  • Setup costs: $1,500-$2,500 per transaction set for mapping
  • Yearly subscription fee: $10,000
  •  For each trading partner: minimum $2,000 per year, $3,000 per year for more than 2,000 transactions, or $5,000 per year for more than 5,000 transactions.
  • For a company doing 25,000 transactions per year. the cost would be about $25,000 per year or roughly $1.00 per transaction.

 

Below is a fairly typical (but expensive) cost structure

  • Setup costs: $3,000-$5,000 per transaction set for mapping
  • Yearly subscription fee: $25,000
  •  For each trading partner: minimum $2,000 per year, $3,000 per year for more than 2,000 transactions, or $5,000 per year for more than 5,000 transactions.
  • For a company doing 25,000 transactions per year. the cost would be about $75,000 per year or roughly $3.00 per transaction.

 

 Yeah, for some companies it's not a problem, but for most small companies paying a VAN is out of the question, it's just too expensive. Fortunately, there are many newer integrators to deal with now, unfortunately their prices are usually lower, but not that much lower.

 The cost of VAN's and integrators force most small companies to roll their own EDI systems. While this is lower cost, most small companies don't know enough about EDI to make good decisions on who to hire to get a robust, scalable EDI systems, and they end up with a mishmash of EDI components and no comprehensive system that "just works".

We are not making the claim that our EDI Magic programs and components are the only logical choice, the best choice or the least inexpensive choice if you don't use a VAN or integrator. However, we can't estimate the cost of an open source solution as it depends almost entirely on who you hire to do it for you. We can estimate the costs for EDI Magic though.

We deal with either the Logistics industry or the medical (HIPAA) industry quite often so here's an estimate for a scenario for both of these.  

 

EDI Magic
Below is sending a 210 (invoice) and receiving a 997 in reply Below is sending a 270, and an 837 and receiving 999's, 271's and 835's in reply
  • EDI Magic Program                    FREE
  • EDI Magic Service                      FREE
  • EDI ANSII X12 210 component   $795
  • Component cost includes 5 hours custom programming
  • 997 component code is FREE but will require some custom programming to setup
  • Each component purchase included 5 hours of custom programing eg. this order includes 5 hours of custom programming.
  • EDI Magic Program                  FREE
  • EDI Magic Service                    FREE
  • 270 outgoing component        $795
  • 271 incoming component        $595
  • 837 outgoing component        $595
  • 835 incoming component        $595
  • 997 incoming reply                 FREE
  • Each component purchase includes 5 hours of custom programming. eg. this order includes 20 hours of custom programming.
 Total cost (excluding extra programming) $795   Total cost (excluding extra programming) $2580

 

 

 

You run a small business, let's say an online store on Shopify. Several of your suppliers have EDI capabilities, and it's obvious to you that some of your processes can be automated if you just knew what EDI is.

EDI is short for "Electronic Document Interface", and it's an accurate description. EDI is a system for exchanging documents between companies in a clear, precise format that eliminates errors and misunderstandings. EDI can be easily automated. However, EDI must be done correctly, or it can be a nightmare.

Imagine you have a small company that sells custom laptops to consumers. Amazon does your shipping for you, so everyday you send dozens of laptops to the Amazon warehouse, and you take orders on your Amazon store and website. Currently, everytime you sell a laptop, you have to enter the information into a form to send it to Amazon. Not only is this system prone to data entry errors, it's time consuming. You decide to automate this, so you hire someone to create an EDI file and send it to Amazon. What you have to realize about EDI is it's automated. Nobody is looking to make sure the data is correct before it's sent to your trading partner. In this case, what if every order gets tripled? What if some orders are never sent? If the orders get tripled, how long can you stay in business if Amazon ships 3 of every laptop you've sold? how many customers will you lose if the order gets lost? When you setup EDI, your system needs to have a mechanism to be 100% sure every order is sent once, and only once. Amazon will of course send back a 997 for every order in an EDI file, but your system has to be capable of matching the

 

Although an EDI document is simply a text file in EDI format, EDI is MUCH, MUCH MORE than that. EDI is a document management system that specifies how to manage your files, keep track of which documents were received by your trading partner, whether the data was successfully extracted by the EDI system, and whether the data was successfully used. No other document does all that. If you combined a very good document management system and then integrated a file format into it, and then consulted with every major industry on what information they need to share, that's what EDI is.

The EDI file format has wrappers that if properly used, keeps track of not only the file in question, but the files that came before it.

 

Here's a small checklist of what your EDI system has to do (using the example above). Note that creating the actual EDI file is only a small part of the total.

  • Pull the data for all new orders once an hour, or once a day (whatever your timeline is)
  • make sure to ONLY pull the information for paid orders
  • check for missing information. EDI should NEVER send incomplete information
  • notify staff if there are orders completed, but still missing information
  • using the data pulled, format it into EDI formats
  • Compose the EDI file
  • Store the EDI file in long term storage
  • put a copy of the EDI file in a directory you will send from
  • Start the sending system so the file gets sent to your trading partner
  • Verify the file was sent properly, AND received by the trading partner
  • Check to see if there are any reply files that need to be read
  • for every reply file, match the data to your data and update the entries
  • Close down properly without any memory leaks

Note that composing the EDI file is about halfway in the total process and there are a lot of things to be done BEFORE and AFTER the file is actually composed

 

 

 

 

EDI Terminology

Addenda – Refers to a version of the HIPAA mandated transaction sets that corrects identified implementation issues noted in the original TR3.


ASC X12N/005010X222– The HIPAA mandated (ANSI) ASC X12N Professional Health Care Claim transaction format.


ASC X12N/005010X222A1 – The Type 1 Errata modifications mandated for use with the ASC X12N/005010X222 837 Professional Health Care Claim transaction format.


BCBSM or FEP Supplemental – BCBSM or FEP is being billed as the secondary payer and the primary payer is original Medicare or any type of Medicare Advantage or Medicare Advantage HMO.


BCBSA – An acronym for Blue Cross Blue Shield Association


BCC – An acronym for Blue Cross Complete of Michigan, a Medicaid managed care plan


BCN – An acronym for Blue Care Network


BlueExchange – A BCBSA process through which non-claim HIPAA transactions for members from all other Blue Cross and/or Blue Shield plans that are governed by the BCBSA can be accepted by a local host plan (the plan that delivers the benefits to a member) and routed to the home plan (the plan that covers the member) for processing.


Data Segment – Corresponds to a record in data processing terminology. Consists of logically related data elements in a defined sequence (defined by X12N). Each segment begins with a segment identifier, which is not a data element and one or more related data elements, which are preceded by a data element separator. Each segment ends with a segment terminator.


Data Element – Corresponds to a field in data processing terminology. Assigned unique reference number. Each element has a name, description, type, minimum length and maximum length. The length of an element is the number of character positions used, except as noted for numeric, decimal and binary elements. Data element types are defined in Appendices B of the TR3.


Delimiter – A character used to separate two data elements (or sub-elements) or to end a segment. They are specified in the interchange header segment (ISA). Once specified in the ISA, they should not be used in the data elsewhere other than as a separator or terminator.


EDI – An acronym for Electronic Data Interchange.


Electronic Data Interchange – The application-to-application transfer of key business information transacted in a standard format using a computer-to-computer communications link. There are typically 6 components used in order to do EDI. They are: an EDI file, a trading partner, an application file/form, translator (mapper), communications and value-added network or value-added service provider.


FEP – Federal Employee Program


Interface – The point at which two systems connect to pass data

Loops – Loops are groups of semantically related segments. Data segment loops may be unbounded or bounded.


Medicare Beneficiary Identifier (MBI) – an eleven-character alpha numeric identification number issued by the Center for Medicare Services, which replaces the Medicare Health Insurance Claim Number (HICN).


NASCO – The National Account Service Company connects several Blue Cross and Blue Shield plans across the country through a common automated system to administer health benefit programs.


Routing – Separation of data based on specific criteria for subsequent transfer to an internal or external system.


Technical Reports Type 3 (TR3s) – Documents that provide standardized data requirements and content as the specifications for consistent implementation of a standard transaction set. The Washington Publishing Company publishes HIPAA TR3s on their web site: http://store.x12.org/store/


Trading partners – Companies/Entities that exchange electronic data files. Agreements are sometimes made between the partners to define the parameters of the data exchange and simplify the implementation process.


Transaction Set – A transaction set is considered one business document which is composed of a transaction set header control segment, one or more data segments, and a transaction set trailer control segment.

X12 - An Accredited Standards Committee commissioned by the American National Standards Institute to develop standards for Electronic Data Interchange


X12N – An Accredited Standards Committee commissioned by the American National Standards Institute to develop standards for Electronic Data Interchange. While X12 indicates EDI, the N identifies the Insurance Subcommittee that is responsible for developing EDI standards for the insurance industry. There is a special health care task group within this subcommittee responsible for the development of health care insurance transactions.

 

Front Page

 
Affordable EDI for Micro, Small and Mid-Sized Business
 
EDI Shacks' Open Source EDI projects are MIT licensed so you can do whatever you like with them.
 
Every good EDI implementation needs a robust database to keep track of the EDI files and data contained in, plus the acceptance or rejection of the data
EDI Manager
EDI manager is an Ionic project to manage one of the EDI Shack frameworks. EDI Manager is a PWA but can be compiled to an Android/IOS app if needed. MIT licensed

 

Affordable EDI for Micro, Small and Mid-Sized Business

 

At EDI Shack we believe every company with some technology knowledge should be able to do EDI. As Such, we supply some Open-Source and FREE (MIT License) libraries you can use to get started with EDI. We'll also try very hard to keep you from making the most common EDI mistakes.

EDI Design or Build it
Our EDI experts can design an EDI system for you, and you can have your own IT staff build it, or we can design and build it
 

What is the Number 1 EDI Mistake? Thinking EDI is just creating a strangely formatted file and sending it to your trading partner. In reality, what you're doing is pulling some data from your system, and putting it into your trading partners' system, using a strangely formatted file, or even scarier for you, you're taking data from your trading partner and putting it directly into your system using a strangely formatted file. If that doesn't scare you, it should. Any mistake in your, or your partners' EDI implementation is going straight into your data.

 

In fact, managing your EDI files and keeping track of what's in them is just as important as creating the file.

 

Let's face it. EDI is expensive and confusing. EDI is one of the simplest technologies there is, but it can also be incredibly pricy and complex. EDI Shack is dedicated to make EDI simple for small and mid-sized companies.

 

EDI is Simple EDI is Complex
EDI is a simple text file The EDI Specifications Book for 1 version is 1930 pages
Create the file You know where your data is but how can it be formatted to EDI?
Send it to your trading partner Most large companies insist on specific transmission software
You're done This is EDI, you're never done. You send an EDI file, they send back a 997, or an 824. Now what do you do?
 
 

The problem for most companies is it's difficult, EXPENSIVE, and CONFUSING to get started in EDI. Most companies start doing EDI because they are forced to by a much larger trading partner. If you're a small manufacturer, you might have just gotten Walmart to buy a product from you, and Walmart won't buy from you UNLESS you update them with EDI. It's the same at GM, Ford, Chrysler, in fact most of the Top 500 companies. So, the bottom line for you is, it might be expensive, it might be confusing, but you don't have a choice.

EDI doesn't have to be complex, but most EDI companies deliberately confuse the issue. They make a lot more money that way. If you're a small company that only needs to do EDI to satisfy a big company you want to do business with, and you don't expect to need to keep expanding your EDI, then we can find a simple, not so expensive solution for you.  

 

Some quick and easy to understand facts everyone starting with EDI should know in a question answer FAQ type format
EDI Magic is a framework for a complete EDI System. Designed to be affordable for small and mid-sized companies

 

 Talk to Us about EDI Magic

EDI Magic started as a program or service for doing a few Transaction Sets with the ability to highly customize it for the individual company. Over the years it has grown into a framework, plus a template for a program or service, a flexible database schema, plus over 60 EDI components that can be dropped into the template, and customized for the company and trading partners. For smaller companies who don't want to spend tens of thousands of dollars, with limited EDI needs who need a high degree of automation and customization, it could be your best choice. Let us know what your actual needs are, now and in the future, and we'll present some options for you, or if EDI Magic is not your best choice, we'll tell you that also.

 

Do you need EDI for healthcare transactions? Talk to Us about HIPAA Magic

HIPAA Magic is our latest product offering. It's a subset of EDI Magic which includes as many of the HIPAA related transation sets as you need with simplified pricing. HIPAA Magic consists of a FREE desktop program used to setup Transaction Sets, plus a FREE EDI service that runs on a server that processes EDI automatically. You get both the program and the service with any Transaction Set purchase.

 

HIPPA Magic
HIPAA Magic Progam FREE w/Purchase of any Transaction Set
HIPAA Magic Service FREE w/Purchase of any Transaction Set

1st Sending or Receiving Component

(835, 837, 834, 820, 270, 271, 276, 277, 278, 997)

 $795 *  **

 2nd and subsequent Sending or Receiving Component

(835, 837, 834, 820, 270, 271, 276, 277, 278, 997)

$595 *  **
* All components will need some setup. The First 5 hours of setup is FREE

** No limits on purchased components. Use them for multiple trading partners

 

 

Do you need to do EDI with WooCommerce, or Shopify?

One of the many benefits of using EDI Magic or HIPAA Magic is that they are lightweight full EDI frameworks and each use standardized data tables in a SQL Server or MySQL/Maria database. We can supply plugins for WooCommerce or Shopify to enable your staff to monitor the EDI system and alert you of problems.

 

 

 

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