November 5, 2020

Why EDI doesn't scale in the age of connected insurance

There’s a large opportunity for insurance companies to capitalize on digital distribution to increase membership, reduce operating expenses, and improve the customer experience. To do this, carriers need to deploy new infrastructure quickly, but instead, many continue to double down on manual processes and dated methods like Electronic Data Interchange (EDI).

So what’s the problem with EDI? EDI connections are slow, expensive to build and maintain, and require time-consuming, custom integrations. Because EDI is operationally intensive with long feedback loops, the manual support that’s required strains relationships with distribution partners and limits growth. Worst of all, these error-prone and less secure systems often lead to poor consumer outcomes.

The ability to launch fast, secure connections with any partner in weeks, provide a member ID within minutes of enrollment, have full transparency into the status of every transaction, and programmatically audit and resolve discrepancies isn’t future-state. It’s the modern standard Noyo enables today.

The problems with EDI for benefits

Consumers expect the same level of speed and access to their insurance data that they experience when they connect a bank account or pay a bill online. Behind the scenes, the growth and operations teams that manage insurance data need real-time insights and hands-off ways of ensuring accuracy.

Member eligibility management today still takes many manual forms that can’t meet these standards: direct data entry, portals with varying levels of sophistication, paper/pdfs, and of course, EDI. While EDI 834 and other custom file feeds offer a standardized way of transferring data, they’re far from automated.

As the digital landscape matures, these are the top reasons why further investment in EDI leads to long term technical debt, heavy operations costs, and missed opportunity:

  1. New EDI connections between carriers and benefits platforms can take 8 to 14 weeks to build.

  2. Each new carrier partner requires unique file requirements and a new configuration process, and each new group needs its own custom file.

  3. Once an EDI connection is established, it may still have limited uses. For example, in many cases, a carrier won’t accept EDI for groups under 50 people.

  4. One missing digit–or any other error–invalidates an entire file.

  5. If a file doesn’t go through, it’s very difficult to tell that it failed (let alone why). If there are alerts, they are often buried in unstructured text in someone’s inbox.

  6. There’s usually no positive confirmation that a file was received and processed correctly.

  7. EDI files become more difficult to work with and maintain as they get larger, preventing efficient scaling as you grow your business.

  8. Employees must be manually enrolled in coverage during open enrollment while the new file is put in place for the upcoming year.

  9. Data is locked away in EDI files, so it can’t be used for analysis, reporting, or product development.

  10. The next generation of innovative customer experiences will require real-time data exchange, which is not possible through EDI.

The way forward

Noyo offers an API-driven solution to the limitations of EDI, transforming connections between insurance carriers and benefits administration platforms. We’ve covered in detail the advantages of APIs and how insurance companies can upgrade legacy systems behind the scenes while getting to market fast with modern infrastructure, no matter the system or stack they rely on today.

This is why carriers like Humana, Ameritas, and Beam Dental have chosen to scale distribution with Noyo:

Fast and accurate. Data exchange through Noyo is instantaneous, with built-in validation and auditing capabilities to catch errors before they affect customers’ coverage. =

Flexible and scalable. Noyo provides modern infrastructure that flexibly integrates with any enterprise system and enables partners to plug in and activate quickly.

Transparency and control. With more transparency into the status of each transaction, ops teams are totally in control of the entire data exchange process. They can confirm submissions, identify issues, and build tooling and analytics to better serve their customers.  

A complete solution from the start. Noyo’s technology covers every key benefits administration business case, from quoting through ongoing enrollment and renewal.

Our solutions transform connections with distribution partners, providing unprecedented speed, accuracy, and transparency throughout the entire lifecycle of a policy. New connections with benefits administration platforms can be activated in weeks, not months. To learn more, reach out to our team.

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The age of connected insurance demands fast, accurate data exchange. Get to market with powerful API solutions to fit any stack.