1. DWC

Implementing EDI - A Managers' Guide

1. Get to know the basic requirements.

2. Assign responsibilities for implementing EDI.

3. Decide whether to contract with an EDI service provider.

4. If your organization will not use an EDI service provider, choose a file format and transmission mode for your data.

5. Make sure your computer systems contain all the required data.

6. Decide whether to implement a comprehensive EDI system or to start with a minimal system to meet the initial requirements only.

7. Determine whether you will need to apply for a variance (delay).

8. Figure out who will handle error messages sent by WCIS.

9. Decide whether your organization could benefit by adding "data edits."

10. Install any software and communications services you will need.

11. Test your system internally.

12. Move through the Test and Pilot stages, to reach the Production stage of EDI transmission.

13. Evaluate the efficiency of your EDI system, and consider future refinements.

1. Get to know the basic requirements.

Starting up a new EDI system can be a complex endeavor. Make sure you understand all that is required before investing resources. Otherwise you may end up with a collection of piecemeal fixes rather than a comprehensive solution.

The California EDI Implementation Guide has much of the information needed to implement EDI in California. As more information becomes available it will be posted on our Web site: http://www.dir.ca.gov/dwc/wcis.htm

2. Assign responsibilities for implementing EDI.

Some organizations put an Information Systems (IS) manager in charge. Others designate a Claims manager. Implementing EDI will affect both your information systems and the flow of claims information through your business processes, so it may be most effective to have Claims and Information Systems collaborate on the project.

Regardless of who is assigned primary responsibility, make sure that both Claims and Information Systems maintain continual oversight as your solution is designed and implemented.

Many organizations find that implementing EDI highlights the importance of data quality. Addressing data quality problems may require adjustments in your overall business processes. Your EDI implementation team will need access to someone with authority to make these adjustments if they are needed.

3. Decide whether to contract with an EDI service provider.

Formatting electronic records and transmitting them by EDI generally requires some specialized automated routines. Programming a complete EDI system also requires in-depth knowledge of EDI standards and protocols.

Some organizations choose to develop these routines in-house, especially if they have an IS department that is familiar with EDI or that is efficient in bringing new technology on-line. Make a realistic assessment of your organization's capabilities in these areas.

Other organizations choose to contract with vendors for dedicated EDI software or services. Typically, an EDI vendor's products interface with your organization's data to produce EDI transactions in the required formats. The benefit is that no one in your organization has to learn all the intricacies of EDI - the service provider takes care of file formats, record layouts, and many other details that may seem foreign to your organization. Some EDI vendors can also provide full-service consulting - helping you update your entire data management process to ready it for electronic commerce.

Some EDI vendors are listed in Section J - EDI Service Providers.

4. If your organization will not use an EDI service provider, choose a file format and transmission mode for your data.

Contracting with an EDI service provider would relieve your organization of the detailed mechanics of EDI - such as file formats and transmission modes - but if you decide to develop your own system you will have some important decisions to make. These will determine the scope and difficulty of the programming work.

Probably the most important decision is what file format you will put your data into, before sending it to WCIS. This is really two separate decisions: whether to use the original "Release 1" IAIABC protocols or the updated - and more complex - "Release 2" protocols. A related decision is whether your data will be packaged as "flat files" or as "ANSI X12 files." More information on these choices is provided in Section H - File Formats and Supported Transactions. In general, Release 1 flat files are easiest to get up and running quickly, but Release 2 flat files are extraordinarily complex. ANSI X12 may be a wise investment in long-run flexibility and compatibility.

You will also need to choose a transmission mode from the three that WCIS will support: commercial Value Added Networks, data files transmitted by secure Internet e-mail attachment, and manual data entry into our data entry forms on the World Wide Web. (The Web forms are really suitable only for small-volume data providers.) See Section I - Transmission Modes for further information.

5. Make sure your computer systems contain all the required data.

You'll have a hard time submitting data by EDI if the data are not readily accessible on your systems. Give your IS department a copy of Section L - Required Data Elements. Have them indicate which ones are readily accessible, which are available but accessible only with difficulty, and which are not even captured at this time.

If all are available and readily accessible, then you are in great shape. If not, your Claims and Information Systems departments will need to develop and implement a plan for capturing, storing, and accessing the necessary data.

6. Decide whether to implement a comprehensive EDI system or to start with a minimal system to meet the initial requirements only.

California's EDI requirements go into effect in three phases. The first phase includes only EDI transmission of First Reports of Injury, beginning in March 2000. The second phase adds Subsequent Reports (benefit notices) and some additional data elements for the First Reports, beginning in July 2000. A final requirement, an annual summary of payments on each active claim, does not go into effect until January 2001.

Many organizations will find that Implementing EDI is simplest for the First Reports, and most challenging for the Subsequent Reports. A key difference is that a First Report occurs only once in the life of a typical claim, while Subsequent Reports may be needed many times for some claims (for example, when an injured worker experiences several periods of disability) but not at all for others.

Focusing first on EDI transmission of First Reports may provide your organization a good training opportunity, before it tackles the challenges of the more complex reports.

On the negative side, implementing the various reports sequentially may be inefficient. If your organization puts together a simple system for transmitting First Reports, it may not be able to support the more complex demands of Subsequent Reports. When the time arrives for filing these more complex reports you may then need to install a second, more sophisticated system, resulting in unnecessary duplication of effort and a higher overall project cost.

7. Determine whether you will need to apply for a variance (delay).

Establish a rough time frame for beginning your first EDI transmissions. You will need a variance if you are unable to transmit data by March 1, 2000. If granted, a variance will allow you to delay, until January 1, 2001, your first EDI transmissions.

8. Figure out who will handle error messages sent by WCIS.

Your organization will receive "error messages" from WCIS if you transmit data that cannot be interpreted or do not meet the regulatory requirements to provide complete, valid, accurate data.

Some glitches are inevitable. You'll need a system for forwarding any error messages to people who can respond as necessary.

Establish a procedure for responding to error messages before you begin transmitting data by EDI. Otherwise your organization may find itself unprepared for the inevitable.

Typically errors related to technical problems may be aggravating when a system is new, but they quickly become rare. Error messages related to data quality and completeness are harder to correct, and you can expect them to present an ongoing workload that must be managed.

9. Decide whether your organization could benefit by adding "data edits."

Data you transmit to the WCIS will be subjected to "edit rules" to assure that the data are valid and that they are consistent with data reported previously for a particular claim. (For example, one edit rule would reject an injury date of February 31. Another rule would reject a benefit notice if a First Report had not been filed previously.) These edit rules are detailed in Section L - Required Data Elements, Section M - California-Specific Data Edits, and Section N - System Specifications. Data that violate these edit rules will cause transmissions to be rejected or will be returned with error messages.

Correcting erroneous data often requires going to the original source, perhaps the applicant or the policyholder. In some organizations the data pass through many hands before it is transmitted to WCIS. For example, the injury type and cause may be reported first by the applicant, then go through the employer, a claims reporting center, a data entry clerk, a claims adjuster, and an Information Systems department. Any error messages would typically be passed through the same hands in the opposite direction.

An alternative is to install in your system - as close as possible to the original source of data - data edits that match the WCIS edit rules. As an example, consider a claims reporting center in which claims data are entered directly into a computer system, and the system has data edits in place. Most data errors could be caught and corrected while the employer was still on the phone. This eliminates the expense of passing bad data from hand to hand and back again.

10. Install any software and communications services you will need.

Once your system is planned you can begin purchasing and/or developing any software your system will need, and lining up any needed services.

Most systems will need at least the following:

11. Test your system internally.

Not every system works perfectly the very first time. Make sure your system gets thoroughly tested before you begin reporting data to WCIS. Catching any bugs internally will spare you the blizzard of error messages that a faulty system can cause.

Include in your internal tests some complex test cases as well as simple ones. For example, challenge your system with claims that feature multiple episodes of disability and partial return to work.

Fix any identified problems before you try transmitting EDI data to WCIS. Don't bother sending us faulty data; the WCIS data management system is quite good at finding and highlighting any errors.

12. Move through the Test and Pilot stages, to reach the Production stage of EDI transmission.

Complete an EDI Trading Partner Profile (see Section F). The Profile is used to prepare WCIS for your data transmission: what file format to expect; where to send your acknowledgements; when you plan to transmit reports, and similar information.

Once you have completed a successful test, and verified that your transmissions match our technical specifications, then you will be ready to enter the pilot stage. During the pilot, a sample of your EDI transmissions will be compared with the paper reports and will also be tested against the WCIS data validation rules.

Upon your successful completion of the pilot, the Division will issue you a written determination that you have demonstrated capability to transmit complete, valid, accurate data.

13. Evaluate the efficiency of your EDI system, and consider future refinements.

Many organizations find that implementing EDI brings unexpected benefits. For example, EDI may provide an opportunity to address long-standing data quality problems.

Arrange a review session after your system has been running for a few months. Users will be able to suggest opportunities for future refinements. Managers from departments not directly affected may also be interested in participating, because EDI will eventually affect many business processes in workers' compensation.

Please let us know if you have any comments on this Manager's Guide.

We can't anticipate every challenge you may face in implementing EDI data reporting. If you have ideas for adding to this Guide - or otherwise changing it - let us know. Send us an e-mail, addressed to wcis@dir.ca.gov.

September 2007