What is an Electronic Data Interchange (EDI)?

An Electronic Data Interchange (EDI) is a method for submitting claims electronically, facilitating a streamlined process between healthcare providers and payers. By utilizing EDI, organizations can exchange business documents, such as insurance claims, in a standardized format, making the communication more efficient and reducing the potential for errors that often occur with paper submissions. This electronic method accelerates the billing and payment processes, allowing for quicker reimbursements and improved financial management for healthcare providers.

In contrast, submitting paper claims can be cumbersome and prone to delays. A manual billing process also lacks the speed and efficiency of EDI, as it involves significant paperwork and human intervention, increasing the likelihood of mistakes. Tracking healthcare outcomes is unrelated to the electronic submission of claims but rather focuses on analyzing patient data to improve care and efficiency within healthcare systems. Hence, the definition and functionality of EDI distinctly align with the electronic submission of claims, marking it as the correct answer.