Blue Cross and Blue Shield of Maryland said yesterday that Dallas computer giant Electronic Data Systems Corp. is taking over its antiquated LifeCard electronic claims system to build a new one that would move five times as much information at a lower cost.
The new network eventually would be expanded to allow access by doctors, hospitals, laboratories, pharmacies and others in the health care industry. Eventually, the so-called "all-player" network could include individual patient records.
Terms of the contract signed Friday with EDS, a subsidiary of General Motors Corp., were not disclosed, but Blue Cross Senior Vice President Thomas J. Higgins said it was a noncash deal.
"They are absorbing the subsidiary and its operation," Mr. Higgins said.
In exchange for giving EDS access to the market, Blue Cross would get certain pricing advantages, which Mr. Higgins would not disclose.
LifeCard electronically handles 5.8 million claims a year, or 30 percent of the Blues claims, with the remainder handled by paper. The new system could transmit 25 million transactions a year, including payment of medical bills, determination of eligibility and the tracking of if and when bills have been paid.
Under the deal, all 28 LifeCard employees would get new jobs at EDS but remain located at the Blues' headquarters in Owings Mills.
The takeover is to be effective 30 days after contracts with the employees are negotiated, Mr. Higgins said.
EDS officials did not return a phone message requesting comment.
EDS, which was founded by Ross Perot, is eager to position itself as a leader in developing all-player networks for various regions of the country. It already has begun a network in Massachusetts.
Such systems would make it easier for health care reforms now beingconsidered by the Clinton administration to work by making it easier for the groups involved to communicate. These reforms focus on creating a network of health care providers -- hospitals, doctors and other services such as pharmacies and laboratories -- that compete to treat people on a per-head basis. It would also cut costs; paperwork costs the health care industry at least $40 billion a year.
For the Blues, the deal serves two purposes. On the one hand, it saves the insurer, which faces a write-down in its reserve levels, from having to invest in upgrading the outdated LifeCard system. At the same time, it preserves the Blues' influence as the state's biggest health insurer in shaping the development of the marketplace.
"We are migrating to a system that everybody can participate in," Mr. Higgins said.
Although only a handful of such networks now exist, Mr. Higgins said he expected such systems to appear throughout the country in the next 12 to 36 months because they will increase productivity.
Blue Cross' record in paying claims to doctors and hospitals is among the slowest in the country. Currently the LifeCard system charges doctors a fee to use it. Although the advantage to the provider is supposed to be faster payment, according to some doctors LifeCard speeds payment by only one week.