Newswise — As the demand for bariatric surgery continues to increase, employers and insurers are increasingly forced to make or revisit decisions about whether or not to provide insurance coverage for the cost of the procedure.
In two articles appearing in the October issue of the American Journal of Managed Care, researchers at RTI International provide information that will assist in making that determination.
In two separate studies, the authors estimate the return on investment associated with an employer's decision to provide some level of coverage for bariatric surgery and the demand for such surgeries based on various out-of-pocket costs. The most common forms of the procedure are gastric banding and gastric bypass, which cost about $15,000 and $25,000, respectively, in total medical costs, which include surgery, hospitalization and recovery.
In the first paper, the authors used nationally representative data to determine that roughly 9 percent of all full-time employees are eligible for bariatric surgery based on existing guidelines. Because of their high medical costs and increased absenteeism, approximately two-thirds of costs attributable to obesity (roughly $90 billion per year) are incurred by those eligible for bariatric surgery.
Based on the simulation models, the authors determined it would likely take between five and 10 years for an employer to recover the full cost of the surgery, although higher cost-sharing could reduce the break-even point to less than five years.
In the second study, RTI researchers and colleagues with Ethicon Endo-Surgery, Inc., a Johnson & Johnson Company, and Copernicus Marketing, Inc., used an Internet survey of obese individuals to determine that about 150,000 bariatric procedures per year would be demanded by those with private health insurance at an out-of-pocket price of $25,000.
Decreasing the out-of-pocket cost from $25,000 to $10,000 would result in only a small increase in the total number of surgeries demanded. Even when fully covered by insurance, the results suggest that demand among those with private insurance would not exceed about 375,000 procedures per year among full time employees.
Although it is currently less popular, the predicted demand for gastric banding is actually greater than that for gastric bypass surgery even though bypass surgery is more effective.
"It is possible that individuals are willing to trade off some of the potential benefits for a fully reversible procedure," said co-author Derek Brown of RTI.
Lead author Eric Finkelstein notes that while more research is needed, these estimates allow insurers and employers to make more informed decisions about the financial impact of offering coverage for bariatric surgery.
"On the one hand, the time to break even may be longer than some have suspected," Finkelstein said. "On the other hand, the demand for the surgery appears less than many have anticipated."
Finkelstein further noted that financial implications are one of many factors considered in the decision to offer coverage for specific treatments but that as the prevalence of morbid obesity increases, employers will be forced to look for cost-effective strategies to improve the health of their employees.
The two papers are available free of charge at the AJMC web site.
The first study was funded by RTI International. The second study was funded by Ethicon Endo-Surgery, a Johnson & Johnson Company.
About RTI InternationalRTI International is an independent nonprofit research organization dedicated to conducting research and development that improves the human condition. With a staff of more than 2,500 people, RTI offers innovative research and technical solutions to governments and businesses worldwide in the areas of health and pharmaceuticals, advanced technology, surveys and statistics, education and training, economic and social development, and the environment. For more information, please visit us at: http://www.rti.org.
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