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Use And Costs Of Bariatric Surgery AndPrescription Weight-Loss Medications Treatment for obesity has skyrocketed since 1998, but coveragepolicies remain uneven across insurers.
by William E. Encinosa, Didem M. Bernard, Claudia A. Steiner, and ABSTRACT: The extent of use of bariatric surgery and weight-loss medications is unknown.
Using the Nationwide Inpatient Sample, we estimate that the number of bariatric surgeries grew 400 percent between 1998 and 2002; such surgeries were performed on 0.6 percent of the 11.5 million adults clinically eligible in 2002. Hospital costs for bariatric surgery grew sixfold to $948 million in 2002. The inpatient death rate declined 64 percent. Among em- ployers that covered weight-loss drugs in 2002, less than 2.4 percent of adults clinically eli- gible for these drugs used them, with average annual spending of $304 per user.
The obesity epidemic hasrecently pharmaceuticalpipeline,withtwocurrently These bariatric treatments have substantial attention is now drawn to two medical treat- health benefits. A recent meta-analysis found ments for obesity: bariatric surgery and bar- that the percentage of excess weight loss was iatric pharmacotherapy. Bariatric surgery, 61.6–70.1 percent with gastric bypass, the most one of the fastest-growing surgical proce- common bariatric surgery. As a result, diabetes dures in the United States, involves restrict- was completely resolved in 76.8 percent of pa- ing the size of the stomach and bypassing tients.3 Another recent study found that gas- part of the intestines to reduce the absorption tric bypass patients had an 89 percent reduced of food. Bariatric pharmacotherapy involves prescription weight-loss medications that ei- ther reduce the absorption of fat or suppress mended only for morbidly obese persons with the appetite. Xenical (orlistat), a drug that a body mass index (BMI) of 40 or more, bariat- blocks about one-third of ingested fat, was ric drug therapy is recommended for obese the third most heavily advertised drug in people with a BMI of 30 or more.5 A recent 1999: $76 million was spent on advertising it meta-analysis found that bariatric medica- to consumers.1 There are about twenty-two tions result in a net weight loss of fewer than ten pounds (over the placebo weight loss) at William Encinosa ([email protected]) is a senior economist in the Center for Delivery, Organization, andMarkets, Agency for Healthcare Research and Quality, in Rockville, Maryland; Claudia Steiner is a seniorresearch physician there. Didem Bernard is a senior economist in the AHRQ Center for Financing, Access, andCost Trends. Chi-Chang Chen is a postdoctoral fellow at the University of Maryland School of Pharmacy inBaltimore. H E A L T H A F F A I R S ~ Vo l u m e 2 4 , N u m b e r 4 DOI 10.1377/hlthaff.24.4.1039 2005 Project HOPE–The People-to-People Health Foundation, Inc. one year, but this amount may still be clinically counter Database, which contains claims for significant in reducing diabetes and high inpatient care, outpatient care, and prescrip- tion drugs for enrollees under age sixty-five in There are no national estimates of the use the employer-sponsored benefit plans of forty- and costs of bariatric surgery and weight-loss five large employers across the country. The prescription drugs. In this paper we address MarketScan data include 5.6 million people— this data gap using national hospital and in- ployer-sponsored health insurance coverage(5.1 million of these have drug coverage).
data to examine the use and costs of bariatric Inpatient Sample (NIS) of the Healthcare Cost surgery. Next, we used the Medstat data to and Utilization Project (HCUP) for 1998 and study use of and spending for prescription 2002.7 The NIS is a nationally representative inpatient care database containing data fromabout 1,000 hospitals sampled to approximate a 20 percent stratified sample of U.S. commu- nity hospitals. Total charges reported in the hibit 1 presents national estimates for use, to- NIS are used with hospital-specific cost-to- tal hospital costs, and cost per surgery by charge ratios to estimate hospital costs for bar- payer based on the NIS data. The total number of surgeries more than quadrupled, from an es- Our second source of data was the Medstat timated 13,386 in 1998 to 71,733 in 2002. In 2002 MarketScan Commercial Claims and En- 2002, privately insured patients accounted for EXHIBIT 1National Estimates Of Bariatric Surgery Use And Costs, By Payer, 1998 And 2002 SOURCE: Healthcare Cost and Utilization Project (HCUP) Nationwide Inpatient Sample (NIS), 1998 and 2002.
NOTES: All costs are in 2002 dollars and include inpatient costs only. Standard errors are in parentheses.
83 percent of surgeries, while Medicare, Medic- rate declined 64 percent (Exhibit 2). Both aid, and self-pay accounted for 6, 5, and 3 per- length-of-stay and mortality generally in- cent, respectively. The remaining 3 percent were paid for by other government sources, a military plan for civilians, and charity.
dergo bariatric surgery in both years. In 2002 National hospital costs for bariatric surger- women accounted for 84 percent of all surger- ies increased more than sixfold, from an esti- ies. However, both lengths-of-stay and inpa- mated $157 million in 1998 to $948 million in tient death rates were higher among men.
2002, in constant 2002 dollars.9 Mean cost per Although the inpatient death rate for men de- surgery increased 12.9 percent, from $11,705 in clined greatly between 1998 and 2002, it was 1998 to $13,215 in 2002. The largest increase in still three times higher than the rate among average costs was for Medicaid-covered sur- geries, with an increase of 17.7 percent, despite Based on national estimates of surgeries for a decline in length-of-stay from 5.8 days to 4.9 2002, we next estimated the prevalence of bar- iatric surgery among those who were clinically Exhibit 2 presents national estimates of the eligible.11 Using the clinical guidelines de- number of surgeries, lengths-of-stay, and inpa- scribed above, we estimated that there were at tient death rates, by age and sex. Focusing on least 11.5 million adults eligible for bariatric 2002, patients ages 18–54 accounted for 88 surgery in 2002.12 Adjusting for multiple sur- percent of all surgeries, while the near-elderly geries per patient, we estimated that there (ages 55–64) accounted for 11 percent. Adoles- were a total of 70,124 adult bariatric patients cents and the elderly accounted for the re- in 2002.13 Thus, of the 11.5 million adults who maining 1 percent.10 The fastest growth in bar- were clinically eligible for the surgery, only 0.6 iatric surgeries between 1998 and 2002—a percent received the surgery in 2002.
tenfold increase—occurred among the near- presents use and spending by type of surgery, Overall, lengths-of-stay declined 24 per- using the 2002 Medstat employer data. While cent for all surgeries, and the inpatient death Exhibit 2 presents hospital costs, Exhibit 3 EXHIBIT 2National Estimates Of Bariatric Surgery Use And Outcomes, By Age And Sex, 1998And 2002 SOURCE: Healthcare Cost and Utilization Project (HCUP) Nationwide Inpatient Sample (NIS), 1998 and 2002.
NOTES: Standard errors are in parentheses. The number of surgeries in age groups 12–17 and 65+ for 1998 is too small to H E A L T H A F F A I R S ~ Vo l u m e 2 4 , N u m b e r 4 EXHIBIT 3Average Bariatric Surgery Spending In A Sample Of Large Employers, 2002 SOURCE: Medstat, MarketScan 2002 (5.6 million nonelderly covered lives in employer-sponsored health plans).
NOTES: “Other gastric bypass” includes long limb bypass and bilopancreatic diversion. All payments are for inpatient hospital presents the prices actually transacted. In surgical joining of the bypass, or dealing with a 2002 the average price for a surgical procedure was $19,346. Physician payments accounted The less intensive banding, or gastroplasty for 14 percent ($2,667), while hospital pay- without gastric bypass, accounted for 4 per- ments accounted for 86 percent ($16,679) of cent of surgeries, while Roux-en-Y gastric by- total payments.14 On average, patients paid 3.3 passes accounted for 84.7 percent. Other gas- percent of expenditures in the form of copay- tric bypasses made up 9.2 percent of surgeries, ments or deductibles, and health plans paid while revision-only surgeries accounted for the remaining 2 percent. Payments increased (CPT-4 codes for procedures) enabled us to banding/gastroplasty to Roux-en-Y to other examine use and spending by type of bariatric gastric bypass. Also, doctors were paid more surgery. Exhibit 3 groups the surgeries into as the surgeries became more advanced.
four types. The first type (gastric banding and We also found that payments varied by the gastroplasty without bypass) simply reduces type of health plan. For example, for Roux-en- the size of the stomach, either by stapling the Y, the average total payment was only $16,222 stomach (gastroplasty) or by placing a tight under capitated health maintenance organiza- (Roux-en-Y gastric bypass) includes a reduc- point-of-service HMOs, and preferred pro- tion in the size of the stomach and a bypassing vider organizations (PPOs), the total pay- of part of the intestines to reduce the absorp- ments were $17,749, $20,154, and $21,698, re- tion of food. The third type (other gastric by- spectively. Length-of-stay was 3.9 days for all pass) is a more advanced technique in which longer lengths of the intestine are bypassed under bilopancreatic diversion or duodenal two ways. The non-laparoscopic approach re- switch gastric bypass.15 The fourth type of sur- quires the abdomen to be opened, while the gery (revision only) is a follow-up surgery that laparoscopic method is a less invasive method may involve readjusting the band, revising the in which surgeons, guided by a video camera, gain access to the abdomen through several medication use and spending among the 2002 small incisions. Fourteen percent of bariatric Medstat employer sample. Of the 5.1 million surgeries were laparoscopic (94 percent of with drug coverage, about 4 million had bar- these laparoscopies occurred in Roux-en-Y iatric drug coverage. Of that 4 million, 21,931 bypass). Laparoscopic surgeries were less used bariatric prescription drugs. Among the costly than non-laparoscopic surgeries; how- users, 45 percent used orlistat, 30 percent used ever, doctors were paid 6 percent more for lap- sibutramine, and 35 percent used sympatho- aroscopy (Exhibit 3). Moreover, the patient’s mimetics (10 percent used multiple drugs).
out-of-pocket payment was 75 percent higher Close to 71 percent of the sympathomimetic Of all surgeries, 3.8 percent involved a revi- Although orlistat and sibutramine are rec- sion; 2 percent had a revision during a follow- up surgery, and 1.8 percent, during the initial years), the average number of days of medica- surgery. Surgeries with revisions were 37 per- tion supplied per patient per year was 110 days cent more costly than surgeries without revi- for orlistat and 102 days for sibutramine. This may suggest that the discomfort of side effects reduces adherence.19 The average number of tions. As of 2002, eight drugs had been ap- days of medication supplied per patient per proved for weight loss. Of these, sibutramine year was 111 days for sympathomimetics. The (Meridia) and orlistat (Xenical) are approved average total supply of drugs per patient per for up to two years of use.16 The other medica- year was 118 days, which reflects the fact that tions are sympathomimetic amphetamine–like 10 percent of patients in the data took multiple benzphetamine, phendimetrazine, diethylpro- Patients spent an average of $304 each for pion, and mazindol.17 These amphetamine-like weight-loss medications each year; patients drugs are labeled for short-term use (up to paid 26 percent of this amount, and health twelve weeks).18 Orlistat is a lipase inhibitor, plans, 74 percent. This annual total payment which blocks fat absorption, while the other per person increased with age, from $192 per seven drugs are appetite suppressants.
person for ages 8–17 to $361 for ages 55–64. Al- Exhibit 4 presents prescription weight-loss though only 22 percent of users were men, EXHIBIT 4Average Spending For Prescription Weight-Loss Medications In A Sample Of LargeEmployers, 2002 SOURCE: Medstat, MarketScan 2002 drug file (5.1 million nonelderly covered lives in employer-sponsored health plans with NOTES: Number of patients and days supplied do not add up to the total since 10 percent of patients took more than one type of drug. Sibutramine is a long-term appetite suppressant. Sympathomimetics are short-term appetite suppressants that include phenylpropanolamine, phentermine, benzphetamine, diethylpropion, mazindol, and phendimetrazine.
H E A L T H A F F A I R S ~ Vo l u m e 2 4 , N u m b e r 4 men spent more on average on the drugs than lost more than 10 percent of body weight at women ($327 versus $297), because men used one year compared with 10 percent of subjects these drugs longer than women (122 days ver- taking placebo.25 Other new drugs will block sus 117 days per year) and because a greater the hormone ghrelin, which is sent from the proportion of men than women used the most stomach to the brain to create an appetite.26 costly drug, orlistat (44 percent versus 36 per- Some drugs will instead stimulate beta 3 recep- tors to increase fat burning within the body.27 Finally, we estimated the prevalence of bar- These new medications will likely increase the iatric medicine use among obese adults with demand for weight-loss drug therapy.
employer coverage for the drugs. From our For the elderly, the Medicare program cov- surgery in 2005.29 By 2010 this number could As bariatric surgeons perform more surger- grow to 475,000. Thus, if Medicare decides to ies and outcomes continue to improve, it is expand coverage for bariatric surgery in the likely that more people will opt for the surgery.
near future, the potential demand by the el- This potential demand may be quite large since the number of bariatric surgeries has grown Bariatric drugs are not included in the final 400 percent in just five years. This growth will likely continue, given that only 0.6 percent of the 11.5 million eligible people underwent the Use of weight-loss medications declined in act excludes agents used for weight loss. How- 1997 with the removal of fenfluramine and ever, according to the final rules recently re- dexfenfluramine from the market (because of leased by the Centers for Medicare and Medic- heart value abnormalities), but it picked up aid Services (CMS), bariatric drugs can be again in 1999, when orlistat entered the mar- covered by Medicare Part D if they are pre- ket.22 The industry reports that total U.S. sales scribed for a “medically accepted indication” for weight-loss medications in 2002 were $362 such as morbid obesity. Thus, it is not yet clear million.23 In 2002 an estimated 63.3 million to what extent the 500 potential drug plans in U.S. adults were clinically eligible for weight- Medicare Part D will choose to include bariat- loss medications but these drugs were used by ric medications on their formularies. We esti- less than 2.4 percent of those eligible. Thus, us- mate that about 3.3 million Medicare benefi- age could greatly increase, given that many ciaries ages 65–69 will be clinically eligible for new, more effective prescription weight-loss medications are being developed.24 Some of the new drugs in the pipeline, such as rimonabant tween the sexes in the use of bariatric treat- (Acomplia), will block a pathway in the brain ments. We estimated that 43 percent of the that produces the craving for food. In recent adults clinically eligible for drug therapy in trials of rimonabant, 44 percent of subjects 2002 were men; however, only 22 percent of adults taking bariatric prescription drugs were men. In contrast, while 57 percent of Santa Monica, Calif., under Contract no. 290-02-0003, Pub. no. 04-E028-2 (Rockville, Md.: those clinically eligible were women, women Agency for Healthcare Research and Quality, July accounted for 78 percent of drug users. Also, 31 percent of adults eligible for bariatric surgery 7. Healthcare Cost and Utilization Project, “Data- in 2002 were men, but only 16 percent of pro- bases,” October 2003, www.hcup-us.ahrq.gov/ men.31 In contrast, while 69 percent of those el- 8. Cost-to-charge ratios are obtained from standard accounting files at the Centers for Medicare and counted for 84 percent of the surgeries. More- Medicaid Services. For the estimation of costs inHCUP, see B. Friedman et al., “Practical Options over, men had worse in-hospital mortality for Estimating Cost of Hospital Inpatient Stays,” rates than the women in their same age group.
Journal of Health Care Finance 29, no. 1 (2002): 1–13.
The higher inpatient mortality for men is con- 9. We used the Consumer Price Index for all urban sistent with higher coexisting illnesses or 10. In fact, patients age sixty-five and older ac- counted for only 14 percent of Medicare bariatricsurgeries in 2002 presented in Exhibit 1 (com- This research was funded by the Agency for Healthcare pared with 7 percent in 1998). Thus, patients un- Research and Quality (AHRQ). The views herein do der age sixty-five accounted for 86 percent of the not necessarily reflect the views or policies of AHRQ, surgeries covered by Medicare in 2002 (through or the U.S. Department of Health and Human Services. the Medicare disability insurance program).
The authors thank the thirty-five data organizations in 11. We did not include adolescents, since surgery is states that contributed data to the Nationwide Inpa- recommended for only a small subgroup: those at tient Sample. They also thank the editors, two anony- least age fifteen with a BMI of 50 or higher. SeeT.H. Inge et al., “Bariatric Surgery for Severely mous reviewers, and Scott Smith for their insightful Overweight Adolescents: Concerns and Recom- mendations,” Pediatrics 114, no. 1 (2004): 217–223.
12. Of these adults, 10.6 million have a BMI of 40 or more. About 868,000 have a BMI between 35 and40 with diabetes, the most common comorbidity L. Bymark and R. Waite, Prescription Drug Use and that makes this group eligible for surgery. This is Expenditures in California: Key Trends and Drivers based on 2002 obesity rates for adults reported in (Oakland: California HealthCare Foundation, A.A. Hedley et al., “Prevalence of Overweight and Obesity among U.S. Children, Adolescents, and 2. Datamonitor, Commercial and Pipeline Perspectives: Adults, 1999–2002,” Journal of the American Medical Obesity (London: Datamonitor, June 2004).
Association 291, no. 23 (2004): 2847–2850. Diabe- 3. H. Buchwald et al., “Bariatric Surgery: A System- tes rates among the obese can be found in A.H.
atic Review and Meta-Analysis,” Journal of the Mokdad et al., “Prevalence of Obesity, Diabetes, American Medical Association 292, no. 14 (2004): and Obesity-related Health Risk Factors, 2001,” Journal of the American Medical Association 289, no. 1 4. N.V. Christou et al., “Surgery Decreases Long- Term Mortality, Morbidity, and Health Care Use 13. In the Medstat data presented in Exhibit 3, 2 per- in Morbidly Obese Patients,” Annals of Surgery cent of bariatric surgeries were follow-up surger- ies. We applied this rate to bariatric surgeries for 5. Bariatric surgery is also recommended for a BMI the national population presented in Exhibit 1.
of 35 or more with serious medical conditions 14. The hospital prices in Exhibit 3 are for large em- (such as severe sleep apnea, Pickwickian syn- ployers, which tend to have generous benefits, drome, obesity-related cardiomyopathy, or dia- while the cost estimates presented in Exhibit 1 betes mellitus). Bariatric drug therapy is also rec- are representative of the U.S. privately insured ommended for a BMI of 27 or more with two or population as a whole. Therefore, we caution the more comorbidities (such as hypertension, dia- reader against making direct comparisons of prices and costs across these exhibits.
6. P. Shekelle et al., Pharmacological and Surgical Treat- 15. R.E. Brolin, “Bariatric Surgery and Long-Term ment of Obesity, Evidence Report/Technical Assess- Control of Morbid Obesity,” Journal of the American ment no. 103, Prepared by the Southern Califor- Medical Association 288, no. 22 (2002): 2793–2796; H E A L T H A F F A I R S ~ Vo l u m e 2 4 , N u m b e r 4 and R. Steinbrook, “Surgery for Severe Obesity,” 26. Bays and Dujovne, “Anti-Obesity Drug Develop- New England Journal of Medicine 350, no. 11 (2004): 27. S. Vansal, “Beta-3 Receptor Agonists and Other 16. American Society of Health-System Pharmacists, Potential Anti-Obesity Agents,” American Journal AHFS Drug Information (Bethesda, Md.: ASHSP, of Pharmaceutical Education 68, no. 3 (2004): 1–10.
28. Centers for Medicare and Medicaid Services, 17. In November 2000, the FDA requested that “National Coverage Decision 40.5: Treatment of phenylpropanolamine be removed voluntarily Obesity,” 1 October 2004, www.cms.hhs.gov/ from the market. In our 2002 data, only 2 percent mcd/m_ncd.asp?id=40.5&ver=2 (11 April 2005).
of bariatric drug claims were for this drug.
For tracking CMS updates to its bariatric sur- 18. Mosby, Mosby’s Drug Consult, 14th ed. (St. Louis, viewncd.asp?ncd_id=100.1&ncd_version=1& 19. Orlistat is recommended for one year, with treat- ment continued after one year if the patient toler- Surgery+for+Obesity (11 May 2005). In 2004 the ates the drug well and sustained weight loss is CMS removed the language “obesity itself cannot documented. D.C. Dale and D.D. Federman, eds., be considered an illness” from its manual. In late2004 the CMS gathered the scientific evidence ACP Medicine (Danbury, Conn.: American Collegeof Physicians, 2005). In a 104-week clinical trial, on bariatric surgery. Its next step is to decide 12.9 percent of patients on orlistat dropped out whether to expand coverage for bariatric surgery of the study because of adverse effects and treat- to all morbidly obese elderly people, not just ment failure. See J. Hauptman et al., “Orlistat in the Long-Term Treatment of Obesity in Primary 29. This is based on a 3.9 percent morbid obesity rate Care Settings,” Archives of Family Medicine 9, no. 2 for adults age sixty or older, reported in Hedley et al., “Prevalence of Overweight and Obesity.” 20. This is based on a 30.6 percent obesity rate 30. This is based on a 32.9 percent obesity rate among adults in 2002, reported in Hedley et al., among adults age sixty or older, reported in ibid.
“Prevalence of Overweight and Obesity.” 31. This is based on obesity rate estimates by sex in 21. This growth trend may be dampened by recent K.M. Flegal et al., “Prevalence and Trends in Obe- health plan decisions to drop coverage for bar- sity among U.S. Adults, 1999–2000,” Journal of the iatric surgery. Blue Cross and Blue Shield of American Medical Association 288, no. 14 (2002): Florida and Nebraska have recently dropped coverage. See R. Stein, “As Obesity Surgeries 32. E.E. Mason, K.E. Renquist, and D. Jiang, “Peri- Soar, So Do Safety, Cost Concerns,” Washington operative Risks and Safety of Surgery for Severe Post, 11 April 2004. Some health plans are instead Obesity,” American Journal of Clinical Nutrition 55, carving out bariatric coverage as an optional benefit. Blue Cross and Blue Shield of NorthCarolina introduced a new benefit, Healthy Life-style Choices, designed specifically to deal withbariatric treatments. See B. McKay, “Blue Crossof North Carolina to Cover Cost of Treating Obe-sity,” Wall Street Journal, 13 October 2004.
22. R.S. Stafford and D.C. Radley, “National Trends in Antiobesity Medication Use,” Archives of Inter-nal Medicine 163, no. 9 (2003): 1046–1050.
23. Datamonitor, Commercial and Pipeline Perspectives: 24. See J. Korner and L.J. Aronne, “Pharmacological Approaches to Weight Reduction: TherapeuticTargets,” Journal of Clinical Endocrinology and Metabo-lism 89, no. 6 (2004): 2616–2621; J. Proietto et al.,“Novel Anti-Obesity Drugs,” Expert Opinion on In-vestigational Drugs 9, no. 6 (2000): 1317–1326; andH. Bays and C. Dujovne, “Anti-Obesity Drug De-velopment,” Expert Opinion on Investigational Drugs11, no. 9 (2002): 1189–1204.
25. Korner and Aronne, “Pharmacological Ap-

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