Insurers Weigh Surgery Risks

It’s not unusual for doctors and insurance companies to clash over coverage. But when it comes to obesity surgery, insurance companies disagree even among themselves.

Worried about the safety and costs of stomach stapling and similar weight-loss operations, many insurers have tightened eligibility rules, and a few have stopped covering the procedures altogether.

These insurers say the risks of complications and death are too high. They also say that covering the procedures -- at an average cost of $25,000 -- would put more pressure on premiums.

Yet other insurers, looking at the same risk studies and similar costs, have reaffirmed their commitment to weight-loss surgery, saying it may be the only answer for some patients.

The procedures also can save money in the long run, these insurers say. Candidates for the surgery are at least 100 pounds overweight and already consume a disproportionate share of premium dollars through the treatment of diabetes and other weight-related conditions.

Who is right? Even insurers aren’t sure.

Bob Greczyn, chief executive of Blue Cross and Blue Shield of North Carolina, decided to continue covering gastric bypass, the most commonly performed type of weight-loss surgery. But he isn’t criticizing insurers that have stopped.

“You can make a legitimate decision not to cover something that’s dangerous,” Greczyn said. “What that leaves you with is people who are morbidly obese who don’t have a lot of options. We set out to create a program that addressed patient safety concerns and create what we believe is a better outcome for patients who are morbidly obese and don’t have a lot of other options.”

For private insurers, weight-loss surgery is one highly visible component of spiraling obesity-related costs. Overall, insurers are spending at least $36.5 billion a year on obesity and related conditions, according to a study set to be posted today on the website of the journal Health Affairs. That is a tenfold increase in 15 years. Spending on obesity-related conditions, such as diabetes and heart disease, also is growing disproportionately, rising from 2% of all healthcare dollars in 1987 to 11.6% in 2002.

North Carolina mirrors the national trend. More than half of Blue Cross and Blue Shield’s 3.2 million members are overweight or obese. These members cost 32% more to cover than others. In 2003 alone, the insurer figured it spent $83.1 million on weight-related medical problems.

Blue Cross and Blue Shield of North Carolina viewed weight-loss surgery as part of the solution and had been covering it for 18 years. But a few years ago, the insurer spotted an alarming trend in its claims data: Complications seemed to be rising faster than the number of procedures.

After analyzing the problem, the insurer concluded that an influx of inexperienced surgeons -- who, on average, have higher complication rates than veteran doctors -- was driving up the risk.

Other insurers came to the same conclusion, which led some to drop coverage.

But Don Bradley, executive medical director for the North Carolina insurer, remained convinced that, properly done, surgery to reduce the size of the stomach could be an effective way to help patients lose weight. Moreover, he said, studies have shown that when weight-loss surgery is successful, diabetes disappears in nearly 9 out of 10 cases.

“It doesn’t get better -- it goes away,” Bradley said. “We’re ultimately reducing their disease burden for their whole life.”

Experience also had shown that the benefits accrue to the bottom line. Pharmaceutical costs for the average patient in the first year after weight-loss surgery drop by 20% to 25%. As the pounds come off, patients take less insulin for diabetes and fewer drugs for high cholesterol, heart disease and other problems, Bradley said.

For him, a retreat from surgery was not an option.

“The real crime is to look and see the problem and not do something about it,” Bradley said. “I believe that appropriately done -- and there is data to show this -- the surgery can be safe and effective. It can also be horrible. People end up in intensive care.”

According to a Rand Corp. analysis of 150 studies, 1 in 5 weight-loss surgery patients has complications, most of them minor. However, when intestinal leaks, blood clots and other serious problems occur, patients can need additional surgery and spend months in the hospital.

Rand found a death rate of less than 1%, based on studies that relied on doctors’ reports. However, insurance claims data show somewhat higher death rates -- between 2% and 3%, said Melinda Maggard, an author of the Rand study. By comparison, the death rate for cardiac bypass surgery is about 2.7%.

Bradley wanted to do everything in the North Carolina insurer’s power to lower the risk. So he proposed an approach that already was common in cardiac care: Designate “centers of excellence” by identifying the surgeons and hospitals with the best support programs and outcome records. Then steer patients their way.

Greczyn, the CEO, hadn’t yet approved the proposal when he bumped into a subordinate who had lost a lot of weight.

“I said, ‘I don’t know what you’re doing, but you look really healthy -- keep it up,’ ” recalled Greczyn, who later learned that the man’s life had been changed by weight-loss surgery. The encounter helped pave the way for the insurer’s rollout over the last few months of an array of weight-loss benefits that are among the most extensive in the country.

Blue Cross and Blue Shield of North Carolina is one of the first health insurers to designate obesity as a primary condition, allowing doctors to bill when patients visit just to talk about their weight.

The insurer also has equipped doctors with tape measures in the belief that waistline circumference is a vital sign of a patient’s health. It has added coverage of certain weight-loss prescription drugs. And members who elect to have surgery are strongly encouraged to go to a center of excellence.

The company is monitoring results to determine how effective each of the interventions is and how weight-loss promotion affects the bottom line. It also is eager to determine whether the centers-of-excellence approach succeeds in reducing the complication and death rates and improving patient outcomes.

“We will ... prove that it can be done safely and effectively, or we will prove that it can’t,” Greczyn said.

Health researchers, business leaders and others are watching the experiment.

“North Carolina’s plan is very creative -- the most creative in the country,” said Helen Darling, president of the National Business Group on Health. “We are urging them to aggressively and with high-quality science evaluate everything that happens, so we can see the evidence.”

Other insurers -- including in California Blue Shield, PacifiCare and Blue Cross -- are moving to designate centers of excellence.

But some are going the other way.

Blue Cross of Florida, that state’s largest health plan with 3.5 million members, is one of the biggest to walk away from weight-loss surgery.

“Our biggest concern was, as demand was increasing, clearly this was becoming a cash cow” for doctors and hospitals, said Dr. Barry Schwartz, vice president of network management for the insurer. “We had small community hospitals doing this. This is high-risk surgery, and they weren’t equipped to deal with complications.”

The insurer’s decision took effect Jan. 1 after a run-up in claims for weight-loss surgery. Doctors in Florida submitted 2,522 requests for weight-loss surgery coverage to Blue Cross in 2004, up from 1,500 a year earlier.

Schwartz said Blue Cross of Florida also had seen a rise in inexperienced doctors performing the procedures.

“We felt that our complication rate had to be higher, or it sure as heck would be higher soon,” he said. “We had surgeons going away, literally, for a couple of days’ course [of training] and coming back and doing the procedure.”

Schwartz also said it was not yet clear how effective the surgery was or how often initially successful patients put the weight back on.

Blue Cross of Florida has not offered its obese members any alternatives to surgery.

“There is really nothing to replace this with,” Schwartz said. “The closest thing to a replacement might be to get our schools to move the Coke machines out and put physical education back in the curriculum.”

Those are fine ideas, but they will do nothing to help people whose health already is compromised by their weight, said Walter Lindstrom, a San Diego lawyer who helps obese patients get procedures approved.

“You can’t simply ignore the people who are already sick,” he said. “It would be like saying, ‘We’re going to look at AIDS prevention or cancer prevention, but we’re not going to bother with the people who have it right now.’ We would never do that. But that’s exactly what we’re doing with morbid obesity.”

Doctors too say such policies are unfair.

“You get covered if you get a total knee or a total hip replacement,” said Dr. Harvey Sugerman, a retired Virginia surgeon and president of the American Society of Bariatric Surgery. “Yet here is a procedure that can wipe out four or five diseases, and it’s being denied. It’s crazy.”

Critics suspect that Blue Cross of Florida dropped coverage because the costs were escalating rapidly as more members sought the procedures. Blue Cross’ Schwartz said cost did play a secondary role in the decision. If the insurer were to pass on the cost of weight-loss surgery coverage to members through premiums, it would price some members out of the market.

“We calculated that for every 1% increase in Blue Cross premiums, there’s another 16,000 uninsured people in Florida, so we cannot have a cavalier attitude about it,” Schwartz said. “We can’t say, ‘OK, it costs us more, so increase the premium.’ ”

In California, health maintenance organizations are required to cover anything a physician deems medically necessary. As a result, qualified patients usually get their plan to cover weight-loss surgery, but some doctors say approvals are taking longer. Preferred-provider organizations have more latitude in California, as do all types of health plans elsewhere, to exclude procedures, such as weight-loss surgery, from coverage.