Officials at Blue Cross and Blue Shield of North Carolina knew that 55 percent of the health plan's 3 million members were overweight and getting heavier, pounds that weighed down the plan's bottom line as much as the physicians' scales.
Still, they hadn't isolated the precise dollars involved until 2003, when they scrutinized medical costs and claims data for one-third of the members. What they discovered was a mindblower. Treating obese members cost at least 30 percent more than normal-weight members; the price difference for overweight members was 18 percent. For 2003 alone, those excess dollars reached $83 million.
The bad news didn’t stop there. A member survey highlighted a yawning gap between perception and reality. Nearly one-third of overweight members described their weight as "just right." So did 5 percent of obese enrollees. In short, what didn’t appear to be broken couldn’t be fixed.
That’s when the Chapel Hill-based plan, the state’s largest insurer, decided to wade into the high-cost, high-stakes world of obesity treatment, rolling out a benefits package that observers describe as one of the most comprehensive available. Depending upon the size of their waistlines and commitment to overhauling their weighty habits, members can qualify for a spectrum of services from nutrition counseling to weight-loss drugs to bariatric surgery.
"The goal is not to have vast numbers of our members lose 50 to 100 pounds," says Betsy LaForge, who oversees the health plan’s prevention and health education programs. "It’s really to have members not gain any more or to lose 5 to 10 percent of their weight."
In the process, though, Blue Cross and Blue Shield of North Carolina is taking a sizable gamble. Health policy analysts and business groups, even those intrigued by the obesity initiative’s public health potential, describe research as mixed on the question of whether these sorts of disease management efforts save money over the long haul.
In October, a Congressional Budget Office analysis looking at disease management’s potential in the Medicare program found that "evidence on cost savings is limited,’’ with few studies available.
For employers and health plans alike, there’s also the reality of turnover. Your newly svelte enrollee may reap lower health bills five years from now--for your competitor, that is. Meanwhile, self-insured employers who buy into obesity packages such as Blue Cross and Blue Shield’s are literally footing the initial bill themselves and assuming the risk that the payoff will occur on their watch.
The North Carolina plan is unusually gutsy in its move to develop an obesity package and promote it so aggressively, says Helen Darling, president of the National Business Group on Health. "A lot of companies don’t advertise what they pay for because they don’t want a demand."
The North Carolina plan is unusually gutsy in its move to develop an obesity package and promote it so aggressively, says Helen Darling, president of the National Business Group on Health. "A lot of companies don’t advertise what they pay for because they don’t want a demand," she says.
But Darling cautions that plan officials must still make their business case to employers by developing a scientifically rigorous study to track results. Given rising health care costs, "no employer is going to knowingly add to benefits unless they were confident that there was a trade-off in terms of lower claims costs later," she says.
Executives at the insurer, who say they are developing such a controlled study, won’t detail their return-on-investment projections for the 1.1 million members who are eligible for the obesity package--primarily individual members and commercial enrollees. They say one problem is that they simply don’t know how many people will sign up.
They maintain, though, that long-term savings will far outweigh upfront costs. "We are going to see savings on the medical side, but it’s not going to be next month or next year necessarily," says Dr. Robert Harris, senior vice president and chief medical officer of Blue Cross and Blue Shield of North Carolina. "But it will come to pass."
The plan has garnered significant publicity for the Cadillac end of the obesity package. Weight-loss drugs, after all, can approach $100 a month, and bariatric surgery can easily cost $35,000 to $40,000.
But executives at the insurer argue that it’s the plan’s basic framework, with its emphasis on prevention and early intervention, that drives their confident, albeit confidential, projections. To enroll in the program, members must not only provide details about their height and weight, but also answer questions designed to assess their willingness to revamp their lifestyle, says Dr. Don Bradley, the health plan’s senior medical director.
"Some people aren’t ready to do that," he says. "Then it’s really wasted time and money."
There’s no clear-cut answer at this point in time on how to manage weight because everyone is different.
During the pilot phase this past summer, 30,000 letters of invitation were mailed to members with diabetes and other high-risk conditions. By early November, 2,600 people had enrolled. Most are individually insured or employees in smaller businesses, as Blue Cross and Blue Shield had just started selling the plan to larger, self-insured employers.
Once members demonstrate a commitment to weight loss, they will be mailed a package of health information, including a food diary and a personalized health assessment that will outline the potential risks associated with their body mass index and waist measurement, among other factors.
In his first two months of participation, health plan member Robert Amato shed 31 pounds from his 378-pound frame. Using the food diary, he says, has helped keep him honest about what he’s putting into his body. The invitation "just came at the right time," says Amato, who runs a small business. "I’m 64 years old. I’m overweight. I know from reading many things that I’m cutting years off my life."
By midyear, the program, Healthy Lifestyle Choices, will be made available to all 1.1 million eligible members. Additional medical benefits will kick in over the course of the year, with the exact dates depending upon the employee’s benefit cycle. In addition to the obesity surgery and weight-loss drugs, the plan will pay for four doctor visits annually to discuss obesity issues, along with dietitian counseling.
Seven physician practices, with a total of 12 surgeons, have been designated as bariatric surgery centers of excellence in an effort to curtail rising complication rates.
The Obesity Train Wreck
Employers and health plans aren’t just worried about today’s employees. The health profile of tomorrow’s workforce is even more dismal. More than 15 percent of adolescents are overweight, compared with 5 percent in the late 1970s.
In 2000, overweight and obese Americans cost the U.S. economy an estimated $117 billion, according to a 2001 U.S. Surgeon General report. Of that total, $61 billion covered direct medical costs; the remainder accounted for indirect costs, such as lost work time, disability and lost income due to premature death.
At this point, obesity intervention efforts have been more likely to fall under the umbrella of health improvement initiatives, such as fitness programs, says LuAnn Heinen, director of the Institute on the Costs and Health Effects of Obesity, part of the National Business Group on Health.
Still, there has been a shift in the past year or so, with more progressive self-insured employers interested in covering weight-loss drugs and bariatric surgery, says Stephanie Pronk, a senior health care consultant at Watson Wyatt. One option for high-turnover industries, such as retail, is to design a benefit package that doesn’t pay for costly obesity interventions until the employee has worked beyond the typical turnover window.
That way, Pronk says, "employers don’t feel like they are throwing money away and people are moving on."
Also, employers that have made more of an effort to tackle obesity--Heinen cites Union Pacific Railroad as one example--have high retention rates, with some companies hiring employees’ children and grandchildren, she says.
Weighing the Options
Aetna, which is rolling out a pilot obesity program that includes its own workforce, already provides reduced-rate access to on-site fitness centers for its own employees. In 2003, those who made an effort to stay fit--using the centers at least twice a week--had pharmacy and medical costs that were $28 less per month than employees who didn’t use the centers but had a similar demographic background, says Jane Hopkins, Aetna’s director of benefits.
"If you’ve got an employee who is 10 pounds or 20 pounds or 30 pounds lighter three or four months down the road, that’s an immediate impact on morale and productivity."
A National Business Group on Health survey released last year found similar bottom-line fitness benefits. Twenty-seven percent of the 84 large companies reported that fitness initiatives helped reduce health care costs. The survey also revealed that jump-starting physical activity is far from easy. At two-thirds of the companies, less than one-fourth of employees participated.
And footing the bill for drugs is no guarantee of substantial weight-loss success. A July 2004 report by the Agency for Healthcare Research and Quality found evidence of only modest success with orlistat (Xenical ) and sibutramine (Meridia), the two drugs covered by Blue Cross and Blue Shield of North Carolina. The weight loss attributable to the medications after 12 months was less than 13 pounds, a figure that nevertheless could be clinically significant, according to the report’s authors.
Since the early 1990s, Union Pacific Railroad has offered a $2.5 million health promotion program to its 48,000 employees, along with their spouses. The program, which provides written information along with phone counseling, has reduced health claims related to lifestyle choices from 29 percent in 1990 to 18.8 percent in 2001, says Marcy Zauha, Union Pacific’s director of health and safety.
But the company has only taken limited steps to cover weight-loss drugs and surgery. Self-insured plans for managers do cover surgery, but there’s no coverage for weight-loss drugs, and the HMO option doesn’t cover surgery either, according to a Union Pacific spokeswoman.
More data is needed, Zauha says. The company participates in several weight-related studies, including one that’s following 225 employees who’ve been prescribed a weight-loss drug along with receiving behavioral modification. "There’s no clear-cut answer at this point in time on how to manage weight because everyone is different," Zauha says. "There are so many things that affect it (weight loss)."
Blue Cross and Blue Shield of North Carolina has covered bariatric surgery for at least 15 years, but the surgery’s popularity has surged only recently. In 2003, 495 surgeries were performed, compared with 75 just two years before, according to the plan’s claims data. During the first six months of 2004, 340 patients underwent the procedure. By the year’s end, nearly 700 patients were expected to have gotten the operation.
When analyzing their own claims data, health plan officials also identified a significant correlation between a surgeon’s volume and results, says Bradley, the plan’s senior medical director.
High-volume doctors, who averaged 35 surgeries in the previous year, had a 6.4 percent readmission rate within 60 days of a patient leaving the hospital, he says. Those with a limited track record, averaging just four surgeries, had an 11.7 percent complication rate. "This doesn’t mean these are bad surgeons," Bradley says. "We view this as a learning curve."
The surgeons’ records were a significant part of the criteria used to develop the health plan’s list of centers of excellence. A physician advisory panel started with a list of 19 doctors who had performed 100 surgeries in the previous year for Blue Cross and Blue Shield patients, as well as members of other plans, according to spokeswoman Gayle Tuttle.
The panel members also assessed the physicians’ ability to identify good surgical candidates. They visited their offices to gain insight into their sensitivity, Tuttle says: "Are the chairs big enough? Are the gowns big enough?"
If the surgical results from the seven centers of excellence prove to be better, the plan then may provide financial incentives to steer patients to those practices, Bradley says. The hope is that other doctors performing bariatric surgery will improve their own results so they can be a designated center as well, he says.
In making their case for the surgery’s health benefits, Blue Cross and Blue Shield officials cite a recent meta-analysis of 136 studies that was published in October in the Journal of the American Medical Association. The morbidly obese patients involved not only lost a lot of weight, often dropping more than 120 pounds, but also saw improvement in diabetes, blood pressure and sleep apnea. The diabetes benefits alone were particularly dramatic: Three-fourths experienced a complete reversal of the risky health condition.
Employers are not necessarily convinced. In 2003, 52 percent of employers didn’t cover bariatric surgery at all, according to Mercer Human Resource Consulting’s annual survey of employer-sponsored plans. An additional 18 percent required criteria to be met.
Some of the bariatric surgery debate boils down to a difference in perception, says Watson Wyatt’s Pronk. When obesity is not viewed as a disease, that influences employers’ thinking.
"We cover coronary bypass surgery without blinking an eye," she says. "That surgery costs roughly twice as much as bariatric surgery. If people don’t do the right thing (healthwise) after bypass surgery, in seven to 10 years they will be back in for another $40,000 to $50,000 procedure, and we never question that."
Selling the Plan
In November, Michael Roach and his team of 35 account managers started selling the new Healthy Lifestyle Choices program to the plan’s self-insured clients. In meetings with more than 200 businesses, including about 20 Fortune 500 companies, they will outline the obesity costs of doing business.
For example, the health plan can compile a company’s diabetes-related claims and show how obesity drives up those costs, says Roach, vice president of national accounts. They also are discussing potential incentives for the program’s pioneers. One possibility would be to waive the administrative costs for the obesity benefits when a company signs on, Roach says.
Frontier Spinning Mills, a North Carolina manufacturer with 950 employees covered by Blue Cross and Blue Shield, was among the first self-insured employers to express interest. Employers can’t ignore the escalating cost of chronic, obesity-related illness, says Jim Powers, Frontier’s human resources director.
True, some employees will inevitably move on, he says. (Frontier’s 2003 turnover rate was 18.2 percent.) "But I think that (the turnover issue) is a narrow way to look at it," Power says. "You’ve got 18 percent of people who may leave, but 82 percent are going to stay."
For companies a little too cynical, or cost-strapped, to buy the public health argument, Roach points to more immediately visible results. "If you’ve got an employee who is 10 pounds or 20 pounds or 30 pounds lighter three or four months down the road, that’s an immediate impact on morale and productivity."
With no sign of a slimmer American workforce in sight, academics and health purchasers already know the weighty cost of inaction. The only question is which initiatives and what companies will forge the way.
Workforce Management, January 2005, pp. 47-51 -- Subscribe Now!