Session 6B Appropriate Treatment of Obesity Demonstrates Clinical & Economic Success Part 2 John Dawson, FSA, MAAA
Appropriate Treatment of Obesity Demonstrates Clinical & Economic Success SOA Asia-Pacific Annual Symposium Beyond Traditions - A World of Opportunities John D. Dawson, FSA, MAAA Willis Towers Watson July 7, 2017 2017 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. Overview The Case for Metabolic Surgery US Healthcare Marketplace Obesity Economics Surgery Economics Actuarial Opportunity 2
US Healthcare Marketplace Influence of Obesity on Cost 3 Nearly 90% of the Non-Elderly US Population Have Health Insurance Source: Employee Benefit Research Institute estimates for the Current Population Survey, March 2000-2015 Supplements (as of 2014) 4
Typical US Benefit Design Structure Typical US Medical Plan Design Structure Deductible Single $500 Family $1,000 Coinsurance 20% Medical Copays Primary Care Office Visit $25 Specialist Visit $50 Emergency Room $100 Drug Copays Generic $5 Brand $20 Non-Preferred $50 Out of Pocket Max Single $2,000 Family $4,000 Deductibles reduce cost by sharing first dollar expenses and reducing excess demand. Deductibles as high as $1,000 and $2,000 are increasingly common. Family deductible limits employee s cost exposure to a specified amount for the whole family. Coinsurance shares a portion of the cost after deductible has been met. Copays are like deductibles, but apply per event per office call or per emergency room visit. Out of pocket maximum limits employee s cost exposure to a specified amount. Under current federal law, out of pocket maximums apply to all employee cost sharing for care received from an in-network provider. 5 Key Factors Driving US Health Spend Common Risk Factors Much of the chronic disease burden is attributable to a short list of key risk factors; most US adults have more than one of these risk factors: High blood pressure. 70% of US Healthcare Relates to Preventable Disease 1 Tobacco use and exposure to secondhand smoke. Obesity (high body mass index). Physical inactivity. Excessive alcohol use. Diets low in fruits and vegetables. Diets high in sodium and saturated fats. Four Domains of Chronic Disease Prevention 1. Epidemiology and surveillance. 2. Environmental approaches 3. Health care system interventions 4. Community programs linked to clinical services Source: Centers for Disease Control and Prevention (CDC) http://www.cdc.gov/chronicdisease/resources/publications/four-domains.htm 1Preventable illness makes up approximately 70 percent of the burden of illness and the associated costs. Source: Reducing Health Care Costs by Reducing the Need and Demand for Medical Services, Freis Et AL., New England Journal of Medicine 1993; 329:321-325, July 29, 1993 DOI: 10.1056/NEJM199307293290506 6
Key Factors Driving US Health Spend Key Chronic Diseases Chronic disease is the leading cost of death and disability in the United States. Key chronic diseases we face are: Heart disease Diabetes Stroke Obesity, and 86% 2010 US Healthcare Spend for People with 1 or More Chronic Diseases 70% of US Healthcare Relates to Preventable Disease 1 Cancer Arthritis Behavior and lifestyle choices significantly contribute to most chronic conditions. Preventive care focused on identifying risk factors and disease, providing patient education, and changing member behavior have significant potential to reduce the incidence and related cost. Four Domains of Chronic Disease Prevention 1. Epidemiology and surveillance 2. Environmental approaches 3. Health care system interventions 4. Community programs linked to clinical services Source: Centers for Disease Control and Prevention (CDC) http://www.cdc.gov/chronicdisease/resources/publications/four-domains.htm 1Preventable illness makes up approximately 70 percent of the burden of illness and the associated costs. Source: Reducing Health Care Costs by Reducing the Need and Demand for Medical Services, Freis Et AL., New England Journal of Medicine 1993; 329:321-325, July 29, 1993 DOI: 10.1056/NEJM199307293290506 7 Workforce Health and Productivity According to research published in 2014 by the Integrated Benefits Institute (IBI), worker illness impacts financial productivity in several key ways: Metabolic syndrome: 3 times more likely to have a work-disabling event (e.g. heart attack or stroke) Diabetes: Depression: 47% more likely to miss at least one day of work per month than workers with normal fasting blood glucose Cost of lost work time and health care: $62,000 / 100 employees (Translates to $51.55 per employee per month) Low-back pain: Cost of lost productivity and health care: $51,400 annually per 100 employees (Translates to $42.83 per employee per month) IBI s research reveals that employees in organizations with a strong health culture report that they spend more time working, work more carefully and concentrate better than employees at organizations with poor cultures of health. 1 1Look beyond health care financing to workforce health, Integrated Benefits Institute, February 26, 2014 8
Obesity Economics A Growing Problem 9 The Cost of Obesity Currently, US spends between $147 billion 1 to $190 billion 2 annually on obesity-related healthcare expenses. Obesity-related illness is predicated will raise national health care costs by $48-$66 billion annually over the next 2 decades by adding another 7.9 million new cases of diabetes, 5 million cases of chronic heart disease and stroke, and 400,000 cancer cases. 3 If obesity prevalence in the US stabilizes at 2010 rates and does not climb to the predicted level (42% by 2030), the US would save a combined $549.5 billion in medical expenditures. 4 1 Finkelstein EA et al. Annual medical spending attributable to obesity: payer- and service-specific estimates. Health Aff. 2009 2 Cawley, Meyerhoefer. The medical care costs of obesity: an instrumental variables approach. J Health Econ. 2012. 3 Trust for America and Robert Wood Johnson Foundation. F as in Fat. 2013 4 Finkelstein et al. Obesity and Severe Obesity Forecasts Through 2030. Am J Prev Med. 2012 10
Defining Obesity Normal Weight Overweight Obesity Severe Obesity Extreme or Morbid Obesity 139 lbs. BMI 22 152 lbs. BMI 26 175 lbs. BMI 39 205 lbs. BMI 35 234 lbs. BMI 49 BMI 18.5 to 24.9 25 to 29.9 30 to 34.9 35 to 39.9 40 or more Clinical Classification Normal Weight Pre-obese Obesity 1 Obesity 2 Obesity 3 Approximate Population % 32%* 34% 20% 8% 6% *Normal weight population percentage includes underweight persons. All data shown for United States. Flegal KM, Carroll MD, Ogden CL et al. Prevalence and trends in obesity among US adults, 1999-2008. JAMA 2010; 303(3):235-241. World Health Organization. BMI Classification. Retrieved April 22, 2011 from http://apps.who.int/bmi/index.jsp?intropage=intro_3.html 11 Standard Body Mass Index (BMI) Table (kg / m 2 ) Weight (Pounds) Height 100 110 120 130 140 150 160 170 180 190 200 210 220 230 240 250 260 270 280 290 300 6' 6" 12 13 14 15 16 17 19 20 21 22 23 24 25 27 28 29 30 31 32 34 35 6' 4" 12 13 15 16 17 18 19 21 22 23 24 26 27 28 29 30 32 33 34 35 37 6' 2" 13 14 15 17 18 19 21 22 23 24 26 27 28 30 31 32 33 35 36 37 39 6' 0" 14 15 16 18 19 20 22 23 24 26 27 28 30 31 33 34 35 37 38 39 41 5' 10" 14 16 17 19 20 21 23 24 26 27 29 30 31 33 34 36 37 39 40 42 43 5' 8" 15 17 18 20 21 23 24 26 27 29 30 32 33 35 36 38 39 41 42 44 45 5' 6" 16 18 19 21 23 24 26 27 29 31 32 34 35 37 39 40 42 43 45 47 48 5' 4" 17 19 20 22 24 26 27 29 31 32 34 36 38 39 41 43 44 46 48 50 51 5' 2" 18 20 22 24 25 27 29 31 33 35 36 38 40 42 44 45 47 49 51 53 55 4' 10" 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 48 50 52 54 56 58 4' 8" 21 23 25 27 29 31 33 35 37 39 41 43 46 48 50 52 54 56 58 60 62 4' 6" 22 24 27 29 31 33 35 38 40 42 44 47 49 51 53 55 58 60 62 64 67 4' 0" 24 26 29 31 33 36 38 40 43 45 48 50 52 55 57 60 62 64 67 69 71 = Overweight = Obese = Morbidly Obese 12
Obesity is an Epidemic OBESITY RATES AMONG US ADULTS (BMI 30, or ~ 30 lbs. overweight for 5 4 person) 81.5 Million Obese Americans 33.7 Million Severely Obese 225,000 Bariatric Surgery Procedures Annually (1.5% of eligible population seeks surgery) Guam Puerto Rico 15%-<20% 20%-<25% 25%-<30% 30%-<35% 35% INCREASES IN OBESITY IN THE USA: 2000 2010 Centers for Disease Control. US Obesity Trends. Retrieved October 22, 2014 from http://www.cdc.gov/obesity/data/trends.html Estimated values. Sturm R and Hattori A. Morbid obesity rates continue to rise rapidly in the United States. Int J Obes 2012; 1:1-3. 13 Surgery Economics Clinical and Financial Efficacy 14
Most common metabolic procedures ROUX-EN-Y GASTRIC BYPASS SLEEVE GASTRECTOMY LAPAROSCOPIC ADJUSTABLE GASTRIC BANDING BILIOPANCREATIC DIVERSION (± DUODENAL SWITCH) Bypass a portion of the small intestine and create a 15- to 30-cc stomach pouch Resect approximately three-fourths of the stomach Place implantable device around the uppermost part of the stomach Remove part of the small intestine; performed with or without duodenal switch % of procedures performed 40% 50% 5% 5% 15 Comparative Treatment Outcomes 80.0% 70.0% 60.0% Metabolic Surgery is the Most Effective Long Term Treatment for Obesity 71.2% 66.0% 55.2% 60.5% 50.0% 49.0% 40.0% 30.0% 20.0% 10.0% 10.7% Not Enough Data 29.5% 0.0% -10.0% -0.1% Diet and Exercise Drug Therapy Gastric Bypass Sleeve Gastrectomy Surgery Gastric Banding -1.6% Diet and Exercise Drug Therapy Gastric Bypass Sleeve Gastrectomy Surgery Gastric Banding Average Weight Loss at 3 Years Average Weight Loss at 5 Years 16
Metabolic surgery impacts obesity associated diseases: Comorbidity reduction as found in various studies Migraines 46% improved 4 Depression 47% reduced 5 Pseudotumor cerebri 96% resolution of headaches 6 95% resolution of pulsatile tinnitus 6 Metabolic syndrome 80% resolved 12 GERD 72% to 95% resolved5, 13 Type 2 diabetes 20% to 84% controlled 14 Obstructive sleep apnea 45% to 76% resolved 7, 8 High cholesterol* 71% to 94% improved 9 Asthma 39% resolved 10 High blood pressure 42% to 66% resolved 7, 8, 11 Nonalcoholic fatty liver disease 37% resolution of steatosis 12 Polycystic ovarian syndrome 52% resolution of hirsutism 15 100% resolution of menstrual dysfunction 15 Urinary stress incontinence 50% resolved 16 Osteoarthritis/degenerative joint disease 41% resolved 5 Venous stasis disease 95% resolution of venous stasis ulcers 17 Resolution observed in the confines of studies. Ethicon has no independent data to suggest permanent resolution. *Figure is for hyperlipidemia. Comorbidity reduction as found and relevant to females. Hyperlipidemia is a general term for high fats in blood, which may include cholesterol and/or triglycerides. See end of presentation for references. 17 Metabolic Surgery Helps Resolve Obesity-Related Disease Related to treating type 2 diabetes, bariatric surgery was shown to Reduce the use of insulin and other medications used to treat diabetes Help patients achieve lower HBA1c measurements gastric bypass patients averaged between 6.0%-6.5% Related to treating dyslipidemia, bariatric surgery was shown to Reduce the use of medications generally required to treat hyperlipidemia Reduce triglyceride levels below 100 mg/dl for gastric bypass and gastric sleeve patients Offer a more modest impact on total cholesterol compared to the control group, but HDL levels were notably higher for metabolic surgery patients The decline in LDL levels was significant for gastric bypass patients Related to treating hypertension, bariatric surgery was shown to Reduce the use of medications generally required to treat hypertension In each of these cases, gastric bypass and gastric sleeve patients performed better than adjustable gastric band patients Source: Study of surgeries from 2006-2013 included in Optum Clinformatics Data Mart; study results were previewed at the 2016 Society of Actuaries Health Meeting and are in the process of being published. 18
Metabolic Surgery Helps Resolve Obesity-Related Disease Among all bariatric surgery patients Initially, the average monthly medical cost relating to gastric bypass patients exceeded the control group, but by the middle of the third year gastric bypass patients average cost dropped and stayed below the control Prescription drug costs for all three metabolic surgery types dropped below the control group in the very first year Among bariatric surgery patients diagnosed with related comorbid conditions The average monthly medical cost for all surgery patients was below the control group for the first five years At year 5, the average monthly medical cost for adjustable gastric band increased above the control group cost Medication costs for surgery patients was less than the control in all years following surgery When considering medical and prescription drug costs combined for patients diagnosed with type 2 diabetes before surgery Gastric bypass had lower medical and prescription drug cost than the control in all years; Gastric sleeve patients seemed to perform well, subject to data limitations Adjustable gastric band patients cost was similar to the control group Source: Study of surgeries from 2006-2013 included in Optum Clinformatics Data Mart; study results were previewed at the 2016 Society of Actuaries Health Meeting and are in the process of being published. 19 Impact of Metabolic Surgery on Type 2 Diabetes $30,000 Cost Difference vs. Control Cohort $20,000 $10,000 -$10,000 -$20,000 ROI for T2DM Patients Using Insulin who Underwent LRYGB ROI for T2DM Patients who Underwent LRYGB $0 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 Time From Index Date (Year) -$30,000 Source: Study of surgeries from 2006-2013 included in Optum Clinformatics Data Mart; study results were previewed at the 2016 Society of Actuaries Health Meeting and are in the process of being published. 20
7/12/2017 Examining the Economic Benefits of Bariatric Surgery Results: ROI Consistent Across the Globe Consistent ROI showing the savings and break-even point for a bariatric surgery benefit within 2 to 4 years Several studies show increased short-term medical costs at an acceptable costeffectiveness 21 Actuarial Opportunity Decision-Making Support 22
Savings: Financial Efficacy Post-Surgery Savings = Time Cost of Doing Nothing Post-Surgery Cost Patient Net Cost (Savings) = Surgery Investment Post-Surgery Savings Net Financial Impact = Morbid Obesity Prevalence X Surgery Conversion Rate X Patient Net Cost (Savings) 23 Savings: Financial Efficacy Budget Impact Model Assumptions: US Model 24
Savings: Financial Efficacy Budget Impact Model Assumptions: US Model 25 Savings: Financial Efficacy Budget Impact Model Assumptions: US Model 26
Savings: Financial Efficacy Budget Impact Model Assumptions: US Model 27 Savings: Financial Efficacy Budget Impact Model Results: US Model 28
Savings: Financial Efficacy 29 Potential Decision-Driving Factors Competitive Advantage? Would adding coverage increase revenue? More sales growth? Better client retention? Financial Results? Will metabolic surgery coverage improve margins? Goodwill? Does metabolic surgery coverage represent good public policy? 30
John D. Dawson, FSA, MAAA Senior Vice President and Actuary Willis Towers Watson +1 262-780-3270 john.dawson@ 31