Bariatric Surgery Coverage: a Comprehensive Budget Impact Analysis from a Payer Perspective

  • Swetha R. Palli
  • John A. Rizzo
  • Natalie Heidrich
Original Contributions



The objective of this study was to estimate a payer’s budget impact of bariatric surgery coverage under (1) unrestricted, (2) budget-restricted ($500,000/year), and (3) quantity-restricted (100/year) medical benefit plan scenarios versus non-coverage in general and type 2 diabetes mellitus (T2DM) populations over a 10-year period.


Using recently published literature and health technology assessment reports, the model evaluated a hypothetical payer population of 100,000 members under current real-world trends: BMI-defined obesity groups (31.3% normal/underweight, 33% overweight, 20.4% obese, 9% severely obese and 6.3% morbidly obese), T2DM prevalence (6.7–27.5%; 100% for the T2DM model), surgery type (LAGB, BPD/DS, VSG, and RYGB), and differential outcomes (T2DM resolution, costs, and reoperation and complications rates). Assuming a surgery election rate of 1.42% among eligible candidates with a 3% discount rate and 10% annual surgery turnover rate, the model calculated the incremental cost per-member-per-month (PMPM) by estimating the difference in total non-T2DM and T2DM-related expected costs and savings. One-way (± 25%) sensitivity analysis was performed.


The impact of covering bariatric surgery under multiple scenarios for a general (or T2DM) population ranged from an additional $0.3 to $3.6 (T2DM: $0.3 to $10.5) PMPM in year 1. Incremental costs diminished over time, breaking even between years 5 and 9 (T2DM: 5–6), and by year 10, cost savings were estimated to be between $1.5 and $4.8 (T2DM: $1.2 and $31.8).


Providing bariatric surgery coverage may have a modest short-term budget impact increase but would lead to long-term net cost savings in a general population model. The cost savings were much more pronounced in the T2DM model.


Bariatric surgery Obesity Costs Affordability Efficiency Payer Access Insurance 



The authors would like to acknowledge John Dawson of Willis Towers Watson for his contributions to the concept and design of the model.

Compliance with Ethical Standards

Blinded Conflict of Interest Statement, Ethical Statement and Consent Statement

This study was funded by Ethicon, Inc. At the time of the analysis Author 1 was an employee of, and Author 2 is currently a consultant to, CTI Clinical Trial and Consulting Services, which is a paid consultant to Ethicon, Inc. Author 3 is an employee of Ethicon, Inc., the study sponsor.

This article does not contain any studies with human participants or animals performed by any of the authors. For this type of study, formal consent is not required.


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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  • Swetha R. Palli
    • 1
  • John A. Rizzo
    • 2
  • Natalie Heidrich
    • 3
  1. 1.Real World EvidenceCTI Clinical Trials and Consulting ServicesCovingtonUSA
  2. 2.Department of Family, Population and Preventive MedicineStony Brook UniversityStony BrookUSA
  3. 3.Health Policy, Economics & Market Access, Ethicon, Inc.SomervilleUSA

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