Advocates say it will give obese patients a complete arsenal for fighting the condition that can spur a host of life-threatening illnesses and help save billions of dollars in healthcare costs for employers and the government.

Critics argue that bariatric surgery has high rates of complications and that, ultimately, surgery does not change the behavior underlying obesity.

The most vocal of the manufacturers is arguably Allergan Inc, the maker of Botox and breast implants. The company wants to revive weak sales of its LapBand, a silicone cuff that is implanted around the top portion of the stomach to constrict food intake.

"It's all about reimbursements," Allergan Chief Executive David Pyott told Reuters. The benefits of weight loss surgery, he added, "are not well understood by policy makers."

Allergan recently beefed up its staff working on securing reimbursement for LapBand to more than 100 people from seven.

Pyott is spending more time in Washington D.C. speaking with officials at the U.S. Department of Health and Human Services, as well as with lawmakers about having bariatric surgery included in the package of standard benefits that all insurance plans must offer under the 2010 Affordable Care Act health system overhaul.

LapBand competes with a device called Realize made by Johnson & Johnson, which says it is also working toward better reimbursement.

Gastric banding is only one type of bariatric surgery. Others are more complicated, involving stapling portions of the stomach to limit food intake or re-routing the path of digestion, limiting calorie absorption. As with any major surgery, all carry the risk of complications and infection.

Allergan is pushing for coverage for all bariatric surgery, including methods that compete with its LapBand device, because it is more likely that private and public insurers would approve the entire category.

The company says some private insurers have changed their policies as a result. For example, the Midwest Blue Cross/Blue Shield Plan and the Health Alliance Medical Plan in Southern Illinois and Iowa recently eliminated the requirement that a patient must have tried and failed to lose weight under the supervision of a physician before getting surgery.

COSTS IN THE BILLIONS

Nearly 73 million Americans are considered obese, defined as having a ratio of weight to height, or Body Mass Index (BMI), of more than 30. For example, a 5'9" adult weighing more than 203 pounds is consider obese. About 12 million people are classified as morbidly obese, defined as having a BMI over 40.

The condition is the second leading cause of preventable death in the country behind smoking, as it can cause type 2 diabetes, heart disease, stroke, osteoarthritis, gall bladder and liver disease and many types of cancer. It leads to nearly $150 billion in annual U.S. healthcare costs.

A survey by Hewett Associates found that 45 percent of U.S. employers cite obesity as one of the most significant health concerns for their businesses, but many of their insurance plans - 44 percent of those with 5,000 or more employees - do not cover bariatric surgery.

Bariatric surgery coverage is often viewed as a separate benefit, said Gus Georgiadis, president of Triad USA, an employee benefits services and consulting firm. Larger employers tended to have better coverage.

Employers who do cover surgery often define patients as eligible at a higher BMI and require them to first try other methods for an extended period of time - even if they already have already made such attempts - and undergo a psychological evaluation. Most plans have high co-payments of around $5,000 to $7,500, making it too expensive for many.

"If you're making $25,000 a year and you have a $5,000 co-pay, that's 20 percent of your salary," said Joseph Nadglowski, President and CEO of the Obesity Action Coalition, a patient advocacy group. "High co-payments and the hoops and hurdles insurance companies put in front of surgery is limiting."

But Nadglowski still wants to see patients first try diet and exercise programs, followed by medications and then surgery as a last resort.

"There's a gap between Weight Watchers and surgery," Nadglowski said.

His organization is pushing for more access to all kinds of treatment, including nutrition counseling.

Georgiadis argues that certain treatments are more or less appropriate for a patient, given their condition.

"Diet and exercise at a BMI of 35 or greater will fail more often than it will succeed," he said.

Studies show that bariatric surgery is almost 10 times more effective for losing weight and keeping it off than other approaches. Some research has shown that gastric bypass is superior to banding, with bypass patients losing more weight and keeping it off better than patients who got the band.

Patients who choose gastric bands may do so because the surgery is less invasive and the device can be removed. But they require more maintenance and follow-up doctor visits for adjustments.

The band sometimes slips from where it was placed and in rare cases can erode into the stomach, complications that require removal.

The number of all types of bariatric surgeries was down about 8 percent in 2010, a year that saw a decline across the board in medical procedures as many Americans lost health insurance when they lost their jobs. High co-payments are also to blame.

Although just a small part of Allergan's revenue, LapBand sales fell 14 percent from a year ago to $156 million in the first 9 months of 2011, even after the Food and Drug Administration lowered the weight requirement to get the device.

STATE BY STATE COVERAGE

Some states already require some level of coverage.

Virginia and Georgia, for instance, mandate that state-regulated insurers offer bariatric surgery, but employers are not required to buy that coverage. Michigan has a unique provision that says all "medically necessary" procedures, not just bariatric surgery, are covered.

The government's Medicare and Medicaid health programs for the elderly and the poor, respectively, cover bariatric surgery and use the same guidelines as private insurance companies.

Convincing employers has been challenging, especially if they have a high turnover of employees, said Dr. Richard Feifer, Medical Director for National Accounts for Aetna Inc, the third largest U.S. health insurer.

"Employers who have significant turnover every year may not want to invest in bariatric surgery for employees who may not be working for them in 2 or 3 or 4 years when the benefits start to accrue," he added.

(Reporting by Debra Sherman; Editing by Michele Gershberg and Andre Grenon)

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