Promotion vs. Nudging vs. Mandatory Mail

Although there is always a dialogue about the lifecycle of mail order, I think some of the work out of the Consumerology group at Express Scripts is interesting.  The frameworks that they apply internally are very similar to the technology and approach that Silverlink uses with the rest of the market.  [Kudos to Sean Donnelly and Bob Nease for their work on this new approach.]

The traditional ways of driving mail order have been:

  • Over a copay incentive (and hope)
  • Letter and calls encouraging member to convert
  • Providing a call center to facilitate the conversion to mail (from an inbound call or from a transfer on an automated outbound call)
  • Mandatory mail – requiring the member to use mail or pay the full cash price for the drug
  • Retail buy-up – allowing the member to keep getting the maintenance drug at retail (after 2 fills typically) but requiring them to pay a penalty for choosing a higher cost channel

Now, “Select Home Delivery” uses the 401K approach of opt-out vs. opt-in to drive participation.  As behavioral economics would suggest, inertia will carry the momentum and by getting the member signed up in mail and moving them to mail will drive success versus requiring them to take an action. The idea here is to “nudge” the member versus force them or leave it up to them to take action.

Select Home Delivery optimizes the use of cost-saving Home Delivery, requiring members to opt out of the program rather than the traditional approach of requiring members to opt in.  The program is based on the psychological principle of hyperbolic discounting, which says immediate events (for example, the hassles of signing up for Home Delivery) loom large compared to downstream benefits (such as a lower overall copayment and receiving a 90-day supply).  Dr. David Laibson, an economics professor at Harvard and member of the Center’s advisory board, conducted research showing that applying this principle to 401(k) programs dramatically improved participation rates.

“Opt-out and active decision programs for 401(k) enrollment dramatically improved low employee participation rates. We wanted to explore whether these tools could also solve healthcare challenges,” Laibson said. “This is one of the first marketplace adaptations that successfully applies behavioral economics to improve healthcare.”  [quotes from Consumerology blog]

I think the new results from their blog (below) are impressive.  [BTW – If you’re a member at Lowe’s or another client which has used this, I would love to hear your reactions.]


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