Increasing financial recoveries using insights from behavioural economics
Exemptions from payment for dental and ophthalmic treatments cost NHS Scotland approximately £75m per annum. Professor Ghosal and Dr Koutmeridis worked with NHS Scotland to co-design a new intervention for incorrectly claimed exemptions for payment. Their research has contributed to significant increases in recovered payments and has informed NHS Scotland’s practice and culture.
‘The framing effect’ is an example of cognitive bias whereby people decide on an option based upon the way that information is presented, and whether the options presented are perceived positively or negatively.
Ghosal and Koutmeridis build on the seminar work on ‘framing effects’ by Kahneman and Tversky to consider the specific ways that framing can impact policy making.
Ghosal’s collaborative research from 2016 produced a framework to show that exposure to positive stimuli could reduce behavioural bias. In 2018 he set out the conditions under which frames are self-fulfilling and worked out the welfare implications of such frames.
In 2019, Ghosal et al’s research demonstrated that designing frames - which assumed individuals’ ability to forecast the short-run consequences of their actions - could impact on choices and behaviour in the medium term. Those who participated in the program exhibited improved self-efficacy, a greater sense of agency and willingness to invest in the future.
Building from engagement in NHS Scotland policy events, Ghosal and Koutmeridis developed an intervention with NHS Scotland’s Counter Fraud Services based upon these research findings. This included sending written request for voluntary payment without the threat of a penalty charge.
Approximately 1.4 million exemption claims are made each year from approximately 6 million patients - with annual losses to NHS Scotland of approximately £10m.
This collaboration marked the first time that NHS Scotland Counter Fraud Services had incorporated insights from behavioural economics in their activities.
In the first seven weeks of the project, 7,800 letters were issued and £109,330 was collected as a result, from those receiving a letter without the threat of a penalty.
In March 2018, NHS Scotland’s letter of incorrect exemption was modified to incorporate the co-designed ‘social welfare’ frame as standard: ‘Most people pay for their dental treatment unless they qualify for exemption. Only a minority in your area wrongly claim exemption, diverting money away from patients like you who rely on NHS healthcare. Make sure you are not one of them.’
From July 2019 to March 2020, 17,245 letters incorporating the ‘social welfare’ frame were sent out (prior to activities being suspended by COVID-19). The data on financial recoveries totals approximately £330,000 (which would equate to approximately £990,000. Per annum).