Which preferred providers are really preferred? Effectiveness of insurers' channeling incentives on pharmacy choice

Efficient contracting of health care requires effective consumer channeling. Little is known about the effectiveness of channeling strategies. We study channeling incentives on pharmacy choice using a large scale discrete choice experiment. Financial incentives prove to be effective. Positive financial incentives are less effective than negative financial incentives. Channeling through qualitative incentives also leads to a significant impact on provider choice. While incentives help to channel, a strong status quo bias needs to be overcome before consumers change pharmacies. Focusing on consumers who are forced to choose a new pharmacy seems to be the most effective strategy.

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