Illustration by Jon Krause

Eric Gastfriend (MBA 2015) had watched friends and family members struggle with addiction. He’d seen some of them go to treatment, and he’d seen many of them relapse. He didn’t understand why the field of addiction psychiatry had been unable to develop more effective options to assist people with substance use issues. Then he learned that there were better treatments available—a category of interventions known as contingency management, which offer motivational incentives for staying sober. “But no one ever used them!” Gastfriend says.

David Gastfriend—Eric’s father and a prominent addiction psychiatrist and former director of the Massachusetts General Hospital Addiction Research Program—explained the challenges to his son, whose background was in the video-game industry. In study after study, contingency management proved more effective than standard addiction treatment alone, but administering a program that tracks an individual’s healthy behaviors, and provides incremental rewards along the way, was difficult in traditional treatment settings.

From those conversations came DynamiCare Health, a technology-based contingency management program launched in 2016, with Gastfriend as CEO and his father as chief medical officer. A 2014 study estimated that 12.5 million Americans had substance use disorders, and that number was rising, largely due to opioid use. In addition to the human toll, the financial burden was substantial: Tobacco, alcohol, and illegal-drug addictions totaled an estimated $700 billion in direct and indirect costs, according to a 2015 report from the National Institute on Drug Abuse.

DynamiCare developed an app that provides financial rewards via a debit card (which cannot be used at bars and liquor stores or for cash withdrawal) and other incentives for remaining substance-free and engaging with a treatment program. The company currently offers programs for alcohol, opioids and heroin, and stimulant addiction. Participants can be prompted at random intervals to take an alcohol or drug test via a Bluetooth-enabled breathalyzer or a rapid saliva test. They also can use phone-based GPS to verify they have attended treatment appointments, and access information and coaching services via text, voice, and video.

A participant who remains substance-free and follows a treatment plan can earn up to $100 a month (up to $599 per year) for making healthy choices and also receive other non-financial encouragement, such as acknowledgement of having achieved a sobriety streak. Such incentives and nudges may seem inconsequential, but they can go a long way toward changing behavior, says HBS professor Leslie John. She has not evaluated DynamiCare’s model in particular, but John’s research has looked at the ways in which people can be encouraged toward healthier behaviors through the framing of choices. One approach that has proven effective in weight loss and smoking cessation has been leveraging “loss aversion,” even if that’s just the loss of a streak. “If you frame a choice as what you stand to lose, that can prompt action—more so than when you frame a decision in terms of what you stand to gain,” John explains. These subtle design choices “can help you to make a good decision while preserving your free will,” she says.

Peer-reviewed studies of DynamiCare’s program design have found that those using the app are twice as likely to abstain from drugs and alcohol as those in traditional outpatient treatment alone—but the company, and others pursuing similar goals, still suffer from what Gastfriend calls the “square peg, round hole problem.”

When Gastfriend launched DynamiCare into the young sector of digital therapeutics (app-based programs designed to improve health outcomes), he did not fully appreciate the bureaucratic hurdles the company would face. Developing the technology and processes to administer a contingency management program were relatively minor challenges on the path toward providing more effective treatment. The bigger obstacle was fitting into the American health care system.

An app-based digital health program isn’t something that health plans understand, he says. “When we would pitch a health plan, the clinical people would be excited. But the business people would say, Are you a treatment provider? Are you a medical device? Are you a drug? Are you a software vendor?” The latter seemed like the right answer until Gastfriend realized that software is counted against a health plan’s overhead, not its services to beneficiaries, which made DynamiCare seem expensive to the plans.

“The biggest barrier—and this sounds crazy—is the lack of a billing code for contingency management,” Gastfriend says. “If there’s not a billing code for something, health care providers won’t do it, because they can’t get reimbursed.” Slowly, DynamiCare is breaking down those barriers, contracting with some more innovative commercial and Medicaid programs while advocating for federal change in billing codes and seeking FDA approval for the company’s offerings.

DynamiCare’s biggest victory came in March 2022, when the Department of Health and Human Services (HHS), Office of Inspector General, weighed in on a question Gastfriend had not even considered when he first envisioned the company. The medical industry had widely understood that federal laws forbid providing monetary incentives to patients in excess of $75—a limit researchers believed was too low to be effective. “There was this idea that it was illegal because it’s a patient kickback or beneficiary inducement,” Gastfriend says. DynamiCare asked HHS to issue an advisory opinion on its protocol; the government agency found favorably for the company, a decision that cleared the way for continued adoption.

Although the advisory opinion applies only to DynamiCare, substance abuse researchers praised the decision, and Gastfriend is hoping for competition. “My mentor in startups used to have a saying: Competition validates the market.” And more than that, it can provide better treatment options to more people. “I’m hoping that contingency management—but also digital therapeutics, more broadly—becomes a huge sector.”

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