AUTHOR=Duan Jinli , Lin Zhibin , Jiao Feng 

TITLE=A Game Model for Medical Service Pricing Based on the Diagnosis Related Groups

JOURNAL=Frontiers in Public Health

VOLUME=Volume 9 - 2021

YEAR=2021

URL=https://www.frontiersin.org/journals/public-health/articles/10.3389/fpubh.2021.737788

DOI=10.3389/fpubh.2021.737788

ISSN=2296-2565

ABSTRACT=Background: Currently there are various issues that exist in the medical institutions in China as a result of the price-setting in DRGs, which include medical institutions tend to choose patients, the payment standard for complex cases can not reasonably compensate the cost.
Objective: The main objective is to prevent adverse selection problems in the operations of DRGs system with the game pricing model for scientific and reasonable pricing.
Methods: The study proposes an improved bargaining game model through three stages with the government and patients forming an alliance. The first stage assumes the alliance is the price maker in Stackelberg game to maximize social welfare. Medical institutions are a price taker and decide the level of quality of medical service to maximize their revenue. A Stackelberg equilibrium solution is obtained. The second stage assumes medical institutions dominate Stackelberg game and set an optimal service quality for maximizing their revenues. The alliance as the price taker decides the price to maximize the social welfare. Another Stackelberg equilibrium solution is achieved. The final stage establishes a Rubinstein bargaining game model to combine the Stackelberg equilibrium solutions in the 1st and 2nd stage. A new equilibrium between the alliance and medical institutions is estabilished.
Results: The results show that if the price elasticity of demand increases, the ratio of cost compensation on medical institutions will increase, and the equilibrium price will increase. The equilibrium price is associated with the coefficient of patients’ quality preference. The absolute risk aversion coefficient of patients affects the government compensation and total social welfare. 
Conclusion: In DRGs system, considering the demand elasticity and the quality preference of patients, medical service pricing can prevent the adverse selection problem. In the future, we plan to generalize these models to DRGs pricing systems with the effects of competition of medical institutions. In addition, considering the differential compensation for general hospitals and community hospitals in DRGs system, in order to promote the goal of hierarchical diagnosis and treatment.