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A Data-Driven Approach of DRG-Based Medical Insurance Payment Policy Formulation in China Based on an Optimization Algorithm

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  • Kun Ba

    (Department of Automation, Tsinghua University, Beijing 100084, China)

  • Biqing Huang

    (Department of Automation, Tsinghua University, Beijing 100084, China)

Abstract

The diagnosis-related group (DRG) system classifies patients into different groups in order to facilitate decisions regarding medical insurance payments. Currently, more than 600 standard DRGs exist in China. Payment details represented by DRG weights must be adjusted during decision-making. After modeling the DRG weight-determining process as a parameter-searching and optimization-solving problem, we propose a stochastic gradient tracking algorithm (SGT) and compare it with a genetic algorithm and sequential quadratic programming. We describe diagnosis-related groups in China using several statistics based on sample data from one city. We explored the influence of the SGT hyperparameters through numerous experiments and demonstrated the robustness of the best SGT hyperparameter combination. Our stochastic gradient tracking algorithm finished the parameter search in only 3.56 min when the insurance payment rate was set at 95%, which is acceptable and desirable. As the main medical insurance payment scheme in China, DRGs require quantitative evidence for policymaking. The optimization algorithm proposed in this study shows a possible scientific decision-making method for use in the DRG system, particularly with regard to DRG weights.

Suggested Citation

  • Kun Ba & Biqing Huang, 2025. "A Data-Driven Approach of DRG-Based Medical Insurance Payment Policy Formulation in China Based on an Optimization Algorithm," Stats, MDPI, vol. 8(3), pages 1-14, June.
    • Handle: RePEc:gam:jstats:v:8:y:2025:i:3:p:54-:d:1690793
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    References listed on IDEAS

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    1. Notman, Mark & Howe, Kenneth R. & Rittenberg, William & Bridgham, Robert & Holmes, Margaret M. & Rovner, David R., 1987. "Social policy and professional self-interest: Physician responses to DRGS," Social Science & Medicine, Elsevier, vol. 25(12), pages 1259-1267, January.
    2. Trajtenberg, Manuel, 2018. "AI as the next GPT: a Political-Economy Perspective," CEPR Discussion Papers 12721, C.E.P.R. Discussion Papers.
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