Robust risk adjustment in health insurance

Risk adjustment is used to calibrate payments to health plans based on the relative health status of insured populations and helps keep the health insurance market competitive. Current risk adjustment models use parameter estimates obtained via regression and are thus subject to estimation error. This paper discusses the impact of parameter uncertainty on risk scoring, … Read more

A Bilevel Direct Search Method for Leader-Follower Optimization Problems and Applications

In the paper, we propose a bilevel direct search method for solving a type of leader-follower problems with each decision maker’s objective being a “black-box” function. First, we give a description for a leader-follower optimization problem. Then, we investigate a bilevel direct search method including two algorithms for combinatorially solving the upper and lower level … Read more