Game-Theoretic Simulation Checklist (Batch 4): "All-In" Spec¶
Source: User provided text (December 2025) Context: Comprehensive specification for an "All-In" simulation, including inputs, decision variables, mechanisms, operations, outputs, and validation.
1) Inputs (exogenous state, parameters, data)¶
| Input group | What to include (examples) | Notes |
|---|---|---|
| Players / institutions | Commonwealth; each State/Territory; (optional) LHNs/hospitals; IHACPA (price/weights); National Health Funding Pool (NHFP) Administrator/NHFB (payments/reconciliation); auditors/regulators | IHACPA sets NEP that underpins ABF. NHFP Administrator is independent statutory office supporting payment/reconciliation functions. |
| Agreement period & schedules | NHRA baseline terms; Addendum (e.g., 2020–25); extension terms (e.g., Schedule K 2025–26); renegotiation deadlines | Schedule K extends arrangements for 1 Jul 2025–30 Jun 2026 and includes time-limited adjustments. |
| Funding streams (3-stream) | ABF stream; block funding stream; public health (if modelled as distinct stream) | ABF uses NEP × NWAU; block is for determined services/functions. |
| Pricing & classification inputs | NEP/NEC; NWAU calculators/weights/adjustments; classification rules; outlier rules | NEP & NWAU tooling are published by IHACPA. |
| Policy parameters | Contribution shares; cap parameters; reconciliation rules; dispute process parameters | Addendum includes a national growth cap (e.g., 6.5%/yr) and defines reconciliation. |
| One-off adjustments / side-payments | Fixed top-ups; special uplifts (e.g., NT uplift); earmarks | Schedule K (per NHFB corporate plan) describes one-time fixed funding and other one-offs for 2025–26. |
| Demand drivers & shocks | Population; morbidity; seasonality; pandemic-like shocks; inflation | Drives off-equilibrium stress tests; interacts with caps/queues. |
| Capacity & adjustment frictions | Beds, theatres, ICU, workforce; hiring/training lags; overtime costs; capital limits | Prevents unrealistic “instant growth”; generates queuing/congestion. |
| Cost structure | Fixed/variable costs; cost per NWAU distribution; efficiency frontier parameters | Needed to define “efficient growth” vs waste. |
| Cross-system substitution | Public ↔ private; hospital ↔ community/primary care; aged care/NDIS spillovers | Enables cost shifting and pathway substitution as strategic options. |
| Information structure | Who knows true demand/cost; reporting lags; measurement error; forecasting error | Required for signalling/screening; makes reconciliation non-trivial. |
| Integrity/compliance regime | Audit probability/targeting; detection sensitivity; penalties/repayments; dispute rates | Turns “gaming” into a constrained optimisation. |
| Political/reputational constraints | Election-cycle proxy; salience thresholds (ED, ramping, electives); media penalty; intergov relationship costs | Implements non-linear “pain” when KPI thresholds are breached. |
| Mid-term review / scrutiny pressure | Probability of adverse findings; adoption likelihood; reputational loss | Mid-Term Review is an identifiable external signal affecting beliefs/strategies. |
2) Agent decision variables (endogenous “strategy inputs” each period)¶
| Actor | Strategy channels to model | Typical constraints |
|---|---|---|
| State/Territory (funder/operator) | Activity targets; internal LHN budgets; elective scheduling; investment in capacity/efficiency; coding governance intensity; disclosure strategy; bargaining stance | Budget constraint; workforce constraints; KPI thresholds; political loss function |
| LHNs / hospitals (agents) | Case-mix choices; admission/LOS policies; theatre allocation; coding intensity (within bounds); shifting between ABF vs block-eligible activity; deferral/smoothing | Capacity/queues; audit risk; clinical constraints; internal contract rules |
| Commonwealth | Enforcement stance; willingness to side-pay/top-up; bargaining posture for new schedules; (if modelled) audit funding or integrity emphasis | Political utility; fiscal constraints; intergovernmental bargaining costs |
| IHACPA (leader/stackelberg) | NEP/weights updates (exogenous or strategic); eligibility determinations (esp. block) | Often treated as ruleset/leader rather than payoff-maximiser |
| NHFP Administrator/NHFB (referee) | Payment cadence rules; reconciliation processing; integrity checks; dispute resolution throughput | Administrator/NHFB run payment/reconciliation system functions. |
| Auditor/integrity actor (optional explicit player) | Audit targeting intensity; thresholds; penalties | Resource constraint; false positive/negative trade-off |
3) Mechanisms (rules engine + strategic “games”)¶
| Mechanism | How to model it | Why it’s high leverage |
|---|---|---|
| ABF payment rule | Payments = NEP × realised NWAU (with adjustments) | Core incentive for volume/mix/coding. |
| Block funding eligibility + payment | IHACPA determines block-eligible services/functions; Administrator calculates block contributions | Creates a boundary where strategic “classification shifting” happens. |
| Tri-stream choice (ABF vs block vs public health) | Let actors allocate marginal effort/volume across streams with different marginal returns | Captures “venue shifting,” not just volume growth. |
| Efficient growth accounting | Efficient cost frontier; Commonwealth share applies to “efficient growth” definition | Prevents treating all growth as fundable; aligns incentives to efficiency. |
| National growth cap + kinked payoffs | Piecewise marginal funding: full rate until cap; reduced/zero after cap; include redistribution rules | Produces “race-to-cap” and timing games. Cap specified in Addendum (e.g., 6.5%/yr). |
| Monthly payments + annual reconciliation loop | Short-cycle cashflow + long-cycle true-up; lags and revisions | Generates end-of-period surges, smoothing, defensive reporting. |
| Dispute resolution & data matching | Probability of disputes; resolution delays; revisions | Small “business rules” changes can move large $ in reconciliation. |
| Side-payments / one-off adjustments (Schedule K) | Exogenous shock or bargaining settlement stage (transfer + conditions) | Strongly changes incentives for the year (e.g., top-up; NT uplift; equity commitments). |
| Renegotiation / extension bargaining | Alternating-offers bargaining with deadlines and outside options; asymmetric impatience | Captures brinkmanship and settlement dynamics during schedule transitions. |
| Audit / integrity “arms race” | Endogenous audit targeting responding to anomalies; expected penalty shapes coding strategies | Makes gaming measurable and policy-tunable (audit intensity vs behaviour). |
| Transparency as public signals | Publish KPI/funding signals → Bayesian belief updates → reputational utility impacts | Enables signalling/screening equilibria, not just complete-information play. |
4) Operational dynamics layer (so “activity” turns into access/quality)¶
| Operational module | What to include | What it prevents / enables |
|---|---|---|
| Queues & congestion | ED queue, elective queue; cancellations; M/M/s or discrete-event | Prevents “free” activity growth; yields waiting-time outcomes. |
| Capacity with adjustment costs | Hiring lags, overtime, bed expansion friction | Stops instant scale-up; produces realistic cycles. |
| Substitution rules | ED ↔ short stay ↔ inpatient; public ↔ private; hospital ↔ community | Captures cost shifting and avoidance strategies. |
| Quality as endogenous | Pressure → readmissions/complications; minimum quality constraints | Reveals access–quality trade-offs under funding pressure. |
| Threshold-triggered political loss | Step penalties when KPI thresholds are breached | Produces realistic “sudden priority shifts” rather than smooth optimisation. |
5) Outputs (what the simulation should report)¶
| Output domain | Primary outputs | “Gaming / integrity” signatures |
|---|---|---|
| Funding flows | Payments by stream (ABF/block/public health); by state/LHN; net transfers; reconciliation adjustments | Volatility of true-ups; dispute frequency; revisions |
| Activity & case-mix | NWAU volume; growth; DRG/service mix; elective/emergency split | Coding intensity index; complexity inflation; boundary switching (ABF↔block) |
| Efficiency & cost | Cost per NWAU; distance to frontier; fixed-cost absorption; productivity | “Paper efficiency” vs real efficiency (audit-adjusted) |
| Access & timeliness | Waiting lists; time-to-treatment; ED LOS; bed occupancy; ambulance offload delay (if modelled) | End-of-period surges; deferral/smoothing patterns |
| Quality & safety | Readmissions, complications, mortality proxies; patient outcomes (if included) | Quality degradation under throughput pressure |
| Equity | Stratified access/outcomes (region/SES/priority groups); equity-weighted welfare | Equity trade-offs under caps and scarcity |
| Strategic stability | Utilities by actor; cooperation vs conflict rate; renegotiation breakdown probability | Identifies unstable rulesets and perverse incentives |
6) Validation, stress-tests, and reproducibility (add all the “make it usable” improvements)¶
| Category | What to implement | Deliverable you should produce |
|---|---|---|
| Calibration (multi-target) | Fit simultaneously to spend, NWAU growth, mix, and access KPIs | Calibration report + fitted parameter set |
| Out-of-sample validation | Train on earlier years; test on later shocks | Predictive performance dashboard |
| Structural sensitivity | Vary mechanisms (cap form, audit regime, info timing), not just parameters | Tornado plots + scenario comparisons |
| Scenario library (policy counterfactuals) | Cap removed; different contribution shares; stronger audits; altered NEP paths; different schedule terms | A repeatable YAML/JSON catalogue of scenarios |
| Modular architecture | Separate rules engine / agents / world / measurement layer | Swap NHRA variants without rewrites |
| Determinism & traceability | Fixed random seeds; config-logged runs; invariant checks | Reproducible “run packets” (config + logs + outputs) |
| Explainability hooks | Log marginal payoff decomposition for each action | “Why did the agent do that?” audit trail |
| Sanity/integrity tests | Conservation checks; non-negative entitlements; bounded utilities; episode/eligibility invariants | Automated test suite gating model runs |