What does capitation mean in a healthcare payment model?

Capitation refers to a healthcare payment model where a healthcare provider is paid a fixed amount per patient over a specified period, regardless of the number of services provided. This model shifts the financial risk to the provider, as they receive a set amount of money to care for patients, which may include preventive services, treatment, and care management. The goal of capitation is to encourage providers to focus on preventive care and efficient management of resources, as they benefit financially by keeping patients healthy and reducing unnecessary services.

Choosing this option reflects an understanding of how managed care organizations use capitation to promote cost-effective and quality-driven care, aligning provider incentives with the well-being of patients. The fixed nature of the payment encourages providers to think about the overall health of their patients rather than compensating them based solely on the volume of services rendered.