Capitation in managed care refers to what payment arrangement?

Capitation in managed care refers to what payment arrangement?

• A. Capitation is a system where physicians and hospitals are paid a fixed per-capita amount for each enrolled patient over a period, regardless of services; payments are often per member per month.
• B. Capitation is a plan where patients pay high premiums for unlimited services.
• C. Capitation is a form of indemnity where you pay per service with no cap.
• D. Capitation is a temporary loan provided to hospitals.

Answer: (A)

Capitation is a payment arrangement in managed care where providers are paid a fixed amount for each enrolled patient over a defined period, typically expressed as a per member per month (PMPM) payment. This means the provider receives the same dollar amount whether the patient uses many services or few, transferring financial risk to the provider and encouraging cost-effective, preventive care and care coordination. This differs from fee-for-service, where payment is made for each individual service rendered, and from indemnity plans that typically reimburse per service without a cap. The option describing a temporary loan to hospitals isn’t relevant to how capitation works.

Capitation is a payment arrangement in managed care where providers are paid a fixed amount for each enrolled patient over a defined period, typically expressed as a per member per month (PMPM) payment. This means the provider receives the same dollar amount whether the patient uses many services or few, transferring financial risk to the provider and encouraging cost-effective, preventive care and care coordination.

This differs from fee-for-service, where payment is made for each individual service rendered, and from indemnity plans that typically reimburse per service without a cap. The option describing a temporary loan to hospitals isn’t relevant to how capitation works.