Capitation is defined as which of the following statements?

• A. Fixed payment per patient per month regardless of services used
• B. Payment per service rendered
• C. Insurance premium per year
• D. Variable payment based on patient age

Answer: (A)

Capitation means you receive a fixed amount per patient per month, regardless of how many services that patient uses. This shifts cost risk to the provider and encourages efficient, preventive care, since the provider must cover all needed services within that fixed payment. It differs from paying for each service rendered (fee-for-service), and from a simple annual insurance premium, which isn’t tied to a per-member monthly rate for delivering care. It’s not defined by age alone; while risk adjustments may account for age or health status, the defining feature is the fixed per-member monthly payment.