Under capitation, which statement most accurately describes financial risk?

• A. The Payer Pays a Fixed Per-Patient Amount Per Period
• B. Payment Is Determined by Each Service Rendered
• C. The Provider Bears Financial Risk Due to Fixed Per-Patient Payment
• D. There Are No Financial Risks for Providers

Answer: (C)

Capitation fixes a per-member-per-period payment to a provider to cover all or most services. Because the payment is fixed regardless of how much care a patient uses, the provider must manage costs within that budget. If actual care costs exceed the capitation amount, the provider bears the losses; if costs are lower, the provider benefits. This is why the financial risk is on the provider under capitation.