Which statement defines capitation and describes its impact on incentives for utilization management?

• A. Capitation is a fixed per-member-per-month payment to providers regardless of services used; it incentivizes cost containment and utilization management but may raise concerns about underutilization without proper quality safeguards.
• B. Capitation is a fee-for-service payment with payment made after each service.
• C. Capitation is a global budget for a health plan that isn't tied to members.
• D. Capitation is a one-time cap placed on total services for a year.

Answer: (A)