Which term is defined as a fixed payment per patient per month regardless of services used?

• A. HMO
• B. Capitation
• C. Managed Care Definition
• D. Prior Authorization

Answer: (B)

Capitation is a fixed payment per patient per month regardless of services used. In this arrangement, a payer pays a set PMPM to cover a defined scope of care for each enrolled member, no matter how many visits or procedures occur, which shifts financial risk to the provider and encourages cost containment and coordinated care. This contrasts with fee-for-service, where reimbursement depends on the volume of services delivered. The concept is commonly used in managed care and is often described as per member per month (PMPM). Potential downsides include incentives to under-serve or avoid high-cost patients unless risk adjustment and quality measures are in place.