What does capitation refer to in healthcare payment?

Capitation in healthcare payment refers to a system where providers are compensated with a fixed amount per patient over a designated time period, regardless of the quantity or type of services provided to those patients during that time. This method encourages healthcare providers to focus on preventive care and overall patient health rather than the volume of services delivered, as their payment does not fluctuate with the number of services rendered.

This approach can lead to more efficient healthcare delivery, as it incentivizes providers to manage their patients' health proactively. By receiving a predetermined rate, providers are encouraged to keep patients healthy and reduce unnecessary interventions, which can be a significant advantage for both patients and payers in controlling healthcare costs.

Other options describe different payment models, such as fee-for-service, where providers are paid for each service rendered, or flat rate payments for specific procedures, which do not capture the broader, population-based approach inherent in capitation.