How is a provider’s payment structured under a capitation system?

In a capitation payment system, providers receive a fixed fee per patient, which is designed to cover a range of services over a specific period, typically one month. This means that the payment is predetermined and does not vary with the actual services provided to the patient. Instead of being compensated for each service rendered, which can lead to increased healthcare costs when more services are provided, the capitation model incentivizes providers to maintain the overall health of their patient population efficiently.

This structure encourages preventive care and careful management of patient needs because the provider receives the same payment regardless of whether a patient requires a few or many services. Consequently, providers are motivated to avoid unnecessary tests and procedures that do not contribute to overall patient health outcomes.

In summary, the fixed fee per patient, which remains constant regardless of the intensity or volume of services rendered within that period, is the hallmark of a capitation payment system.