What does a capitation payment model involve in healthcare?

The capitation payment model is characterized by a fixed amount paid to healthcare providers for each patient assigned to them, regardless of how many services the patient needs or receives. This approach means that providers receive a set amount per patient, typically on a monthly basis, which encourages them to focus on preventive care and efficient management of resources.

This fixed payment means that the provider must manage care effectively to keep costs within the capitation budget while ensuring that patients receive the necessary care without overspending. By incentivizing providers to maintain patient's health rather than simply providing more services, capitation can lead to improved patient outcomes and cost savings for the healthcare system overall.

In contrast, other payment models, such as fee-for-service, reimburse providers based on the quantity of services rendered, which can lead to an emphasis on volume rather than the quality of care.