What is a key feature of the Capitation payment model?

In the Capitation payment model, providers receive a predetermined amount per patient per month, regardless of the number of services provided to that patient. This fixed payment arrangement allows for predictable budgeting for both healthcare providers and insurers. It emphasizes efficiency in service delivery, as providers have an incentive to focus on preventative care and managing overall patient health to avoid excessive service utilization.

The essence of capitation is to encourage healthcare providers to deliver appropriate care at a controlled cost, as they are not compensated based on the volume of services rendered. Since the payment is per patient rather than per service, it fosters a primary care model where providers can manage their patient populations more effectively, focusing on long-term health outcomes rather than fee-for-service approaches that may lead to unnecessary treatments. This model also aligns financial incentives, as caring for a healthier patient population can lead to lower overall costs for the insurer.