What is Capitation?

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Capitation is a payment model where a provider is paid a fixed amount for each enrolled patient over a set period to cover a defined set of services. This fixed fee is usually arranged per member per month and is paid regardless of how many services the patient uses, shifting financial risk to the provider. The idea is to encourage efficient care, emphasize preventive and coordinated services, and manage overall costs within the fixed budget. This differs from fee-for-service, which pays for each visit or procedure; a government grant is external funding not tied to patient-provider care arrangements; and a cap on patient fees concerns limits on what patients pay rather than how providers are compensated.