Which term describes an insurance arrangement where payment is made per patient per time period regardless of services delivered?

Which term describes an insurance arrangement where payment is made per patient per time period regardless of services delivered?

• A. Capitation
• B. Fee-for-service
• C. Per member per month
• D. Upfront payment

Answer: (D)

Capitation is a payment arrangement where providers receive a fixed amount for each enrolled patient per defined time period (often monthly), regardless of how many services the patient uses. This setup shifts some financial risk to the provider and incentivizes delivering efficient, preventive care since payment isn’t tied to the volume of services. A closely related way this is expressed is PMPM—per member per month—the fixed amount paid per member each month under capitation. However, the overarching term describing the arrangement is capitation. Fee-for-service pays for each individual service rendered, and upfront payment isn't tied to patient enrollment or ongoing care.

Capitation is a payment arrangement where providers receive a fixed amount for each enrolled patient per defined time period (often monthly), regardless of how many services the patient uses. This setup shifts some financial risk to the provider and incentivizes delivering efficient, preventive care since payment isn’t tied to the volume of services.

A closely related way this is expressed is PMPM—per member per month—the fixed amount paid per member each month under capitation. However, the overarching term describing the arrangement is capitation. Fee-for-service pays for each individual service rendered, and upfront payment isn't tied to patient enrollment or ongoing care.