Which statement about capitation incentives is true?

Which statement about capitation incentives is true?

• A. Capitation increases revenue per visit.
• B. Capitation provides a fixed payment per patient, encouraging cost containment but risking under-service.
• C. Capitation pays for every service regardless of its value.
• D. Capitation has no impact on preventive care.

Answer: (B)

Capitation is a fixed, per-patient payment made to providers for a set period, regardless of how many services the patient uses. Because the payment stays the same no matter what, the incentive is to manage overall costs and use resources efficiently, often with a strong emphasis on keeping patients healthy through preventive care and better care management. At the same time, there’s a risk that some needed services could be under-provided as a way to control costs. This framework does not increase revenue per visit, since the income comes from a fixed amount per patient rather than fees for each visit. It doesn’t pay for every service regardless of value, either, since the model centers on a capped amount for the patient’s care within the period. And capitation can influence preventive care decisions—providers may invest in preventive measures to avoid expensive interventions later. Therefore, the statement describing capitation as a fixed payment per patient that encourages cost containment but risks under-service best captures how this incentive structure works.

Capitation is a fixed, per-patient payment made to providers for a set period, regardless of how many services the patient uses. Because the payment stays the same no matter what, the incentive is to manage overall costs and use resources efficiently, often with a strong emphasis on keeping patients healthy through preventive care and better care management. At the same time, there’s a risk that some needed services could be under-provided as a way to control costs.

This framework does not increase revenue per visit, since the income comes from a fixed amount per patient rather than fees for each visit. It doesn’t pay for every service regardless of value, either, since the model centers on a capped amount for the patient’s care within the period. And capitation can influence preventive care decisions—providers may invest in preventive measures to avoid expensive interventions later. Therefore, the statement describing capitation as a fixed payment per patient that encourages cost containment but risks under-service best captures how this incentive structure works.