What is capitation in healthcare payment models?

Capitation is a payment model used in healthcare where providers are compensated with a predetermined amount for each patient over a specific time period, regardless of the number of services the patient may need during that time. This model encourages healthcare providers to manage patient care efficiently, as they are responsible for providing adequate care within the fixed payment they receive.

By implementing capitation, healthcare systems aim to promote preventive care and overall health management, as providers are incentivized to keep their patient population healthy to avoid additional costs. This model can discourage overutilization of services since the provider’s revenue is not directly tied to the number of services rendered.

Understanding this payment structure is crucial for those involved in revenue cycle management, as it influences how financial resources are allocated and how patient care is approached within the healthcare setting. It also distinguishes capitation from models like fee-for-service, where providers are paid based on the volume of services provided, and from variable payment models that fluctuate based on specific services.