What does "capitation" mean in health care financing?

Capitation refers to a payment model in health care financing where a fixed amount of money is paid per patient, typically on a monthly basis, regardless of the number of services provided during that period. This model incentivizes healthcare providers to focus on preventive care and the overall health of their patients rather than on the quantity of services delivered.

By receiving a predetermined payment for each enrolled patient, providers are encouraged to manage their resources efficiently, as their financial compensation does not fluctuate based on the number of services rendered. This can lead to a more coordinated and comprehensive approach to patient care, as providers seek to maintain patient health to avoid more costly interventions later.

In contrast, other options suggest different payment structures or strategies that do not align with the definition of capitation. For instance, a payment model based on individual services rendered or a system promoting unlimited services directly contradicts the fundamental principle of capitation, which centers around fixed, per-patient payments.