Under capitation, which of the following is true?

• A. Payment is based on actual services used
• B. Payment is determined by patient age
• C. Payment is variable with resources used
• D. Payment is a fixed per-member, per-month amount regardless of utilization

Answer: (D)

Capitation is a payment arrangement where providers receive a fixed amount per enrolled patient for a set period of time, typically per member per month, to cover defined services. Because the payment is fixed and not tied to the number or type of services used, the total payment does not vary with utilization. The provider must manage care within that budget, often emphasizing preventive care and efficient management of chronic conditions. If utilization exceeds what the fixed payment covers, the provider bears the extra cost; if utilization is lower, the provider may realize savings.

Payment based on actual services used describes a fee-for-service model, not capitation. Setting payment by patient age alone isn’t the defining mechanism of capitation (though rates can be risk-adjusted by age or other factors in some plans). A payment that varies with resources used is the opposite of capitation.