What is "capitation" in the context of health insurance?

Capitation is a payment model used in health insurance where a healthcare provider is paid a set fee for each enrolled patient over a specific period, regardless of the number of services the patient uses. This means that providers receive a fixed amount to care for each patient, which incentivizes them to focus on preventative care and efficient management of patient health.

This model contrasts with fee-for-service arrangements, where providers are compensated based on the quantity of care delivered. Capitation encourages providers to maintain overall patient health since their income isn't directly tied to the volume of services provided. This aligns with efforts to reduce unnecessary treatments and promote cost-effective healthcare delivery.

In summary, the crux of capitation lies in the fixed payment per patient, regardless of the actual services rendered, which is why this option accurately describes the concept while other options do not align with this definition.