Health care providers accept preestablished payments for providing care to health plan enrollees over a period of time under the reimbursement method of:

Capitation is a reimbursement method in which healthcare providers receive a predetermined amount of money per patient enrolled in a health plan over a specific time period, regardless of the number of services rendered. This payment model incentivizes providers to focus on preventive care and efficient treatment, as their revenue is not directly tied to the volume of services provided.

Under capitation, providers are essentially taking on the financial risk of the patient’s health care. If the costs of providing care exceed the capitation payment, the provider absorbs the loss, but if the costs are lower, they retain the difference as profit. This model encourages providers to manage patient health proactively to avoid costly interventions.

In contrast to capitation, fee-for-service compensates providers based on each individual service rendered, which can sometimes lead to overutilization of services. The Resource-Based Relative Value Scale (RBRVS) is a system used primarily in Medicare that assigns a relative value unit to each service to reflect the resources required. Point-of-service plans combine features of both HMO and PPO plans but do not inherently reflect the prepaid nature of capitation.