Under capitation, providers are paid a fixed amount per enrolled patient and thus assume utilization risk.

• A. True
• B. False
• C. Depends on risk adjustment
• D. Only for certain populations

Answer: (A)

Under capitation, a fixed amount is paid per enrolled patient in a set period, regardless of how much care each patient uses. Because the payment doesn’t vary with utilization, the provider takes on the risk that actual care costs may exceed the fixed payment. If a patient needs a lot of services, the provider must cover those costs within the capitation budget; if services are minimal, the provider keeps any excess within the contract’s terms. This is why capitation transfers utilization risk from payer to provider. In practice, contracts may use risk adjustment, stop-loss protections, and quality incentives to help manage that risk, but the fundamental idea remains: the fixed per-patient payment creates utilization risk for the provider.