Capitation
Updated: 05 January 2025
What Does Capitation Mean?
Capitation is a health insurance payment system where healthcare professionals are paid a fixed amount per month for each insured individual under their care, regardless of how frequently those individuals seek health services.
Insuranceopedia Explains Capitation
The purpose of capitation is to reduce the cost of health services by determining a fixed monthly payment in advance for a year. This payment amount is established through a contract between the insurance company and the medical provider.
To prevent underpayment of the medical provider, individuals are classified according to risk. For example, those with conditions like diabetes, who require regular treatment, may be placed in a higher-risk pool. Risk pool assignments can also be influenced by factors such as age.
