what is capitation in healthcare

Capitation is a payment arrangement for healthcare service providers where a fixed amount of money is paid in advance to the provider per patient for each unit of time, regardless of the amount of healthcare services that person uses. The amount of remuneration is based on the average expected healthcare utilization of that patient, with payment for patients generally varying by age and health status. Capitation is meant to help limit excessive costs and the performance of unnecessary services, but it might also mean that patients get less facetime with the doctor. Capitation can be used in different healthcare systems and can be arranged between a managed care organization and primary care physician (primary capitation) or between a physician and a secondary or specialist provider (secondary capitation) . Capitation also supports value-based care, which focuses on improving patient outcomes rather than just providing healthcare.