Which payment arrangement is described by a group of physicians contracted with an HMO who is paid a flat fee per member per month?

Which payment arrangement is described by a group of physicians contracted with an HMO who is paid a flat fee per member per month?

• A. Fee for service
• B. Capitation
• C. Collective bargaining
• D. Joint venture

Answer: (B)

Capitation is a payment arrangement where a physician or group is paid a fixed amount for each enrolled patient per period, typically per member per month, to provide a defined set of services. In this setup, the payment does not depend on the number of visits or services used, so the provider assumes some financial risk but also gains flexibility to emphasize preventive care and managing overall costs. The scenario describes a group contracted with an HMO receiving a flat fee per member per month, which is exactly Capitation. This differs from fee-for-service, where payment comes per service rendered; collective bargaining, which centers on negotiating employment terms; and a joint venture, which involves shared ownership between entities for a business project.

Capitation is a payment arrangement where a physician or group is paid a fixed amount for each enrolled patient per period, typically per member per month, to provide a defined set of services. In this setup, the payment does not depend on the number of visits or services used, so the provider assumes some financial risk but also gains flexibility to emphasize preventive care and managing overall costs. The scenario describes a group contracted with an HMO receiving a flat fee per member per month, which is exactly Capitation. This differs from fee-for-service, where payment comes per service rendered; collective bargaining, which centers on negotiating employment terms; and a joint venture, which involves shared ownership between entities for a business project.