Which of the following best describes the incentives associated with capitation?

Question

Options

• APhysicians have a higher incentive to sign up only healthy patients.
• BPhysicians have more flexibility to deliver effective and efficient services to patients.
• CIt only pays for an in-person visit with a physician.
• DA and B only

• A
  3% (1)
• B
  9% (3)
• C
  15% (5)
• D
  73% (24)

Explanation

D is correct because both A and B accurately describe incentives inherent to capitation - the payment model where a physician receives a fixed fee per enrolled patient per period, regardless of services rendered.

Why A is correct: Since physicians earn the same amount whether a patient is healthy or chronically ill, they are financially incentivized to preferentially enroll healthier patients who consume fewer resources - a phenomenon known as "cream skimming."

Why B is correct: Unlike fee-for-service (which only reimburses specific billable encounters), capitation frees physicians to deliver care through phone calls, care coordination, or preventive strategies without losing revenue - rewarding efficiency over volume.

Why C is wrong: C describes fee-for-service, not capitation. Capitation is explicitly not tied to individual visits; it's a prospective lump sum per patient per time period.

Memory tip: Think of capitation as a flat subscription (like a streaming service) - the provider gets paid the same whether you use it once or constantly, which creates incentives to attract light users (healthy patients) and deliver care cheaply and flexibly.

No community discussion yet for this question.