Capitation

Capitation is a payment arrangement for health care service providers such as physicians or nurse practitioners. It pays a physician or group of physicians a set amount for each enrolled person assigned to them, per period, whether or not that person seeks care. The most common form of capitation is known as “per-member-per-month” (pmpm), where a payment amount determined in advance is paid to a capitated provider for each member that is attributed to that provider for a month. The actual amount of money paid in advance can be determined in a myriad of ways, but the most common method is to rely on historical payments, trended forward to account for changes