What does "capitation" refer to in healthcare reimbursement?

Capitation refers to a payment model in which healthcare providers receive a fixed amount of money per patient for a set period, such as a month or a year, regardless of the number of healthcare services the patient may require during that time. This model incentivizes providers to focus on preventive care and efficient management of patient health, as their income does not directly correlate with the volume of services they provide. Capitated payments encourage providers to manage healthcare costs by promoting health and reducing unnecessary services, ultimately aiming to improve the quality of care while controlling expenditures.

This model contrasts with fee-for-service systems where providers are reimbursed for each individual service rendered, leading to potential overutilization of services. Additionally, the other options provided do not encapsulate the definition of capitation accurately. While they may relate to healthcare organization or payment strategies, they do not describe the fixed payment arrangement characteristic of capitation.