What is capitation in the context of physician contracts?

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Capitation refers to a payment structure in healthcare where a physician or group of physicians is paid a set amount for each enrolled patient, regardless of how many times that patient visits for care during a specified period, typically a month or a year. This payment model encourages preventive care and efficient management of resources since physicians are incentivized to maintain the health of their patient population effectively.

In this arrangement, the focus shifts from volume-based care—where providers are paid for each individual service rendered—to a more holistic approach, where the overall health and well-being of the patient are prioritized. This can lead to more comprehensive care as physicians seek to prevent health issues rather than just treating them.

The other options refer to different payment methods or healthcare models that do not align with the capitation model. The governmental fee set is likely a reference to more traditional reimbursement structures that do not encapsulate the preventive aspect of capitation. Similarly, billing based on completed procedures reflects a fee-for-service model, and direct payments for services signify a consumer-patient model where patients are responsible for paying out-of-pocket for each service rendered, which diverges from the concept of capitation.

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