Kogut's Managed Care Practice Test 2026 - Free Managed Care Practice Questions and Study Guide

Capitation means a fixed per-member-per-month payment to providers, paid regardless of how many services a patient uses. Because the payment is set ahead of time and doesn’t vary with visit volume or procedures, providers have a strong incentive to manage costs and carefully oversee utilization. This encourages the use of utilization management techniques, care coordination, and preventive care to keep expenses within the fixed payment while maintaining quality. However, there’s a risk of underutilization if safeguards aren’t in place, so quality monitoring and appropriate risk adjustment are important safeguards.

The other statements don’t fit capitation: one describes fee-for-service, where payment occurs after each service; another describes a global budget not tied to members; and the last describes a one-time cap, which isn’t how capitation works.