Capitation is a form of payment for health care services whereby a physician, hospital or other provider is paid a contracted rate for each patient who is a member of a group or plan for which they have agreed to provide service. The provider is paid this rate per patient, whether or not they provide services and no matter which services or how much or how many services they provide. Beneficiaries in a capitated system are limited to providers who have agreed to the terms of the plan. Medicare Advantage plans use this form of payment and organization, and capitation has been discussed as a potential method of limiting Medicare costs.
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