Capitation is a payment model used in healthcare where healthcare providers or facilities receive a fixed amount of money per patient enrolled in a health plan, regardless of the services provided or the actual healthcare costs incurred. Under capitation, healthcare providers or organizations are responsible for providing all necessary healthcare services to their enrolled patients within the allocated payment amount. This model incentivizes providers to manage costs effectively while maintaining the quality of care.

Providers may coordinate care, emphasize preventive services, and manage chronic conditions to optimize patient health outcomes and reduce unnecessary healthcare utilization. Capitation is commonly used in managed care organizations (MCOs), such as Health Maintenance Organizations (HMOs), where providers contract with insurers or health plans to deliver healthcare services to a defined patient population for a fixed fee per member per month (PMPM) or per year.