How are payments to providers typically made in an HMO?

• A. Capitation
• B. Fee-for-service
• C. Salary per patient
• D. Per-visit charging

Answer: (A)

Capitation is the fixed amount paid per enrolled patient over a set period, typically monthly, and it covers a defined package of services. In an HMO, this payment approach means providers receive a consistent, per-patient revenue regardless of how many visits or procedures the patient uses, which encourages efficient care, care coordination, and a focus on preventive services. This contrasts with fee-for-service, where providers are paid for each service rendered and may have an incentive to increase volume. Per-visit charging and salary-based approaches are different payment models and aren’t the standard method used to reimburse providers in HMOs.