Capitation is a method of payment based on a payment per person, rather than a payment per service provided. Several different types of capitation range from relatively modest per member per month (PMPM) case management payments, to primary care physicians involved in patient-centered medical homes, to PMPM payments covering all professional services, to PMPM payments covering the total risk for all services including professional, facility, pharmaceutical, clinical laboratory, and durable medical equipment. Variations on these basic capitation types depend on the particular services that the parties decide to carve out and handle on either a fee-for-service basis or by delegation to a separate benefit management company.

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