What term describes payment to physicians that occurs when they are paid a contracted rate for each member assigned, regardless of services provided?

• A. Fee for service
• B. Joint venture
• C. Collective bargaining
• D. Capitation

Answer: (D)

Capitation is a payment model where physicians are paid a fixed amount for each enrolled patient per period, regardless of how many services are provided. This setup shifts financial risk to the provider and rewards care coordination and preventive measures, since income doesn’t rise with more visits or procedures. The contracted rate is usually described as a per-member-per-month payment, so the provider receives that amount whether the patient uses services or not. Fee-for-service, by contrast, pays for each service rendered, so higher service volume means more payment. A joint venture is a business arrangement between providers, not a payment method, and collective bargaining concerns negotiating terms with employers or unions, not how patients are paid. This description fits capitation best.