Under a capitation arrangement between an HMO and a primary care physician (PCP), the PCP is paid:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Capitation is the hallmark financing method of HMO-style managed care: the HMO pays the primary care physician a fixed monthly (per-member) amount for each enrolled member, whether or not the member uses any services. Because the payment does not rise with service volume, the PCP has an incentive to provide appropriate, cost-conscious care and coordinate referrals. This is part of the individual plan-type material (AH-III.A.1a) that contrasts the financing of HMO delivery models with the fee-for-service payment common to other arrangements. Understanding who bears utilization risk under capitation is a recurring exam distinction.
Why the other options are wrong
- B) Paying a percentage of submitted claims would tie income to usage rather than to enrollment, which is the opposite of capitation.
- C) Paying per visit or procedure is fee-for-service compensation, not a fixed per-member payment.
- D) A bonus based on hospital admissions would reward utilization, whereas capitation and managed care generally seek to control unnecessary admissions.
Memory hook
Capitation = per head per month, paid before any care happens.