Under a capitation arrangement, a provider is paid a per-member-per-month (PMPM) fee for all enrolled members:

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Under a capitation arrangement, a provider is paid a fixed amount per enrolled member each month, regardless of whether or not the member receives services during that month. This payment model incentivizes providers to focus on preventive care and health maintenance, as keeping patients healthy can help reduce costs and improve outcomes in the long run. Referrals to specialty care or hospitalizations would not impact the provider's monthly payment under a capitation arrangement.

Under a Capitation Arrangement, a Provider Is Paid a Per-Member-Per-Month