When an HMO is paid a fixed amount for each patient served without considering the actual number or nature of services provided to each person, this is known as

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Capitation is a payment method where the HMO is paid a fixed amount per patient, regardless of the number or type of services provided. This creates an incentive for the HMO to focus on preventive care and cost-effective treatments, as they are responsible for the overall health of their patients and will bear the costs of any unnecessary or excessive services. Fee-for-service, usual charges, and customary fees are all payment methods where healthcare providers are reimbursed for each service they provide, which can encourage overuse and inflate healthcare costs.

When an HMO Is Paid a Fixed Amount for Each