Which statement about capitation contracts is true?

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Capitation contracts pay a fixed amount for each enrolled patient over a set period (for example, a per-member-per-month payment). That fixed dollar covers the patient’s care during that period, so the provider must manage costs within the budget. Because the payment isn’t tied to the number of services used, the focus is on cost control, utilization management, and reporting on outcomes and efficiency. When a contract is risk-bearing, the provider takes on financial risk for the cost of care, making efficient delivery essential to avoid losses.

The other ideas don’t fit capitation. Paying per service describes fee-for-service, not capitation. Capitation does not eliminate all risk for providers; it transfers financial risk to the provider. And capitation payments are not universally higher for sicker patients—rates are often adjusted for risk or based on expected costs, not simply higher across the board.