Under capitation, who bears financial risk?

• A. The provider or plan bears risk.
• B. The patient bears risk.
• C. The insurer bears no risk.
• D. There is no risk.

Answer: (A)

Capitation places the financial risk with the provider (or the plan delivering capitation). In this model, a fixed amount is paid per enrolled patient over a set period, regardless of how much care that patient uses. The provider must cover all necessary services within that fixed payment. If actual costs exceed the capitation revenue, the provider incurs losses; if costs are lower, the provider retains the savings. The patient’s out-of-pocket risk is not the primary dynamic of capitation, and while insurers still have some overall risk, the design concentrates financial risk on the provider.