Question

An agreement in which the health care provider is paid a fixed amount for each person in a specific contract within the practice, regardless of service provided, is called:

Answer 1

An agreement where the health care provider is paid a fixed amount per enrolled person, regardless of services provided, is known as a health maintenance organization (HMO).

Step-by-step explanation:

An agreement in which the health care provider is paid a fixed amount for each person within a specific contract, regardless of the services provided, is called a health maintenance organization (HMO). In contrast to the fee-for-service system where providers are reimbursed according to the costs of services rendered, HMOs require providers to manage the care of patients within the fixed payment they receive. This system introduces incentives for providers to focus on preventative care and managing resources efficiently to decrease instances of moral hazard and deter adverse selection.

Capitation agreements are often seen in managed care settings, such as Health Maintenance Organizations (HMOs), where the emphasis is on cost-effective and coordinated healthcare delivery. While capitation can promote cost containment and preventive care, it also requires careful management to ensure that patients receive necessary services and that providers are not incentivized to underdeliver needed care to cut costs.