Final answer:
The method of payment that transfers financial risk to healthcare providers and pays them a fixed amount based on admission diagnosis is Managed Care, typically associated with Health Maintenance Organizations (HMOs).
Step-by-step explanation:
The method of paying health care providers that shifts part of the financial risk to hospitals by paying a fixed amount based on the admission diagnosis is known as Managed Care. This system, notably used by Health Maintenance Organizations (HMOs), contrasts with the traditional fee-for-service model.
In managed care arrangements, providers receive a lump sum for each patient enrolled, which covers all required treatments for a diagnosis, regardless of the actual services provided. This payment model transfers some financial risk to the providers, as they must manage patient care within the fixed payment they receive.
This change aims to curtail the potential overutilization of healthcare services and aligns with efforts to contain costs while maintaining quality of care.