Question

The services are provided on a prepaid per person basis called capitation in-

A. Preferred Provider Organization (PPO)
B. Health Maintenance Organization (HMO)
C. Point-of-Service (POS) plan
D. Exclusive Provider Organization (EPO)

Answer 1

Capitation, a prepaid per person basis for services, is a defining feature of Health Maintenance Organizations (HMOs), contrasting with fee-for-service models by providing more cost-effective healthcare financing.

Step-by-step explanation:

Services are provided on a prepaid per person basis, known as capitation, in a Health Maintenance Organization (HMO). In healthcare financing, HMOs operate differently from fee-for-service models, as they receive a fixed amount per enrolled person, irrespective of the number of services provided. This approach can mitigate issues like adverse selection and moral hazard by providing incentives for the provider to limit unnecessary services while ensuring necessary care, thereby controlling costs.