Strictly speaking, the term "capitation'' refers only to a payment mechanism - paying a provider a specific sum of money for the ongoing care of a person or group of people for a particular period of time.
The sum is set in advance of the actual period of service, and it therefore represents a prediction, or at least an agreed-on estimate, of the amount of money that will be required to provide that care.
Technically, a contract based on capitation can include or exclude almost any medical service. One can provide payment on a capitated basis, for example, for only primary care visits, for primary care visits and associated laboratory tests, or for only referrals to specialists. Mental health care can be covered. So can specialty services or surgery, whether or not primary care is included.
The rate may be adjusted for the age, gender and other health characteristics of the population, based on actuarial projections of medical utilisation (Risk-adjusted capitation).

Last update: 7 June 2023

Source: Berwick (1996), updated by PPRI