In a capitated payment arrangement, who bears the full financial risk?

• A. Insurance company
• B. Medical provider
• C. Enrollee
• D. Third-party payers

Answer: (C)

In a capitated payment arrangement, the party that bears the full financial risk is actually the medical provider. Under this arrangement, a provider is paid a set amount per enrollee for a specific set of services over a predetermined period, regardless of the number of services provided or the actual costs incurred. This means that if the costs of care exceed the capitated payment, the provider is responsible for covering those excess costs, thus absorbing the financial risk.

The insurance company and third-party payers typically transfer this risk to the medical providers when they enter into a capitated agreement. Enrollees, on the other hand, may have a different form of risk, as they could be responsible for certain co-payments or deductibles, but they do not bear the overall financial risk associated with the cost of providing care to all patients. In summary, in capitated arrangements, it is the medical provider who carries the risk since they are limited to the capitation amount regardless of service utilization.