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Payment system in which providers are paid a certain amount of money for each of their patients, regardless of the amount of care rendered. The capitation payments are generally pre-paid (i.e., paid in advance), with the amount depending on the age and gender ("age-sex banding") and possibly other characteristics of the "roster" of patients who are assigned ("empaneled") to that provider. If left unchecked, capitation can stimulate a perverse incentive known as "underutilization".

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