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Capitation payment is characterized by a fixed monthly payment, which is a set fee paid to healthcare providers for each enrolled patient, regardless of the number of services provided. This model is designed to encourage preventative care and efficient resource use, as providers receive the same amount regardless of how often a patient visits or how many services are rendered. As a result, there is an incentive for providers to focus on maintaining the health of their patients and managing care effectively.

In contrast, fee-for-service payment involves providers being paid for each specific service performed, which can lead to increased healthcare costs if more services are rendered. Prospective payment refers to predetermined payment rates for specific conditions or diagnoses, which can also vary based on the severity and complexity of cases, rather than being a fixed monthly amount. Acute care payments usually relate to specific services for patients admitted for short-term illnesses or surgeries, again not reflecting the consistent monthly payment structure inherent to capitation.