Capitation-based reimbursement significantly influences the practice of med
icine. As physicians, we need to assure that payment models do not jeopardi
ze the care we provide when we accept higher levels of personal financial r
isk. In this paper, we review the literature relevant to capitation, consid
er the interaction of financial incentives with physician and medical risk,
and conclude that primary care physicians need to work to assure that capi
tated systems incorporate checks and balances that protect both patients an
d providers, We offer the following proposals for individuals and groups co
nsidering capitated contracts: (1) reimbursement for primary care physician
s should recognize both individual patient encounters and the administrativ
e work of patient care management; (2) reimbursement for subspecialists sho
uld recognize both access to subspecialty knowledge and expertise as well a
s patient care encounters, but in some situations, subspecialists may provi
de the majority of care to individual patients and will be reimbursed as pr
imary care providers; (3) groups of physicians should accept financial risk
for patient care only if they have the tools and resources to manage the c
are; (4) physicians sharing risk for patient care should meet regularly to
discuss care and resource management; and (5) physicians must disclose the
financial relationships they have with health plans and medical care organi
zations. and engage patients and communities in discussions about resource
allocation. As a payment model, capitation offers opportunities for primary
care physicians to influence the future of health care by improving the ma
nagement of resources at a local level.