Which statement defines episode-based payment?

• A. Per day per patient
• B. One payment for entire care episode
• C. Paid per visit
• D. Capitation

Answer: (B)

Episode-based payment is a bundled payment that covers all services involved in a defined episode of care, paid as a single sum for the entire course of treatment. This setup shifts incentives toward coordination and efficiency, since the provider receives one fixed payment regardless of how many visits or procedures occur within the episode, encouraging them to avoid unnecessary services and manage resources wisely.

Describing alternatives helps clarify why this is the best fit: paying per day per patient is a per diem rate, which covers daily hospitalization costs but not the entire episode. Paying per visit is a fee-for-service model, where each encounter is billed separately and can encourage more services. Capitation is a fixed amount paid per patient per time period, regardless of how many services the patient uses. The single, comprehensive payment for the whole episode precisely defines episode-based payment.