What type of third-party payment method is associated with utilization risk from a provider's perspective?

Capitation is the correct answer because this payment method involves a fixed amount paid per patient, typically per month, regardless of the number of services provided. From a provider's perspective, capitation transfers the utilization risk to the provider since they receive a set fee in advance for each patient, irrespective of the actual care utilized by that patient during the payment period.

This means that if the provider ends up delivering more services than the fixed payment covers, they will incur financial losses. Conversely, if fewer services are needed, the provider stands to gain financially. This creates a strong incentive for providers to manage care efficiently and encourage preventive measures, but it also poses a risk if the utilization of services exceeds what was anticipated.

In contrast, fee-for-service billing allows providers to receive payment for each service performed, which typically protects them from utilization risk because they are reimbursed for every encounter. Value-based reimbursement may involve metrics that reward quality and outcomes rather than the number of services, thus shifting the focus away from utilization risk alone. Direct payment involves patients paying providers directly for services, bypassing insurance, which does not create the same kind of utilization risk that capitation does.