Results Between 1990 and 1994, the number of HMO enrollees whose care was paid for through capitation in the six medical groups increased by 91 percent, from 398,359 to 759,474. In 1994, the mean Some HMO plans offer capitation tiers to allow for treatment of more complex or chronic health issues in a responsible way, without undue financial risk to the physician. Advantages of Capitation There are advantages and disadvantages of capitation, just like in any health care payment system. A major component of this change in reimbursement policy was the expansion of the Medicare program between 1976 and 1985 to permit beneficiaries to elect to obtain services through health maintenance organizations (HMO's) and competitive medical plans 1 (CMP's), which are paid prospectively, on a capitation basis, for providing the full range