Which is a very important part of the episode-of-care payment method that requires precise expenditure projections to negotiate contracts?

• A. Contract management
• B. Capitation
• C. Block payment
• D. Utilization management

Answer: (A)

In episode-of-care (bundled) payments, you must forecast what an entire episode will cost so you can set a bundled price and shape the contract terms around risk, performance expectations, and scope of services. The part that handles pulling together these projections, negotiating the price and terms, and overseeing how the agreement will be carried out is contract management. It directly ties the quantified expenditure forecast to the contractual structure—pricing, risk sharing, responsibilities, and incentives.

Utilization management focuses on ensuring appropriate use of services within the bundle, which helps control costs but isn’t the primary mechanism for negotiating the contract itself. Capitation involves fixed payments per member per month, which is a different payment model. Block payment is a fixed payment for a defined set of services, another distinct arrangement.