A dollar amount arrived at by actuarial projection, which is meant to represent the average annual cost for a Medicare beneficiary in a particular geographic area. The AAPCC is the basis of the government’s payment to HMOs and other risk-based providers for Medicare beneficiaries. The government pays the HMO 95 percent of the AAPCC. If the medicare beneficiaries are relatively healthy in a particular region, the 95 percent capitated payment results in the government paying more than if the same beneficiaries were enrolled in a fee-for-service plan. This payment method therefore has a built-in incentive for HMOs to attempt to enroll only the healthier Medicare beneficiaries.