Background. Health insurance is improving access to quality health care in Ghana. However, there are implementation challenges which call for reform of the current health insurance system. There is no doubt that reforming the current health insurance in Ghana is besieged with a myriad of problems due to misconceptions and misinformation. This study explored the perceptions and understanding of clients and health providers on the capitation payment system in the Kumasi metropolis. Methods. The study employed a cross - sectional design and repeated surveys were conducted with a cohort of 422 NHIS policy holders aged 18–69 years in each survey. The surveys were conducted in every three months. Health service providers and clients from thirteen (13) Hospitals, seven (7) Maternity homes and twenty (20) Clinics were also interviewed. Data was collected with interviewer–administered questionnaires. STATA software (version 11) was used for cleaning, standardizing and analysing data. Results. A majority, 97.9% of the clients interviewed had heard of capitation payment although this did not translate into their level of understanding. About two-thirds, 61.2% disclosed that capitation was not important to them as clients are restricted to one Preferred Primary Provider (PPP) for a long period of time. About 94% of health providers also believed that people did not like the capitation payment system due to their misconception that it has been politicized (34%); does not give clients free choice of providers (26%) and capitation not covering most drugs (17%). Conclusion. Although awareness of the capitation was high among clients, attitudes towards the capitation payment system were somewhat poor. A good understanding of the capitation payment system is key to ensuring client and provider acceptance and smooth implementation of the system.