Indonesia’s National Health Insurance (JKN) introduced the Performance-Based Capitation scheme (Kapitasi Berbasis Komitmen, KBK) in 2015–2016 as a supplement to the existing capitation system and scaled it nationally in 2019. This study evaluates the impact of KBK on Diabetes Mellitus (DM)-related primary care utilization using 2015–2020 BPJS Kesehatan sample data, as DM alone accounted for IDR 8.23 trillion (USD 499 million) in JKN claims in 2022, raising concerns about the JKN financial sustainability. We employ a Regression Discontinuity in Time (RDiT) design to estimate causal effects, using a donut hole specification to address anticipation bias, applying alternative bandwidths for sensitivity analysis, and conducting placebo tests to assess robustness. Our findings indicate modest but significant improvements in primary care utilization at Puskesmas, particularly in contact rates (3.3% points), visit rates (6.9% points) and visit frequency (3.1% points). However, KBK had minimal impact on private clinic (klinik pratama), with most utilization metrics remaining insignificant, except for a 6.3% point increase in visit frequency. Additionally, despite increased service utilization at primary health care (FKTPs), referral rates to Advanced Referral Healthcare Facilities (FKRTLs) did not significantly decline. The study concludes that while KBK has led to some improvements, it has not fully met its objectives. Accordingly we recommend strengthening outcome-based performance indicators, mandating Prolanis enrollment for DM patients, and reformulating capitation incentives to better align with provider behavior and capacity. © The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2025.