States are increasingly turning to Medicaid managed care as a key strategy to manage costs and encourage innovation in health care delivery. This report examines health care providers' perspectives on the role of managed care in improving health services for low-income adults in four communities: Milwaukee, Wisconsin; Oakland, California; Seattle, Washington; and Washington, D.C. It finds that providers do not generally perceive Medicaid managed care as a catalyst for delivery system reform. Fragmented delivery systems, limits on the types of services for which managed care organizations are at risk, and the volatility in managed care markets all present challenges to improving care delivery. Policy and operational changes could enhance the role of Medicaid managed care in promoting patient-centered, coordinated, and high-quality care.