Disease management emphasizes prevention of disease-related exacerbations and complications using evidence-based guidelines and patient empowerment tools. It can help manage and improve the health status of a defined patient population over the entire course of a disease.More than 20 states in the US are developing and implementing Medicaid disease management programs. While most are in an early stage of development, a small number of states were pioneers in disease management and have already gained much insight. Among them, three states – Florida, Virginia, and West Virginia – provide some significant lessons.In the late 1990s, Florida’s Medicaid agency authorized development of disease management programs for patients with asthma, diabetes mellitus, HIV/AIDS, hemophilia, hypertension, cancer, end-stage renal disease, congestive heart failure, and sickle cell anemia. However, an analysis of results in 2001 showed significant problems (e.g. inefficiency, inconsistent care, a failure to address problems of patients with multiple diseases). These problems likely resulted from Florida trying to implement too many programs at once, using contracts with multiple vendors.The Virginia Health Outcomes Project was shown to be effective in reducing use of emergency and urgent care services by Medicaid patients with asthma (average 42% reduction in the third to fifth quarters after introduction of the program) and increasing the appropriate use of asthma medications. It was also shown to be cost effective, with projected direct savings to Medicaid of $US3–5 (2002 values) for every incremental dollar spent providing disease management support to physicians.The goals of the West Virginia Health Initiatives Project were to deliver quality care, improve health status and quality of life, and ensure the efficient and appropriate utilization of resources for Medicaid patients with diabetes. The model program had two critical components:adaptation of clinical treatment guidelines that are in the public domain to blend the highest quality of care with the best practical management strategies; andfeedback reports that provide real-time data about patients’ utilization of services to all providers involved in their care.Participating physicians and other providers received training and reimbursement for their efforts to comply with guidelines.It would be a mistake to attempt to draw firm conclusions about disease management programs for low-income elderly or physically disabled patients in the US Medicaid program given their current stage of development. However, credit should be given to the states that are experimenting with cutting-edge programs to tackle not only their fiscal issues, but perhaps more importantly, the issue of ensuring high-quality, cost-effective healthcare for the patients they serve.