State Medicaid programs are rapidly converting fee-for-service health delivery systems to managed care for people with disabilities. In theory, managed care models of health delivery will substantially improve the quality of care for people with disabilities, but in reality, few successful models exist. This period of transition holds both opportunities and challenges for psychologists in medical settings. Because Medicaid reforms for people with disabilities may herald similar reforms for both the public and the private sectors, psychology's response will determine its role in the future of health care delivery for this population. Changes in training and increased attention to outcomes research, innovations in practice, and advocacy will be the keys to success.