purpose: To measure the quality of care for hypertensive and diabetic elderly Medicaid beneficiaries enrolled in managed care versus fee-for-service (FFS) plans. methods: Individuals enrolled in the Medicaid Demonstration Project in Hennepin County, Minnesota, were randomly assigned to receive their care either in one of seven managed care health plans in which the Medicaid payment for their care was capitated or in an FFS plan. Two hundred ninety-one hypertensives and 96 diabetics who were aged 65 years or over at the beginning of the evaluation were interviewed at baseline and followed for 1 year. Drug and nondrug therapy, monitoring, monthly medication costs, and access to medications were assessed. results: The prepaid and FFS did not differ in drug or nondrug therapy, with the exception that slightly more FFS enrollees were on human insulin after 1 year. Mean monthly medication costs and access to medications were similar for both groups. conclusions: In this randomized trial, we were unable to detect differences in the process of care for hypertensive and diabetic Medicaid enrollees.