Promoting the community integration of working age adults with serious mental illnesses remains an important goal and challenges states to develop strategies to facilitate individuals' return to and maintenance in the community. Also, the emergence of consumer-directed services will have a significant impact on the delivery of Medicaid services to individuals with disabilities of all types. The management of Medicaid services is multi-faceted. Within the broad parameters of federal policy, states have considerable latitude in the selection of payment strategies, the application of information technology, and the design of quality management and improvement strategies. Federal funding may be available to underwrite the costs of many Medicaid administrative and management functions.