A prenatal care case-management program in Tennessee was evaluated to determine its effectiveness in improving the adequacy of prenatal care reducing the odds of preterm birth (gestation less than 37 weeks) and very low birth weight births (less than 1,500 g). The case-management program, Project HUG, included care provider referrals, visit scheduling, assistance with transportation and nutritional and health education. In a cohort of 66,051 Medicaid women with a birth during the period July 1989 through December 1991, 6% received HUG services. HUG participants had improved utilization of prenatal care, significantly decreased odds of inadequate perinatal care (an odds ratio of 0.71) and significantly increased odds of obtaining prenatal vitamins within 120 days of the last menstrual period (1.79). The apparent benefit of Project HUG was greater among blacks than among whites. However, there was no significant reduction in the incidence of preterm births or very low birth weight births among program participants