Approximately one-half of all patients with HIV infection who are under care have Medicaid as the third party payor. Unlike Medicare, Medicaid is a state-specific program that has huge variations in reimbursement strategies. Multiple studies have shown that care for persons with AIDS is about $20,000/year, but reimbursement through various state Medicaid programs varies about $100/m/m to $2800/m/m despite the fact that expectations for care are identical. Hopkins has a major commitment to persons with HIV infection with a program that now includes 30 faculty members and a support staff of 170. With the introduction of mandatory managed care for Medicaid recipients in July, 1997, we were confronted with the issue of substantial downsizing with abandonment of over half of our patients, or learning the transition to managed care. This has been a steep learning curve involving negotiations with the state Medicaid office, reorganization of our clinic, careful scrutiny of our database regarding resource utilization and cost, education of providers, and longitudinal collection of new information and integration of the rapid changes in the field. In the process of this transition, we learned that there are precious few resources to provide guidance and that there is a perceived need for assistance by HIV providers throughout the country. Consequently, we have now established the "HIV Managed Care Network" with substantial funding from diverse sources to support education, data collection, and public policy review. It is premature to evaluate performance since most of these activities have just begun, but we expect that this Network will serve as a demonstration model for methods to deal with chronic diseases under managed care.