Rising Medicaid health expenditures have hastened the development of State managed care programs. Methods to monitor and improve health care under Medicaid are changing. Under fee-for-service (FFS), the primary concern was to avoid overutilization. Under managed care, it is to avoid underutilization. Quality enhancement thus moves from addressing inefficiency to addressing insufficiency of care. This article presents a case study of Virginia's redesign of Quality Assessment and Improvement (QA/I) for Medicaid, adapting the guidelines of the Quality Assurance Reform Initiative (QARI) of the Health Care Financing Administration (HCFA). The article concludes that redesigns should emphasize Continuous Quality Improvement (CQI) by all providers and of multi-faceted, population-based data.