The study objective was to examine quality oversight efforts by Medicaid managed care organizations (MCOs) for children in a sample of ambulatory care institutions and private practices in New York City. This was a cross-sectional study of quality assurance priorities and strategies of MCOs and their impact date in institutions in New York City. Data were from structured interviews administered in 1997 to medical directors in the eight largest MCOs; and medical directors, heads of ambulatory pediatrics, and institutional pediatricians in a random sample of 15 institutions and 20 private office-based providers. Medical directors in MCOs reported that their main priority areas were the preventive care measures (e.g., immunization and lead screening) that they must report to the state. Knowledge of these MCO priority areas and monitoring activities was high for medical directors in the random sample, but decreased from these medical directors to heads of ambulatory pediatrics to institutional pediatricians, with the differences between the medical directors and institutional pediatricians significant (P < .05). However, 96% of the institutional pediatricians reported knowing their own institution's priorities and monitoring activities. In contrast, most private pediatricians reported they knew MCO priorities and monitoring activities (80%). Less than 33% of any group reported activities as "very effective" or felt any incentive to improve performance. There was a high level of overlap in provider networks, with institutions and private providers having children in many MCOs, and MCOs having children in many sites. Conclusions. The current model of quality oversight is producing reports for the state, but is not translating into effective strategies at the provider level. The need to work through the leadership in institutions to influence quality is highlighted. The level of overlap in provider networks suggests the need for collaboration among MCOs in quality monitoring.