This paper provides new information from an Urban Institute survey of state Medicaid managed care payment methods and rates. In particular, the paper summarizes various payment methodologies used in 41 of the nation's 45 states (including the District of Columbia) with capitated Medicaid managed care programs, and it examines interstate and intrastate variation among payment rates. We begin the paper with a brief review of the history of federal and state attempts to use payment arrangements, including capitated managed care programs, to encourage the provision of "mainstream" health care to low-income populations. We then present results from a nationwide managed care payment survey of voluntary or mandatory capitated Temporary Assistance for Needy Families/Aid to Families with Dependent Children (TANF/AFDC) and TANF/AFDC-related managed care programs. This survey was conducted as part of the Urban Institute's Assessing the New Federalism project. Concluding the paper is a comparison of Medicaid capitation rates with Medicare adjusted average per capita cost rates.