This document reviews how schools and providers of school-based mental health programs have implemented managed care contracts with Medicaid managed care organizations. Observations were made at three sites (Albuquerque, NM; Baltimore, MD; New London, CT) where school-based mental health services were provided by Medicaid organizations. Following background information, the methodology used to explore policy options is discussed. Four main conclusions can be drawn from the experiences of the three study sites: (1) better understanding of the interrelationship between community-based mental health services and school-based mental health services is needed; (2) lack of on-site support makes implementation difficult; (3) prevention-oriented services are covered in only a few instances; and (4) better coordination is needed between agencies and school-based mental health services. Other models for including school-based services are also reviewed. A discussion is included on financing and reimbursement issues that may affect viability and expansion of services. Consideration is given to alternative ways to maintain and expand services. (JDM)