This report presents two discussions of conceptual and infrastructure issues that state mental health systems serving children with emotional disturbances must consider to make an effective transition towards a managed care organization of services under Medicaid. The first discussion, "Clinical Experiences in Managed Care Implementation for Children with Serious Emotional Disturbances" by Theodore Fallon, describes a set of demonstration programs that are constructing arrays of services to address the needs of the most disturbed children and youth and their families. Five attributes contributing to program success are identified, such as multiple coordinated services which affect all aspects of the family's life. The second discussion, "Best Principles for Managed Care Request for Proposals" by Andres J. Pumariega, describes a document designed to assist state decision makers in selecting managed care Medicaid vendors or developing public managed care systems. Principles address such issues as governance of service systems, design of benefits, access to services, development of treatment plans, triage and assessment, treatment services, case management, quality assurance, information management, and provider support by states. (DB)