Managed care has brought about important changes in how the health care system is financed and services delivered. The authors describe the approaches adopted by community health centers to participate in Medicaid managed care and argue that these providers, commonly referred to as providers of last resort, have a role to play in this system. Many challenges lie ahead for these centers, such as the potential imposition of Medicaid block grants, the increasing number of uninsured persons, and cuts in both Federal grants and State budgets. These various forces may adversely impact health centers, leaving them with more uninsured patients and fewer resources.