To control Medicaid costs, improve quality, and drive community engagement, the Oregon Health Authority introduced a new system of coordinated care organizations (CCOs). While CCOs resemble traditional Medicaid managed care, they have differences that have been deliberately designed to improve care coordination, increase accountability, and incorporate greater community governance. Reforms include global budgets integrating medical, behavioral, and oral health care and public health functions; risk-adjusted payments rewarding outcomes and evidence-based practice; increased transparency; and greater community engagement. The CCO model faces several implementation challenges. If successful, it will provide improved health care delivery, better health outcomes, and overall savings.