To provide medical service at lower costs without diminishing either quality or coverage, the District of Columbia enrolled approximately 1,000 Medicaid beneficiaries, voluntarily, in a prepaid group practice (PGP). The project was evaluated over a three-year period (1971-1974) with regard to: 1) rate of utilzation of medical care before and after enrollment; 2) costs of care per capita as compared with those of the 160,000 beneficiaries in the Medicaid fee-for-service universe; and 3) patient satisfaction with the PGP. Results indicate that for the 834 individuals aged 1 through 64 enrolled in the PGP; ambulatory physican encounter rates decreased 15 per cent, drug utilization was down 18 per cent, hospital admissions decreased 30 per cent, and hospital days declined 32 per cent after enrollment. For the same benefit package, annual prepaid per capita costs for the Medicaid PGP enrollees for 1972, 1973, 1974 were only +282, +232, and +286 respectively, representing a 37 per cent saving when compared to the fee-for-service per capita costs of the Medicaid Universe which stood of +373, +435 and +465 over the same period. The instrument used to probe patient satisfaction showed the Study Group was satisfied with the PGP, and received better dental care. The voluntary dropout rate from the PGP was only 2.5 per cent; and out-of-plan utilization was low, indicating good acceptance of the PGP service.