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Medicaid can improve beneficiary health and help sustain its own future by embracing payment for outcomes. Good precedents exist from states such as Florida, Maryland, Minnesota, New York, Ohio, Pennsylvania, and Texas. Medicaid outcome measures include preventable admissions, readmissions, emergency department visits, and inpatient complications; early elective deliveries; infant and child mortality; patient-reported outcomes, satisfaction, and confidence; and reduction in low-value care. Criteria to prioritize initiatives include potential savings, availability of established models, impact on health status, and Medicaid's ability to effect change. We offer 5 principles for success, emphasizing clinically credible initiatives that generate actionable information for clinicians.