This report describes lessons learned from current best practices in coordinated care as the first step in designing the mandated demonstration programs. A separate report will propose key demonstration design features, including the method of paying for the intervention, financial incentives for programs to generate savings to Medicare, target sample sizes for the demonstration programs, and methods for evaluating them. Current health care often fails to meet the needs of chronically ill people. Treatment regimens for chronic illness often do not conform to evidence-based guidelines (Large State Peer Review Organization 1997). Care is frequently rushed and overly dependent on patient-initiated follow-up. Providers typically devote little time to assessing function, providing instruction in behavior change or self-care, or addressing emotional or social distress (Calkins et al. 1991; Clark and Gong, 2000; and Holman and Lorig 1998). Care is fragmented, with little communication across settings and providers (Manian 1999). A small proportion of chronically ill persons also incurs the large majority of health care costs (Eggert 1988). Furthermore, many unplanned hospitalizations of chronically ill persons appear to be preventable. Thus, preventive interventions targeted to this group might yield sizable overall savings in health care.