Describes the development and implementation in Minnesota of a model for rural county government participation in Medicaid managed care initiatives. The model-called County-Based Purchasing-allows county governments the option of functioning as direct purchasers of health care for the Medicaid beneficiaries in their area, accepting financial risk for service delivery. Concludes that if the model is to be used nationally, several issues must be addressed including, the federal approval process for similar initiatives, the relationship between state and county agencies, and sources of funding.