Use of angiotensin-converting enzyme (ACE) inhibitors and beta-adrenergic receptor blockers in patients with heart failure (HF) remains low despite the results of clinical trials and evidence-based guidelines that support their use. The quality of HF care in managed Medicare and Medicaid programs in North Carolina participating in a HF quality improvement program was assessed. Managed care plans identified adult patients with 1 inpatient or 3 outpatient claims for HF during 2000. A stratified random sample of 971 Medicare and 642 Medicaid patients' outpatient medical records from 5 plans were reviewed by trained nurse abstractors to obtain data regarding type of HF, demographics, comorbidities, and therapies. Left ventricular function assessment was performed in 88% of patients. Among 494 patients with systolic dysfunction, 86% were appropriately treated with respect to ACE inhibitors (73% prescribed, 13% had a documented contraindication). In contrast, beta-blocker therapy was appropriate in 61% (49% prescribed, 12% contraindication). There were no significant differences in drug use by insurance, gender, race, or age. Ventricular function assessment and ACE inhibitor prescription rates are higher than beta-blocker prescription rates among Medicare and Medicaid managed care patients in North Carolina. Opportunities for improvement remain, particularly for beta-blocker use.