Managed care organizations must establish formal processes for the evaluation of new technology, procedures, and drugs to enhance the quality of health care delivered and to support coverage and utilization decision making. Evidence-based research and the results of controlled clinical trials are the preferred sources of outcomes data to support the safety and effectiveness of the technology, procedure, or drug under review. In addition to extensive literature review, the opinion of experts in the field and acceptance by the medical community are considered. Assessments of new technology and drugs are available for purchase from several vendors, and managed care organizations can adopt or modify such evaluations to develop medical coverage policies. The research community can assist third-party payers by conducting studies on practices that might lead to substantial, rather than marginal, improvement in health, pay particular attention to study design when randomized controlled studies are not possible, and include functional and behavioral measures in analysis of outcomes.