Objective: Changes in the process of psychiatric care received by Medicaid beneficiaries with schizophrenia were examined after the introduction of capitated payments for enrollees of some community mental health centers (CMHCs) under the Utah Prepaid Mental Health Plan. Methods: Data from the medical records of 200 patients receiving care in CMHCs participating in the prepaid plan were compared with data from the records of 200 patients in nonparticipating CMHCs, which remained in a fee-for-service reimbursement arrangement. Using the Process of Care Review Form, trained abstracters gathered data characterizing general patient management, social support, medication management, and medical management before implementation of the plan in 1990 and for three follow-up years. Using regression techniques, differences in the adjusted changes between third-year follow-up and baseline were examined by treatment site. Results: By year 3 at the CMHCs participating in the plan, psychotherapy visits decreased, the probability of a patients terminating treatment or being lost to follow-up increased, the probability of having a case manager increased, the probability of a crisis visit decreased (but still exceeded that at the nonplan sites), and the probability of treatment for a month or longer with a suboptimal dosage of antipsychotic medication increased. Only modest changes in the process of care were observed at the nonplan CMHCs. Conclusions: Change in the process of psychiatric care was more evident at the sites participating in the plan, where traditional therapeutic encounters were de-emphasized in response to capitation. The array of changes raises questions about the vigor of care provided to a highly vulnerable group of patients.