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OBJECTIVE: To describe the design and methods of the Washington State Cognitive Activities and Reimbursement Effectiveness (CARE) Project, a demonstration project in which community pharmacies were paid for cognitive services (CS) provided to Medicaid patients, its evaluation objectives, and the extent to which implementation objectives were achieved. DESIGN: Prospective randomized trial. Community pharmacies were allocated to a documentation-and-payment group, documentation-only group, and "silent" control group. CS were reported using a problem-intervention-result classification system embedded within a pseudo-National Drug Code format. Management strategies included use of area coordinators. SETTING: Pharmacies serving ambulatory Medicaid patients in the state of Washington, excluding staff-model health maintenance organization pharmacies and pharmacies predominantly serving long-term-care residents. PARTICIPANTS: 200 community pharmacies (110 treatment; 90 control), with another 100 randomly selected pharmacies as a silent control group. INTERVENTIONS: A modest monthly stipend. The treatment group billed Medicaid for each documented CS associated with a drug therapy-related problem. All participants received training in documentation methods. A unique coding scheme allowed documentation of CS within the constraints of the Medicaid program. Data edit checks and feedback were used to ensure data quality and completeness. Area coordinators were used to facilitate training, compliance with study procedures, and participation. MAIN OUTCOME MEASURES: Participation rates, documentation rates, coding scheme revision, data quality and completeness rates, and effectiveness of area coordinators. RESULTS: Pharmacists documented more than 20,240 CS records. Approximately 89% of records passed edit checks, and 94% did so after modification. Nearly 83% could be linked to a paid drug or CS claim. The coding system was sufficient, with minor modifications, to account for all interventions documented. Area coordinators did not function as expected. CONCLUSION: A system for documentation and payment of pharmacists' CS to Medicaid recipients was implemented successfully and relatively easily in community pharmacies.