As states look for ways to improve health care for people with chronic conditions in order to enhance outcomes and contain long-term costs, the Affordable Care Act offers an important opportunity. Section 2703 of the act provides enhanced federal funding for two years for "health homes" serving Medicaid beneficiaries with chronic conditions. The new issue of States in Action defines health homes, discusses the provision and the latest federal guidance to states, and presents opportunities and options for states to pursue.