This phase II trial studies how well CPX-351 or the CLAG-M regimen (consisting of the drugs cladribine, cytarabine, G-CSF, and mitoxantrone) works in treating medically less-fit patients with acute myeloid leukemia or other high-grade myeloid neoplasms. Drugs used in chemotherapy, such as CPX-351, cladribine, cytarabine, G-CSF, and mitoxantrone, work in different ways to stop the growth of cancer cells, either by killing the cells, by stopping them from dividing, or by stopping them from spreading. Giving CPX-351 or the CLAG-M regimen at doses typically used for medically-fit patients with acute myeloid leukemia may work better than reduced doses of CPX-351 in treating medically less-fit patients with acute myeloid leukemia or other high-grade myeloid neoplasms.

OUTLINE: Patients are randomized to 1 of 2 arms in a 1:1 fashion. ARM I = CPX-351; ARM II = CLAG-M.

ARM I (INDUCTION): Patients receive CPX-351 intravenously (IV) over 90 minutes on days 1, 3, and 5 in the absence of disease progression or unacceptable toxicity. Patients who achieve a response other than an MRDneg CR receive a second course of CPX-351 intravenously IV over 90 minutes on days 1, 3, and 5 in the absence of disease progression or unacceptable toxicity.

ARM I (POST-REMISSION): Patients who achieve a CR or CR with incomplete hematologic recovery (CRi) receive a reduced dose of CPX-351 IV over 90 minutes on days 1, 3, and 5 for up to 4 additional courses in the absence of disease progression or unacceptable toxicity.

ARM II (INDUCTION): Patients receive cladribine IV over 2 hours on days 1-5, cytarabine IV over 2 hours on days 1-5, G-CSF subcutaneously (SC) on days 0-5, and mitoxantrone IV over 60 minutes on days 1-3 in the absence of disease progression or unacceptable toxicity. Patients who achieve a response other than an MRDneg CR receive a second course of cladribine IV over 2 hours on days 1-5, cytarabine IV over 2 hours on days 1-5, G-CSF SC on days 0-5, and mitoxantrone IV over 60 minutes on days 1-3 in the absence of disease progression or unacceptable toxicity.

ARM II (POST-REMISSION): Patients who achieve a CR/CRi receive an intermediate dose of cytarabine IV over 2 hours on days 1-6 for up to 4 additional courses in the absence of disease progression or unacceptable toxicity.

After completion of study treatment, patients are followed up periodically for up to 5 years.

Inclusion Criteria:

• Diagnosis of untreated "high-grade" myeloid neoplasm (>=10% blasts in blood or bone marrow) or AML other than acute promyelocytic leukemia (APL) with t(15;17)(q22;q12) or variants according to the 2016 World Health Organization (WHO) classification. Outside diagnostic material is acceptable to establish diagnosis; submission of peripheral blood specimen for flow cytometry performed at the study institution should be considered. Diagnostic material must have been submitted for cytogenetic and/or molecular testing as clinically appropriate
• Treatment-related mortality (TRM) score >= 13.1 as calculated with simplified model
• The use of hydroxyurea before enrollment is permitted; hydroxyurea should be discontinued prior to start of study treatment. Patients with symptoms/signs of hyperleukocytosis or white blood cells (WBC) > 100,000/uL or with concern for other complications of high tumor burden or leukostasis (e.g. hypoxia, disseminated intravascular coagulation) can be treated with leukapheresis or may receive up to 2 doses of cytarabine (up to 500 mg/m^2) any time prior to enrollment
• Patients may have received low-intensity treatment (e.g. azacitidine/decitabine, lenalidomide, growth factors) for antecedent low-grade myeloid neoplasm (i.e. < 10% blasts in blood and bone marrow)
• Bilirubin < 2.0 mg/mL unless elevation is thought to be due to hepatic infiltration by neoplastic cells, Gilbert's syndrome, or hemolysis (assessed within 14 days prior to study day 0)
• Left ventricular ejection fraction (LVEF) >= 45%, assessed within 12 months prior to registration, e.g. by multigated acquisition scan (MUGA) scan or echocardiography or another appropriate diagnostic modality
• Women of childbearing potential and men must agree to use adequate contraception beginning at the signing of the consent until at least 4 weeks after the last dose of study drug
• Ability to understand and the willingness to sign a written informed consent document

Exclusion Criteria:

• Myeloid blast crisis of chronic myeloid leukemia (CML), unless patient is not considered candidate for tyrosine kinase inhibitor treatment
• Concomitant illness associated with a likely survival of < 1 year
• Active systemic fungal, bacterial, viral, or other infection, unless disease is under treatment with anti-microbials and/or controlled or stable. Patients with fever thought to be likely secondary to leukemia are eligible
• Known hypersensitivity to any study drug used in this trial
• Pregnancy or active breast feeding
• Concurrent treatment with any other approved or investigational anti-leukemia agent. Treatment with a FLT3-inhibitor for FLT3-mutated AML is permissible