California Aligns Healthcare Programs to Improve Quality

State agencies are leveraging performance metrics to drive better clinical outcomes for 17.7 million Californians.

Updated on Oct. 26, 2026 in Healthcare

Isometric editorial illustration of precisely stacked, geometric cubic modules, representing an organized system of unified healthcare quality standards and clinical alignment. — California state agencies including CalPERS and the Department of Health Care Services have aligned performance-based programs to improve clinical quality for 17.7 million residents. AI Illustration. Upload story photo >

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CalPERS, Covered California, and the Department of Health Care Services have implemented aligned performance-based programs. These initiatives aim to improve health care quality and access for residents across the state.

Why it matters

The agencies are utilizing financial incentives and penalties to ensure health plans meet rigorous quality targets. This strategy seeks to standardize care expectations and hold providers accountable for patient results.

These programs reach 17.7 million people, representing 45% of Californians. In total, the agencies have collected $11.9 million in penalties and withheld roughly $600 million in funds from health plans that did not meet performance targets.

The players

CalPERS

The California Public Employees Retirement System provides health benefits to more than 1.5 million public employees and retirees.

Covered California

This is the state's health insurance marketplace that facilitates access to coverage for millions of residents.

Department of Health Care Services

This state agency manages the Medi-Cal program, which serves approximately 14 million members in California.

The details

CalPERS imposes penalties on plans failing to reach quality benchmarks, while Covered California requires underperforming entities to reinvest in population health. These aligned efforts have already yielded improvements in clinical quality for the majority of covered lives.

The Department of Health Care Services launched its QWI program in 2024.
The department withheld approximately $600 million from health plans during 2025 and 2026.
Covered California directed $19.6 million toward population health initiatives in 2026.
The Department of Health Care Services expects to release 2025 performance data in 2027.

Market Landscape

These efforts reflect a broader transition away from traditional fee-for-service models toward outcomes-based reimbursement. By standardizing performance requirements, California positions itself to hold private health plans accountable in a competitive market environment.

Californians covered by these plans may see improved access to preventative care and better clinical outcomes due to mandatory performance targets. Residents should monitor their insurance plan communications to see how quality improvements affect their specific care services.

The takeaway

Transitioning to performance-based healthcare forces providers to prioritize patient health over total service volume. Residents benefit when health plans are financially motivated to improve measurable outcomes like blood pressure control.