The California Public Employees Retirement System (CalPERS) reported on April 12 that its Accountable Care Organization (ACO) pilot is already providing strong evidence that improved communications among medical facilities, physicians, and health plans can achieve better health outcomes for patients as well as significant cost savings. CalPERS launched the pilot in January 2010 in partnership with California Blue Shield for 41,000 CalPERS members in Sacramento, Placer, and El Dorado counties. Analyses of the data available under the pilot to date show a 17 percent reduction in hospital readmissions, a 14 percent reduction in inpatient hospital days, and a 50 percent reduction in the number of patients who stay in the hospital 20 or more days. These improvements are expected to achieve $15.5 million in savings under the pilot, $378 for each CalPERS member participating in the pilot. As reported last week, the Centers for Medicare and Medicaid Services (CMS) is publishing a proposed rule on April 15 to implement ACOs for Medicare beneficiaries beginning in January 2012 in accordance with the Affordable Care Act (ACA). CMS estimates that ACOs could save Medicare up to $960 million over three years, gradually covering up to five million Medicare and Medicare/Medicaid beneficiaries, where ACOs are available.   California is likely to be a national leader.