This paper provides an overview of the new Federal initiative underway to promote research in outcomes and effectiveness of services provided in the U.S. It discusses the factors that stimulated the U.S. government ot undertake this initiative and summarizes past research and current efforts to advance knowledge about utilization and outcomes of care. A focal point of this initiative is to take advantage of information in large, administrative data bases to monitor the use, costs and outcomes of medical services. As part of this initiative, the Federal Government for the first time assembled detailed data, by geographic area and by demographic groups, on the hospitalization, mortality and rehospitalization experience of the entire Medicare population. The paper describes this project and illustrates uses of these data.