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Background: The State Innovation Models (SIM) Initiative invested $254 million in 6 states in Round 1 to accelerate delivery system and payment reforms., Objective: The objective of this study was to examine the association of early SIM implementation and diagnosed diabetes prevalence among adults and hospitalization rates among diagnosed adults., Research Design: Quasi-experimental design compares diagnosed diabetes prevalence and hospitalization rates before SIM (2010-2013) and during early implementation (2014) in 6 SIM states versus 6 comparison states. County-level, difference-in-differences regression models were estimated., Subjects: The annual average of 4.5 million adults aged 20+ diagnosed with diabetes with 1.4 million hospitalizations in 583 counties across 12 states., Measures: Diagnosed diabetes prevalence among adults and hospitalization rates per 1000 diagnosed adults., Results: Compared with the pre-SIM period, diagnosed diabetes prevalence increased in SIM counties by 0.65 percentage points (from 10.22% to 10.87%) versus only 0.10 percentage points (from 9.64% to 9.74%) in comparison counties, a difference-in-differences of 0.55 percentage points. The difference-in-differences regression estimates ranged from 0.49 to 0.53 percentage points (P<0.01). Regression results for ambulatory care-sensitive condition and all-cause hospitalization rates were inconsistent across models with difference-in-differences estimates ranging from -5.34 to -0.37 and from -13.16 to 0.92, respectively., Conclusions: SIM Round 1 was associated with higher diagnosed diabetes prevalence among adults after a year of implementation, likely because of SIM's emphasis on detection and care management. SIM was not associated with lower hospitalization rates among adults diagnosed with diabetes, but the SIM's long-term impact on hospitalizations should be assessed.