Understand patient and system characteristics associated with performance on the Healthcare Effectiveness Data and Information Set (HEDIS) Alcohol and Other Drug (AOD) Initiation and Engagement of Treatment (IET) measures. This mixed-methods study linked patient and health system data from four Kaiser Permanente regions to HEDIS performance measure data for 44,320 commercially or Medicare-insured adults with HEDIS-eligible AOD diagnoses in 2012. Characteristics associated with IET were examined using multilevel logistic regression models. Key informant interviews (n = 18) focused on opportunities to improve initiation and engagement. Non-white race/ethnicity, alcohol abuse, or nonopioid drug abuse diagnoses were associated with lower odds of treatment initiation among commercially insured. For both insurance groups, those diagnosed in healthcare departments other than specialty AOD treatment were less likely to initiate or engage in treatment. Being diagnosed in facilities with co-located AOD/primary care clinics, and those with medications for addiction treatment available, was each associated with higher odds of initiation and engagement for both commercially and Medicare-insured. Having behavioral medicine specialists or clinical health educators in primary care increased initiation and engagement odds among commercially insured. Key informants recommended were as follows: patient-centered care; increased treatment choices; cross-departmental patient identification, engagement, and coordination; provider education; and use of informatics/technology. Tailoring treatment, enhancing treatment motivation among individuals with lower severity diagnoses, offering medication treatment of addiction, clinician education, care coordination, co-located AOD and primary care departments, and behavioral medicine specialists in primary care may improve rates of initiation and engagement in AOD treatment.