Objective: There are limited data on the economic impact of mood disorders among patients with diabetic neuropathy (DN). This study examines factors associated with health care costs among elderly DN patients with or without depression/anxiety (DA). Methods: Using a retrospective cohort design and administrative claims data, we assessed the predictors of total healthcare costs over a one-year follow-up period for over-age-65 patients with 1+ diagnosis of DN. The index date was defined as the first observed medical claim with a diagnosis for DN in 2005. Patients with continuous eligibility for 12 months prior to and following the index date were included. Two cohorts of patients were constructed for individuals with DA (DN-DA) or without (DN-only). Multivariate linear regression was performed to assess whether DN-DA patients have higher health care costs than DN-only patients, controlling for demographic and clinical characteristics (diabetes-related comorbidities and treatment regimen for diabetes observed within 12 months prior to index date). Results: RESULTS: We identified 16,831 DN-only patients, and 1,699 DN-DA patients. The DN-only and DN-DA groups were similar by age (75.6 vs 75.4, p=0.44), but DN-DA patients were more likely to be female (56% vs. 47%, p<0.01). DN-DA patients had higher prevalence of diabetes-related comorbidities for cardiovascular disease, nephropathy, neuropathy, obesity, and hypoglycemic events than DN-only patients (all p<0.01). Controlling for differences in demographic and clinical characteristics, DN-DA patients had $9,785 (p<0.01) higher total health care costs than patients with DN-only. Factors associated with increased costs included insurance type, geographical region, diabetes-related comorbidities, and insulin therapy. Conclusion: These findings indicate that the health care costs were significantly higher for DN patients with depression/anxiety relative to those without these mood disorders.