Objective: Anemia is a well known complication associated with CKD. However, there are little data regarding its association with hospitalizations. The purpose of this study was to investigate whether anemia is associated with increased hospitalization costs in patients with diabetes and chronic kidney disease (CKD). Methods: An analysis of medical claims and laboratory data between January 2000 and February 2006 from over 45 health plans contributing to the Ingenix Impact National Managed Care Database was conducted. Inclusion criteria were ³2 hemoglobin (Hb) values, ³2 claims (within a 90-day period) for diabetes mellitus preceding ³1 claim for CKD and ³2 glomerular filtration rate values of <60 mL/min/1.73 m2, and not yet on dialysis. Patients were excluded if they had cancer or lupus, received organ transplantation or chemotherapy, or were treated for anemia with an erythropoiesis-stimulating agent or blood transfusions. An open-cohort design was used to classify patients into observation periods of anemia (Hb <11 g/dL), within the K/DOQI treatment recommendations, and non-anemia, which allowed for changes in anemia status over time. Both univariate and multivariate analyses were conducted to compare periods of anemia and non-anemia for average yearly hospitalization costs. Results: A total of 708 patients with diabetes and CKD formed the study population. Mean age was 65 years; 44% women. Anemia was associated with a significant increase in hospitalization costs, with an unadjusted incremental yearly cost of $17,072 (anemia: $25,342; non-anemia: $8,270; p<.001) relative to non-anemia. The majority of hospitalizations (57%) were related to cardiovascular disease, with anemia increasing the cost of cardiovascular-hospitalizations by $8647 (anemia: $13,723; non-anemia: $5076; p<.001). After controlling for covariates, anemia remained significantly associated with a hospitalization cost increase. Conclusion: The current study based on real-life practice data demonstrated that anemia in patients with diabetes and CKD was associated with a significant increase in hospitalization costs.