OBJECTIVES: The objective of the study is to examine the association between ambulatory care sensitive hospitalizations (ACSH) for and fragmented care as represented by dual Medicare/Veteran Health Administration (VHA) use. METHODS: The study involves cross-sectional analyses of 44,957 veterans and non-veterans enrolled in Medicare. Merged Medicare claims for fee-for service enrollees and survey data from multiple years of the Medicare Current Beneficiary Survey from 2001 through 2005. ACSH for thirteen conditions were identified using inpatient Medicare claims and an algorithm developed by the Agency for Healthcare Quality, which uses International Classification of Diseases, 9th edition codes.  Dual use was defined as having inpatient or outpatient visits to the VHA and consisted of predominant-VHA use and some VHA use. Unadjusted group differences in any ACSH were tested using chi-square tests. Logistic regressions were used to analyze the association between dual VHA use and ACSH after controlling for demographic, socio-economic, health status, mental illness, smoking and obesity. All analyses accounted for the complex design of the survey. RESULTS: The three most common ACSH were congestive heart failure, bacterial pneumonia, and chronic obstructive pulmonary disease.  Among inpatient users, 10.1% had ASCH for acute conditions and 15.8% for chronic conditions. Among all survey respondents, 5% had any ACSH; the rates were 4.9% for VHA users and 3.7% for veterans with some VHA use. In bivariate and multivariate analyses, dual use was not significantly associated with any ACSH. CONCLUSIONS: In a representative sample of Medicare beneficiaries, ACSH were prevalent. Despite poor health status, dual VHA/Medicare use was not associated with increased ACSH rates perhaps due to the provision of good primary care in the VHA system.