OBJECTIVES: In cost-effectiveness analysis, it is often necessary to characterize the incidence of events in patients with and without risk factors. Yet, the needed background incidence for patients without risk factors (incidence_no_risk) may be unavailable in the published literature. Previously, researchers have used the general population incidence (incidence_pop), derived from epidemiological studies. However, when incidence_pop is used the model will overestimate the true incidence because incidence_pop is a weighted average of the incidences in patients with and without risk factors. The purpose of this study was to develop a general method for deriving a true baseline risk (incidence_no_risk) using a downward adjustment of incidence_pop. This is illustrated with the condition of osteoporosis. METHODS: In osteoporosis, the fracture incidence for high-risk persons (incidence_risk) can be calculated by the patient’s baseline risk times the relative risk increase (RR_risk) due to risk factors (incidence_risk = incidence_no_risk*RR_risk). Published studies report RR_risk, incidence_pop, and the prevalence of the risk factor (p). The fracture incidence in the study population can be represented as follows: incidence_pop = incidence_risk*p + incidence_no_risk*(1-p). Therefore: incidence_pop = incidence_no_risk*RR_risk*p + incidence_no_risk*(1-p) incidence_pop = incidence_no_risk*((RR_risk*p)+(1-p)) incidence_pop/((RR_risk*p)+(1-p)) = incidence_no_risk RESULTS: The resulting equation is: incidence_no_risk = incidence_pop/((RR_risk*p)+(1-p)). We tested incidence_pop as the baseline fracture incidence in an osteoporosis model, which had consistently overestimated the true fracture incidence. For example, the published incidence_pop for spinal fractures for males age 80-84 is reported as 3.58/1,000 patient-years. When incidence_pop is used as incidence_no_risk, our model predicted 6.89 spinal fractures/1,000 patient-years. After adjustment, the model predicted the fracture incidence accurately as 3.45/1,000 patient-years. CONCLUSIONS: The fracture incidence in non-risk patients, the baseline incidence used in the model, can be calculated using this method based on the fracture incidence from the study population, the risk factor prevalence, and the relative risk increase associated with the risk factor.