OBJECTIVES: To identify the risk factors for hospital readmission among the Medicaid population, and describe the characteristics of readmitted Medicaid recipients and their drug utilization patterns before, during and after the initial hospitalization. METHODS: A retrospective cohort research design was used for Medicaid patients hospitalized in 1999 or 2000. Hospital readmission was defined as one or more hospital readmissions to the same hospital within 30, 60, 90 days. Using the Ohio Medicaid database, 37,312 recipients with at least one hospitalization were selected for this study, including 18,882 readmitted recipients and 18,430 recipients non-readmitted comparison recipients. Logistic regression analysis was conducted to assess the risk factors associated with hospital readmission. RESULTS: Six percent of Medicaid recipients had at least one 90-day readmission and account for almost 12% of total Medicaid hospitalizations. Major diseases for readmission were diabetes mellitus (17%), hypertension (14%), non-dependent drug abuse (10%), and heart failure (10%). Non-readmitted patients are most likely to be hospitalized for pregnancy-related conditions. The odds ratios of risk for hospital readmission within 90 days were estimated as: 1.17 (95% CI: 1.11-1.23) for African American; 1.1 (CI: 1.05-1.16) for urban; 1.76 (CI: 1.59-1.96) for disabled or blind recipients; 1.4 - 1.8 times higher for recipients with ages 0-64 compared to elderly persons (age 65+); 1.51 (CI: 1.44-1.59) for recipients with emergency admission; 1.27 (CI:1.19-1.36) for recipients with diabetes mellitus; 1.33 (CI: 1.22-1.44) for recipients with heart failure; and 1.26 (CI: 1.15-1.38) for recipients with asthma. In addition, readmitted patients were more likely than non-readmitted patients to not receive any outpatient prescription drugs. CONCLUSIONS: Efforts to reduce the number of hospitalizations should focus on high-risk recipients with disabled/blind, living in urban, younger or middle-age, and who had diabetes mellitus, heart failure, hypertension, asthma, and other severe conditions through appropriate drug utilization review and disease management programs.