OBJECTIVE: Falls are a major problem for the community-dwelling elderly. About 30% of this group experience a fall each year and between 4 and 10% of community-dwelling elders experience a fall-related injury. Further, falling occurrence is a significant predictor of institutionalization and death. The objective of this study was to provide an annual estimate of the direct medical costs associated with fall-related injuries among the community dwelling elderly. The study was done from the payer's perspective. METHODS: Data from the 1997 Medical Expenditure Panel Survey (MEPS) were analyzed to identify elderly respondents who reported a fall-related injury and to estimate the cost of treating those injuries. Weighted analyses were used to produce estimates that represented the cost of fall-related injuries in the civilian non-institutionalized population in the United States for 1997. Cost estimates were based on actual reimbursements. Costs were estimated for inpatient hospital care, emergency room visits, outpatient hospital services, office-based provider visits, dental care, home healthcare and prescription drugs. RESULTS: In 1997, 2.9 million individuals (9.0% of the non-institutionalized elderly population) reported medical conditions related to 3.3 million falls. Fall-related medical care was provided to 2.3 million individuals. Of the reported fall-related injuries, 25.5% were fractures and 3.5% were hip fractures. Total direct medical cost of fall-related care was $5.01 billion. Mean values were $1521 per fall-related injury, $1716 per injured faller, and $2163 per patient receiving fall-related care. The median expense per injured faller was $151 and the maximum expense was $43,566. The most frequently utilized services for fall-related care included office-based visits, prescription drugs, and emergency room visits. Inpatient hospitalizations, while much less utilized, accounted for nearly half of total costs. CONCLUSIONS: Fall-related injury is a common event for the community-dwelling elderly and is associated with substantial direct medical costs.