OBJECTIVES: Forty percent of hypertensive type-2 diabetes patients will develop nephropathy, indicating end organ damage, increased risk of cardiovascular disease (CVD), and death. In the US, screening rates and nephropathy treatment are suboptimal. We assessed the health economic impact of nephropathy screening followed by optimal antihypertensive therapy in those who have nephropathy in the US. METHODS: A Markov/Monte Carlo model simulated lifetime impacts of screening for nephropathy using semi-quantitative urine dipsticks in a primary care setting, and subsequent addition of irbesartan 300 mg to conventional antihypertensives in hypertensive type-2 diabetes patients in those patients identified as having nephropathy. Progression from no renal disease to end-stage renal disease (ESRD) was simulated. Probabilities, utilities and costs of CVD events, medications and ESRD treatment came from published sources. Number of days of ESRD avoided, quality-adjusted life years (QALYs) and direct costs were projected. Second-order Monte Carlo simulation was used to account for uncertainty in multiple parameters. Costs and QALYs were discounted three percent annually. RESULTS: Screening followed by optimized treatment led to 36,683 ± 5767 days of ESRD avoided in 1000 simulated patients, with incremental costs per QALY gained of $7315. There was a 98% probability that screening and optimized antihypertensive therapy would be considered cost-effective with a willingness to pay ≥ $20,000. Sensitivity analysis showed that screening and optimized treatment would dominate “no screening” in patients < 55 years of age. CONCLUSIONS: In hypertensive patients with type-2 diabetes, screening for albuminuria followed by optimal antihypertensive treatment is cost-effective in a US setting.