OBJECTIVES: Published data on costs associated with treating Medicare patients with hepatocellular carcinoma (HCC) or metastatic liver disease (MLD) are limited. This study evaluated health resource use and medical costs in patients newly diagnosed with HCC or MLD. METHODS: Patients ≥ 65 years of age with an HCC or MLD diagnosis were identified in the 2002 Medicare 5% sample Standard Analytic File and followed for 1 year after the first diagnosis. Patients with HMO enrollment or a prior HCC or MLD diagnosis were excluded. Total health resource use and medical costs, including hospital inpatient, outpatient, and physician and supplier services, were measured from the Medicare payment perspective. RESULTS: The study included 281 HCC and 1,371 MLD patients (mean age 74.8 years; 45% male). Over 1 year, MLD patients had significantly higher outpatient services than HCC patients (10.3 vs. 13.3, p<0.001), as well as significantly more physician encounters, including office visits (p<0.001). There was no difference in hospital admissions between the 2 groups. Total mean medical costs were significantly higher in MLD patients ($35,173) compared to HCC patients ($22,465, p<0.001). Inpatient costs contributed 61% ($13,687) to the total cost in HCC patients compared to 45% ($14,349, p<0.05) in MLD patients. Conversely, 46% ($16,006) of the total cost in MLD patients was due to physician costs (including chemotherapy), compared to only 27% ($6,115, p<0.001) in HCC patients. CONCLUSIONS: Among Medicare patients newly diagnosed with HCC or MLD, significantly higher 1-year health resource use and medical costs were found in MLD patients. The difference in overall costs was due primarily to higher physician (including office) costs among MLD patients. These findings provide important new data for evaluating the economic impact of treating HCC and MLD patients in the Medicare population.