US estimates show that 1.7 million annually develop pressure ulcers incurring costs of $8.5 billion. Leg ulcers affect 2.5 million persons in the US and their prevalence will likely rise as the population ages. OBJECTIVES: We determined the average costs and frequencies of prescription, physician and inpatient hospital claims for four diagnostic categories of skin ulcers from 1994 through 1998, including ulcers of lower limbs (ICD-9 code 707.1), pressure ulcers (ICD-9 code 707.0), venous leg ulcers (ICD-9 codes 454.0/454.2) and other chronic ulcers (ICD-9 codes 707.8/707.9). METHODS: A retrospective review of the New Mexico Medicaid (NMM) Drug Utilization Review (DUR) database was conducted. Data on frequency of hospital admissions, physician visits, and medications, as well as related costs, were analyzed. Prescription claims were not specific to ulcers, and included the top ten concomitant drugs. RESULTS: Mean annual hospital costs per patient ranged from $8,671.48 (SD=$444.10) for other chronic ulcers to $15,733.16 (SD=$482.14) for venous leg ulcers. Mean annual hospital admissions per patient ranged from 1.25 (SD=0.02) for other chronic ulcer to 1.50 (SD=0.06) for venous leg ulcers. Mean annual physician costs per patient ranged from $111.09 (SD=$14.16) for other chronic ulcers to $196.08 (SD=$20.64) for ulcers of the lower limbs. Mean annual physician visits per patient ranged from 2.05 (SD=0.16) for other chronic ulcers to 3.63 (SD=0.32) for ulcers of the lower limb. Mean annual prescription cost per patient was $4179.18 (2461 patients). CONCLUSION: Costs from the perspective of the NMM program are substantial. Assessment of the cost-effectiveness of various treatments is warranted.