OBJECTIVES: The primary objective of this study was to analyze the Medi-Cal 5% claims database in order to estimate the cost of illness for overactive bladder (OAB) to the California Medicaid program. Secondary objectives of this study were to describe patterns of care for patients diagnosed with overactive bladder and to discover cost offsets that could be achieved with drug treatment of OAB. METHODS: A continuously enrolled (1996-1997) cohort of overactive bladder patients was identified based upon the presence of ICD-9 diagnosis codes and drug claims in the database. All claims (physician, hospital, long term care, drug, and medical supply) for these patients were analyzed to determine the quantity and cost of services provided to patients with overactive bladder. Additional analyses were performed to determine if there were medical costs that could be offset by drug treatment of overactive bladder. RESULTS: Claims for OAB were analyzed for 97,160 unique patients. The prevalence of OAB in this continuously enrolled population was 2.95%, significantly lower that the National Survey of OAB estimate of 22%. The average direct costs per patient were $450.00 per year. Ninety-six percent of these costs were for incontinence pads and supplies. Only 13% of patients treated with oxybutynin continued therapy for more than 3 months. Patients treated with drug therapy alone or in combination with pads cost less to treat than patients receiving pads alone. Urologists ordered 95% of diagnostic tests. When OAB was diagnosed and treated, the number of claims and costs for comorbid urinary tract infections and skin breakdown decreased. CONCLUSION: Patients who receive drug treatment for OAB incur lower total costs for OAB management when the cost of incontinence pads are considered.