OBJECTIVES: The overall purpose of this research endeavor was to evaluate changes in healthcare costs associated with a comprehensive disease management program for Medicaid clients with schizophrenia plus other medical comorbidities within the State of Colorado, United States. METHODS: This retrospective database analysis employed a pre-post analysis for disease management clients relative to a propensity-score matched comparator group. Direct costs based upon comprehensive medical and pharmacy claims were assessed from the perspective of a public payer. Data analyzed included patient demographics, medical and pharmacy administrative resource utilization claims and costs, diagnostic information, eligibility and enrollment information, and program-related information from an independent, private, external disease management vendor. Multivariate regression techniques were utilized to ascertain differences between the disease management and propensity-score matched comparator groups. RESULTS: Of the 350 clients contacted for eligibility, 73 (21%) remained enrolled continuously for six to 12 months. Provision of the disease management program through the external vendor cost $31,250 per month regardless of the number enrolled. Not including costs these program costs, the disease management program was associated with 30 percent lower overall per member per month (PMPM) medical costs (p <0.001), although no differences were noted for other cost categories. CONCLUSION: Care for Medicaid clients with schizophrenia involves several unique and important issues that must be considered in both the development and delivery of an effective disease management program. This investigation found significant reductions in total medical costs following the implementation of a disease management program, although costs to deliver the interventions exceeded any resultant cost savings. Furthermore, a relatively small percentage of those eligible for participation ultimately completed six months or more of the program. Future research should seek to assess long-term clinical, humanistic, and economic outcomes in this population and in developing methods that increase program participation.