OBJECTIVE: The objective of this study is to determine the direct medical costs associated with patients who have diabetic retinopathy and their co-morbidities in the state of Florida. METHODS: The study was a non-randomized, secondary data analysis using the Florida Ambulatory Patient Data from 2001. It was a cross-sectional analysis using the individual patient as the unit of analysis. The ICD-9 Code 362.02 was used to extract patients with a principle diagnosis of proliferative diabetic retinopathy (PDR). The ICD-9 Codes 362.01 and 362.10 were used to extract patients with a principle diagnosis of nonproliferative diabetic retinopathy (NDR). ICD-9 Code 362.83 was used to extract patients with macular edema (ME). Patient characteristics along with total charges were extracted for each of these patients. RESULTS: The total charges for Asian, African American, and White Hispanic are significantly lower than the total charges for Caucasians. However, Black Hispanics have a statistically significant higher total charge than Caucasians. Patients with Medicare, Medicare HMO, Medicaid, commercial HMO, and commercial PPO, have statistically significant higher total charges than patients with commercial insurance. Both PDR and BDR are associated with statistically significant greater total charges than patients with NDR. Yet, the total charges for ME are significantly lower than those for NDR. This model is statistically significant. CONCLUSIONS: Total charges are affected by patient characteristics and severity of diabetic retinopathy. In the state of Florida for 2001, $3,885,952 were spent on treating patients with diabetic retinopathy and their co-morbidities in the ambulatory setting.