OBJECTIVES: To compare health care utilization and total direct medical cost in patients with Rheumatoid arthritis (RA) with those of the general population in a Hospital based Health Management Organization (HMO). METHODS: A toal of 127 RA patients (all fulfilling ARA criteria 1982) (111 (87%) females, mean age 62.7 years, median disease duration: 6.7 (interquartile range: 4-11), 77 % seropositive) with continuous affiliation with the HMO during year 2003 were included. All direct medical expenditures from the insurer's point of view and health care utilization during year 2003 were considered and compared with mean values of the adult HMO population (n=69891), standardized by patient's sex and age distribution. Data was obtained from charges to the HMO and considered as proxy to costs. Costs are expressed in 2003 American dollars. RESULTS: RA had significantly more mean annual hospitalizations: 0.27 (SD0 .61) vs. 0.16 (SD 0.51), p=0.025; mean annual medications purchased :34 (SD27) vs. 27.5 (SD 27) p=0.01; mean annual medical visits 19 (SD11) vs. 14.5 (SD 14) p<0.001, and outpatients procedures 48 (SD37) vs. 31 (SD 25); p<0.001. RA patients also had significantly more mean total direct medical costs than general population ($752 vs. $557; p=0.006). Components of direct medical costs were: medical visits: 13%, medications: 24%, hospitalizations: 38% and outpatient procedures: 25%. Only one patient was on biologic treatment. There were no differences in costs between seropositive and seronegative patients, males or females or in relation to disease duration. CONCLUSIONS: RA patients used significantly more health care resources and were significantly more costly than the general population of same age and sex. In a developing country with scarce use of biologic therapy, direct medical costs are still mainly driven by hospitalizations.