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PURPOSE: Endophthalmitis, an ophthalmic condition characterized by an inflammation of the intraocular cavity, can have substantial implications for vision. However, little is known about the cost of treatment. The objective of this study was to estimate the direct medical cost of treatment for endophthalmitis in the United States. DESIGN: Retrospective data analysis using the 1997 through 2001 Medicare Beneficiary Encrypted Files. PARTICIPANTS: Beneficiaries who underwent cataract surgery were identified; baseline and clinical characteristics at the time of diagnosis were determined. Analyses stratified patients based on development of endophthalmitis in the year after surgery. METHODS: Claims and reimbursements for cases (patients undergoing cataract extraction in whom endophthalmitis developed) and controls (patients who did not experience endophthalmitis) were determined and rates of resource use and costs were calculated from the perspective of Medicare. MAIN OUTCOME MEASURES: Annual Medicare payments and claims. RESULTS: A total of 417 beneficiaries with endophthalmitis occurring after cataract surgery were found; 139 558 had cataract surgery without subsequent endophthalmitis. Three fifths of beneficiaries were female and 89% were white. Ophthalmic claims and reimbursements were more than 1.45 times greater for cases than controls ($12 578 in higher claims and $3464 in higher reimbursements; P<0.0001). CONCLUSIONS: These findings demonstrate a substantial cost associated with endophthalmitis. With recent studies suggesting that prophylaxis is effective in preventing endophthalmitis, there is potential that inexpensive prophylaxis could result in cost and resource savings to Medicare