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We sought to identify people living with HIV/AIDS from Medicare and Medicaid claims data to estimate Medicaid costs for treating HIV/AIDS in California. We also examined how alternate methods of identifying the relevant sample affect estimates of per capita costs.We analyzed data on Californians enrolled in Medicaid with an HIV/AIDS diagnosis reported in 2007 Medicare or Medicaid claims data. We compared alternative selection criteria by examining use of antiretroviral drugs, HIV-specific monitoring tests, and medical costs. We compared the final sample and average costs with other estimates of the size of California’s HIV/AIDS population covered by Medicaid in 2007 and their average treatment costs.Eighty-seven percent (18 290) of potentially identifiable HIV-positive individuals satisfied at least 1 confirmation criterion. Nearly 80% of confirmed observations had claims for HIV-specific tests, compared with only 3% of excluded cases. Female Medicaid recipients were particularly likely to be miscoded as having HIV. Medicaid treatment spending for Californians with HIV averaged $33 720 in 2007.The proposed algorithm displays good internal and external validity. Accurately identifying HIV cases in claims data is important to avoid drawing biased conclusions and is necessary in setting appropriate HIV managed-care capitation rates.