Charges for medical services of persons covered by the Blue Cross/Blue Shield Federal Employees Program from 1974 through 1978 who were first diagnosed as having one of four chronic diseases in 1975 and within one year began mental health treatment (MHT) were compared with persons who also were first diagnosed as having one of these diseases in 1975 but had no subsequent MHT. In the third year following the diagnosis, those having seven to 20 MHT visits had medical charges $309 lower and those having over 21 MHT visits had medical charges $284 lower than the comparison group. The savings in medical charges over three years of the group having seven to 20 MHT visits were a function of lower use of inpatient services and roughly equaled the cost of 20 MHT visits. Outpatient mental health treatment can be included in a fee-for-service medical care system to improve the quality and appropriateness of care and, if not extensive, may also serve to lower medical care costs.