OBJECTIVE: Major depression is common in low-income and chronically ill persons and is a barrier for effective chronic disease care. We evaluated a Medicaid-sponsored strategy for detecting depressive symptoms in adults with diabetes or congestive heart failure. METHODS: Using a two-item screening tool, 890 adults enrolled in the Indiana Chronic Disease Management Program were assessed by telephone for depressive symptoms between December 2003 and March 2004. A subset of 386 participants also completed the eight-item Patient Health Questionnaire (PHQ-8) depression measure. Antidepressant use was examined using pharmacy claims. RESULTS: Depressed mood or anhedonia was reported by 51% of participants. About one in four participants had a PHQ-8 score indicating a highrisk for major depression (score >or=10). The two-item screen was 96% sensitive [95% confidence interval (CI), 89-99%] and 60% specific (95% CI, 54-65%) for identifying members at high risk for depression by the full PHQ-8 instrument. Only half of participants with high-risk PHQ-8 scores had a pharmacy claim indicating that an antidepressant medication was filled within 120 days of the depression screening. CONCLUSIONS: A two-stage, telephonic approach involving the PHQ-8 instrument for Medicaid members with either depressed mood or anhedonia could identify two clinically depressed persons for every nine members screened.