Important comorbidities recorded on outpatient claims in administrative datasets may be missed in analyses when only inpatient care is considered. Using the comorbid conditions identified by Charlson and colleagues, we developed a comorbidity index that incorporates the diagnostic and procedure data contained in Medicare physician (Part B) claims. In the national cohorts of elderly prostate (n = 28,868) and breast cancer (n = 14,943) patients assessed in this study, less than 10% of patients had comorbid conditions identified when only Medicare hospital (Part A) claims were examined. By incorporating physician claims, the proportion of patients with comorbid conditions increased to 25%. The new physician claims comorbidity index significantly contributes to models of 2-year noncancer mortality and treatment received in both patient cohorts. We demonstrate the utility of a disease-specific index using an alternative method of construction employing study-specific weights. The physician claims index can be used in conjunction with a comorbidity index derived from inpatient hospital claims, or employed as a stand-alone measure.