Objective: To examine medical conditions associated with diabetic neuropathy (DN) and to identify drivers of health care charges and utilization using administrative claims database. Methods: We studied commercially-insured individuals aged 18-64 with 24 months continuous enrollment in a national health plan. DN patients were identified by having =1 claim with a DN diagnosis between July 2004 and June 2005. Using propensity scoring, we selected a demographically-matched control cohort of patients with diabetes (10:1 ratio to DN). We compared disease prevalence, Year 2 distribution of charges, and reasons for ER visits and inpatient admissions between DN patients and controls. Logistic regression was used to assess the marginal contribution of DN to the most common reasons for ER and inpatient admissions controlling for differences in overall illness burden. Results: Compared with controls (n=86,550), DN patients (n=8655) had more unique number of co-morbid medical conditions (9.7 vs. 6.8) and higher ($41,394 vs. $16,983) total medical charges. Both groups had the highest medical charges for inpatient services, followed by outpatient hospital and pharmacy use. Compared with controls, more DN patients had ER visits (13% vs. 9%), inpatient hospital encounters (28% vs. 13%), and longer hospitalizations (2.4 vs. 0.6 days). The top five reasons for ER visits were the same for both groups, with nonspecific backache being the most common. Three of the top five reasons for inpatient admissions were also the same: coronary atherosclerosis and other chronic ischemic heart disease, chest pain, and cellulitis. Controlling for excess illness burden, DN patients were still at a higher risk for hospitalizations due to chest pain, heart failure, and cellulitis. Conclusion: DN patients had significantly more co-morbid medical conditions, ER visits, inpatient admissions, and longer hospitalizations than age-and-sex matched controls.