OBJECTIVES: Abundance of zero values is commonly observed in cost data resulting in skewed distribution.  This analysis measured the inpatient cost and workplace absenteeism associated with low back and neck pain and demonstrated the consequences of ignoring zeros in inpatient cost and unreported absenteeism. METHODS: We used employer-based claims from the Thomson Marketscan© Research Database (2007), a database representing approximately 100 payers of insured employees containing health and productivity management (HPM) and health care utilization data. Adult insured employees with continuous eligibility in 2007 were included.  The ICD-9 codes identified medical conditions including low back and neck pain without (nociceptive pain, NOCI) or with a neuropathic component (mixed pain, MIXED).  Ordinary least squares (OLS) and two-stage Tobit analyses evaluated the marginal inpatient costs while OLS and Heckman’s Selection Bias (HSB) were applied to absenteeism data.  Estimated inpatient costs and absenteeism using OLS versus two-stage techniques were compared. RESULTS: A total of 2,046,332 employees (male=59.2%; mean age 40.2±11.6 years) were analyzed.  Hypertension (9.8%), NOCI (9.5%), diabetes (3.7%), MIXED (3.0%) and depression (1.1%) were the most prevalent medical conditions among these employees.  1,976,952 (96.6%) employees had no inpatient episodes, thus, with no inpatient costs.  Mean inpatient cost for the entire study population was $537.45 (median=$0) versus $15,851.93 (median= $8,302.20) among those with inpatient episodes.  The incremental inpatient costs associated with MIXED and NOCI were $1,333.02±26.67 and $328.36±15.63 using OLS versus $2,478.97 [95%CI: 2,148.50 – 2,811.16] and $1,242.41 [95%CI: 1,020.10 – 1,469.18] using the two-stage Tobit.  Unreported absenteeism occurred in 80% of the employees.  Annual absenteeism associated with MIXED and NOCI using OLS were 5.25±0.21 and 4.06±0.35 compared to 45.92±1.06 and 16.33±2.01 hours using the HSB technique. CONCLUSIONS: Ignoring zeros in cost data and unreported absenteeism may result in substantial underestimation of inpatient cost and workplace absenteeism associated with low back and neck pain.