OBJECTIVES: This study examined resource utilization and direct, indirect, and procedure-related costs associated with photocoagulation and vitrectomy procedures among employees with diabetic retinopathy (DR). METHODS: Healthcare utilization and costs of DR employees age 18–64 were examined using claims from 17 large self-insured U.S. employers (1999–2004). Indirect costs (work loss, absenteeism) were estimated using disability claims and absenteeism information. The study sample included employees who had at least one diagnosis of DR based on ICD-9 codes and were enrolled continuously for 12 months. Cost outcomes were examined over a randomly chosen 12-month (study) period following the DR diagnosis. Annual total (i.e., healthcare plus indirect) costs (2005 USD) were compared between DR employees who did and did not undergo a procedure. Utilization and costs were measured on the procedure date and during the 30-day follow-up period. RESULTS: The study sample consisted of 2,098 DR employees. The average age was 51 years; 67.4% were male and 64.7% had type I diabetes. Approximately 11.8% (n=247) of DR employees received photocoagulation procedures during the study period; 2.1% (n=44) received vitrectomies. DR employees with photocoagulations had average total costs that were approximately double those of other DR employees ($34,539 vs. $16,041, p<0.001); employees with vitrectomies had costs that were over 3.5 times higher than non-vitrectomy DR employees ($63,933 vs. $17,239, p<0.001). Indirect costs accounted for about 10% of these differences. More than half (58.7%) of employees had multiple photocoagulations within the study period and the majority of employees with vitrectomies received multiple procedures on the same day. Most (76%) photocoagulations were performed in physicians' offices; nearly all (96%) vitrectomies were performed in an outpatient or ambulatory surgery setting. CONCLUSION: Photocoagulation and vitrectomy procedures were associated with substantially higher costs among DR employees. Indirect costs were a substantial but not dominant driver of cost differences.