OBJECTIVE:To estimate healthcare expenditures that could be impacted by advanced diagnostic testing for patients hospitalized with meningitis or encephalitis. METHODS:Patients hospitalized with meningitis (N = 23,933) or encephalitis (N = 7,858) in the U.S. were identified in the 2010-2014 Truven Health MarketScan Commercial Claims and Encounters Database using ICD-9-CM diagnostic codes. The database included an average of 40.8 million commercially insured enrollees under age 65 per year. Clinical, demographic and healthcare utilization criteria were used to identify patient subgroups early in their episode who were at risk to have high inpatient expenditures. Healthcare expenditures of patients within each subgroup were bifurcated: those expenditures that remained five days after the patient could be classified into the subgroup versus those that had occurred previously. RESULTS:The hospitalization episode rate per 100,000 enrollee-years for meningitis was 13.0 (95% CI: 12.9-13.2) and for encephalitis was 4.3 (95% CI: 4.2-4.4), with mean inpatient expenditures of $36,891 (SD = $92,636) and $60,181 (SD = $130,276), respectively. If advanced diagnostic testing had been administered on the day that a patient could be classified into a subgroup, then a test with a five-day turnaround time could impact the following mean inpatient expenditures that remained by subgroup for patients with meningitis or encephalitis, respectively: had a neurosurgical procedure ($83,337 and $56,020), had an ICU stay ($34,221 and $46,051), had HIV-1 infection or a previous organ transplant ($37,702 and $62,222), were age <1 year ($35,371 and $52,812), or had a hospital length of stay >2 days ($18,325 and $30,244). DISCUSSION:Inpatient expenditures for patients hospitalized with meningitis or encephalitis were substantial and varied widely. Patient subgroups who had high healthcare expenditures could be identified early in their stay, raising the potential for advanced diagnostic testing to lower these expenditures.