In the United States, the prospective payment system(PPS), under which diagnosis related groups (DRGs) are used to reimburse hospitals for the care of Medicare patients since 1983. Study results showed that the PF5 is having a major impact on the quantity of services especially of hospital length of stay. The PPS has increased the likelihood that a patient will be discharged home in an unstable condition and the use of nursing homes or long term care facilities increased. SU, it is insufficient to conclude that the PPS has decreased the Medicare total expendture, but relatively sufficient to conclude that the quality of care hasn`t changed. The maintenance of the quality resulted from the systemic "check-and-balance composed of three factors; (1) The doctors are reimbursed based on the fee-for-service system, (2) hospitals c o n h t with doctors undq the attedmg system, and (3) there are some public hospitals. In Korea, the reimbursement for hospitals and doctors are not divided, the hospitals have doctors as employees, and 90% of hospitals are private. These differences may weaken the check-and-balance existing in the U.S. system. And there are few long term care facilities and the diagnostic coding system using in pilot test are not suitable for Korean situation. In conclusion, for successful implementation of the DRG payment system in Korea, the government should establish the check-and-balance system in the health sector to make sure the quality of care before the implementation.