Concerns about growing health insurance expenditures became a national Issue in 2001 when the National Health Insurance went into a deficit. Increases in spending for ambulatory care shared the largest portion of the problem. Methods and systems to control the spending should be developed and a system to measure case mix of providers is one of core components of the control system. The objectives of this article is to examine the feasibility of applying Korean Diagnosis Related Groups (KDRGs) to classify health insurance claims for ambulatory care and to identify problem areas of the classification. A database of 11,586,270 claims for ambulatory care delivered during January 2002 was obtained for the study, and the final number of claims analyzed was 8,319,494 after KDRG numbers were assigned to the data and records with an error KDRG were excluded from the study. The unit of analysis was a claim and resource use was measured by the sum of charges incurred during a month at a department of a hospital of at a clinic. Within group variance was assessed by th coefficient of variation (CV), and the classification accuracy was evaluated by the variance reduction achieved by the KDRG classification. The analyses were performed on both all and non-outlier data, and on a subset of the database to examine the validity of study results. Data were assigned to 787 KDRGs among 1,244 KDRGs defined in the classification system. For non-outlier data, 77.4％ of KDRGs had a CV of charges from tertiary care hospitals less than 100％ and 95.43％ of KDRGs for data from clinics. The variance reduction achieved by the KDRG classification was 40.80％ for non-outlier claims from tertiary care hospitals, 51.98％ for general hospitals, 40.89% for hospitals, and 54.99% for clinics. Similar results were obtained from the analyses performed on a subset of the study database. The study results indicated that KDRGs developed for a classification of inpatient care could be used for ambulatory care, although there were areas where the classification should be refined. Its power to predict tile resource utilization showed a potential for its application to measure case mix of providers for monitoring and managing delivery of ambulatory care. The issue concerning the quality of diagnostic information contained in insurance claims remains to be improved, and significance of future studies for other classification systems based on visits or episodes is guaranteed.