Purpose: To develop the patient classification system based on the resource utilization for reimbursement of long-term care hospitals in Korea. Method: Health Insurance Review & Assessment Service (HIRA) conducted a survey in July 2006 that included 2,899 patients from 35 long-term care hospitals. To calculate resource utilization, we measured care time of direct care staff (physicians, nursing personnel, physical and occupational therapists, social workers). The survey of patient characteristics included ADL, cognitive and behavioral status, diseases and treatments. Major category criteria was developed by modified delphi method from 9 experts. Each category was divided into 2-3 groups by ADL using tree regression. Relative resource use was expressed as a case mix index (CMI) calculated as a proportion of mean resource use. Result: This patient classification system composed of 6 major categories (ultra high medical care, high medical care, medium medical care, behavioral problem, impaired cognition and reduced physical function) and 11 subgroups by ADL score. The differences of CMI between groups were statistically significant (p<.0001). Homogeneity of groups was examined by total coefficient of variation (CV) of CMI. The range of CV was 29.68-40.77%. Conclusions: This patient classification system is feasible for reimbursement of long-term care hospitals.