PURPOSE: As several years have passed since the implementation of the Korean diagnosis-related group (DRG) payment system for appendicitis, its early outcomes should be assessed to determine if further improvements are warranted. METHODS: We retrospectively analyzed clinical data from Korean patients who underwent appendectomy, dividing the sample into 2 groups of those who received services before and after implementation of the DRG system. Based on the DRG code classification, patient data were collected including the amount of DRG reimbursement and the total in-patient costs. We subsequently performed univariate and multivariate analyses to identify independent factors contributing to higher total in-patient cost. RESULTS: Although implementation of the DRG system for appendicitis significantly reduced postoperative length of stay (2.8 ± 1.0 days vs. 3.4 ± 1.9 days, P < 0.001), it did not reduce total in-hospital cost. The independent factors related to total inhospital cost included patient age of 70 years or more (odds ratio [OR], 3.214; 95% confidence interval [CI], 1.769-5.840; P < 0.001) and operation time longer than 100 minutes (OR, 3.690; 95% CI, 2.007-6.599, P < 0.001). In addition, older patients (≥70 years) showed a nearly 10 times greater relative risk for having a comorbid condition (95% CI, 5.141-20.214; P < 0.001) and a 3.255 times greater relative risk for having higher total in-hospital cost (95% CI, 1.731-6.119, P < 0.001). CONCLUSION: It appears that older patients (>70 years) have greater comorbidities, which contribute to higher inpatient costs. Thus, our study suggests that patient age be considered as a DRG classification variable.