This article describes the potential for the acute physiology score (APS) of acute physiology and chronic health evaluation (APACHE) II, to be used as a severity adjustment to diagnosis-related groups (DRG's) or other diagnostic classifications. The APS is defined by a relative value scale applied to 12 objective physiologic variables routinely measured on most hospitalized patients shortly after hospital admission. For intensive care patients, APS at admission is strongly related to subsequent resource costs of intensive care for 5,790 consecutive admissions to 13 large hospitals, across and within diagnoses. The APS could also be used to evaluate quality of care, medical technology, and the response to changing financial incentives.