OBJECTIVES:  Diagnosis Related Groups (DRG) for hospitalizations have varying levels of severity that impact hospital reimbursement. This study assesses the distribution of DRG severity levels in lower anterior resection (LAR) procedures among colorectal cancer patients and explores the association of specific complications [bleeding, infection and anastomotic leak (AL)] and DRG severity category of a major comorbidity or complication (MCC). METHODS:  We reviewed the Premier Perspective® Database containing billing data from over 600 hospitals in the U.S. Included patients were >18 years of age, had a diagnosis of colorectal cancer and underwent an elective LAR between 2008 and 2014. AL, bleeding and infection were identified using ICD-9 diagnosis codes. Multivariable models were used to estimate the association of each major complication on receiving MCC DRG classification, adjusting for differences in patient, hospital, and surgical characteristics; separate models were run for each complication. RESULTS:  A total of 8,790 patients underwent elective LAR with a cancer diagnosis during the study period. Of these, 3,450 (39%) were coded as having no complications/comorbidity, 4,465 (51%) were classified into complication or comorbidity (CC) category, and 875 (10%) were classified as the most severe MCC category. Incidence of AL, bleeding and infection was 12.9%, 9.5% and 5.8%, respectively in the overall sample. These complications were disproportionally higher in the MCC category (AL=35.3%, bleeding=24.2% and infection=41.7%). Results of the multivariable models showed that AL, bleeding and infection were associated with higher odds of receiving an MCC classification [AL:Odds Ratio(OR) =4.12;CI:3.42-5.0;Bleeding: OR= 2.56,CI:2.08-3.16;Infection:OR=38.19;CI:29.53-49.39). CONCLUSIONS:  This study demonstrates that a majority of elective LAR procedures among cancer patients fall under the CC or MCC DRG categorization. Incidence of complications such as AL, bleeding and infection are associated with a greater likelihood of falling under the MCC DRG category and would likely lead to a greater economic burden.