When analyzing medical utilization or other health care-related measurements across provider panels, case mix adjustment is required because "illness burden" is often unevenly distributed across these patient populations. This article develops the rationale for case mix adjustment and walks readers through the case mix adjustment process using the Johns Hopkins Ambulatory Care Group (ACG) Case-Mix System as a model. The ACG system is a population-oriented patient classification tool based on diagnoses assigned by providers and found in payors' data systems. The system categorizes patients according to illness burden. It does not categorize visits, encounters, or episodes. ACGs adjust for case mix differences in the analysis of ambulatory, laboratory, pharmacy, and total health care service delivery.