The Medicare program adjusts its baseline payments to hospitals and individual health care practitioners based on regional variations in expenses beyond providers' control, such as rents, wages, and liability premiums. The goal is to ensure that payments are accurate and fair, but many providers and policymakers have expressed doubts about the accuracy of these adjustments. Geographic Adjustment in Medicare Payments, a new report from the Institute of Medicine, assesses the methodology and data sources used to calculate payment adjustments and recommends ways to improve their accuracy. The report is the first of three examining Medicare's geographic adjustment factors.