On the heels of a sweeping review by the U.S. House of Representatives Committee on Energy and Commerce of the historical charge and billing practices information for acute-care services rendered by hospitals to uninsured patients, the American Hospital Association ("AHA") has sought guidance from the Department of Health and Human Services on the issue, and Tommy Thompson has delivered. In a letter dated February 19, 2004, to Richard J. Davidson, President, AHA, Mr. Thompson has stated that nothing in the Medicare program rules and regulations prohibit hospitals from providing discounts to uninsured and underinsured patients who cannot afford to pay their hospital bill and to Medicare beneficiaries who cannot afford to pay their share.

Accompanying the letter was guidance drafted by the Department of Health and Human Services, in question and answer fashion, and guidance drafted by the Office of Inspector General, which collective guidance reiterates the statements contained in Mr. Thompson's letter that such discounts are acceptable as long as certain conditions are met. Specifically, such discounts must be based upon the financial need or hardship of the individual, as determined in accordance with the hospital's indigent care policy - i.e., a policy developed by the hospital for determining a patient's financial ability to pay.