During my talks about proper pricing, a discussion often comes up relating to private pay patients and TOS discounts. Usually, it takes the following form:

• One physician objects to raising her prices because of all the poor families.
• I point out the practical flaw in this argument.  Only a few people notice.
• Another physician indicates that he resolves the issue by providing a TOS discount to those who pay fully.
• Someone then asks whether this practice is legal or not.
• Debate ensues, and I lose the class for five minutes.

Over on the Medicare Update blog is an analysis of an OIG Advisory opinion about the legality of a hospital group doing just this.  They make it clear that TOS discounts for cash payers is certainly legal at least within the boundaries described in this case and that's for Medicare patients!  I see precedent here.

For those of you suffering from too many HSA programs, here's an answer (though I really don't like discounting your already discounted procedures).