Thank you for the clarification.
This is one of those tricky situations. The answer depends on a few things. First, I assume you are par with Medicare since you asked about the Medicare allowable.
The bottom line is that your practice should have a set fee schedule it uses for everyone. Your fee is your fee. You charge your regular fee for every patient. You then take the contracted rate from whichever payers you are par with and write off the difference. (Obviously copays and deductibles factor in there as well.) Self-pay patients would pay your regular fee.
That said, you can offer a self-pay discount. But it needs to be stated in your financial policy and applied equally to everyone. You have to apply the discount to EVERY self-pay patient.
I asked a colleague her thoughts on this as well and here is how she explained it: "A practice cannot discriminate with their charges--they cannot charge private pay patients less than Medicare allowable--they have a fee schedule and they must charge everyone the same--in other words they charge every patient their regular fee and take whatever their contracted payors reimburse and collect any deductibles, copays, and write off any difference from contracted payer reimbursement to regular fee---self pay patients are charged their regular fee--If they are par w/Medicare then can charge regular fee and write off diff from what Medicare pays but must collect 20% from patient or 2ndary ins-Non par Medicare drs are different.
If a provider is non par with Medicare, then he can charge any patient whatever he wants--regular fee schedule. If he chooses to accept Medicare when non par--then he cannot charge more than the "Limiting Fee"--check CMS website for that--
A practice can have a "self pay policy" whereby they give a discount to EVERYONE who is self pay--they key is every patient and this policy must be in writing in the Financial Policies
So answer to the question is no they cannot charge private pay patients less than Medicare allowable--better question would be "why would they want to do that? Again, they can give a discount to self pay patients but must be in writing and same discount for every self pay patient"
I hope this helps.