There's multiple factors to this and multiple ways despite laws against this that it happens. 1. They incorrectly code the encounter leading to a lesser charge

There's multiple factors to this and multiple ways despite laws against this that it happens. 1. They incorrectly code the encounter leading to a lesser charge. This is Medicare fraud if the doctor ever get audited, but if it's a tiny practice and no one whistleblows on the Doctor, the odds of a small practice getting audited are very low. 2. They charge the cash paying patient the full amount. Then enter a period of "negotiation" and then accept the lesser payment and write off the balance as charity care. This is more legal, but leads to people coming on online forums and bitching about a $3000 bill only to reveal it got lowered to $700. The issue here is that the doctor is super busy and unless it's a micropractice where the doctor is the one billing, some biller/coder somewhere else will send you nasty grams until the doctor intervenes and tells them to write off the balance. You have to remember, it is law in this country that you must bull accurately. Either coding too high or too low is considered equally fraudulent which Medicare will send its auditors after viciously. The only way to go outside the system 100% legally is to completely opt out of Medicare/Medicaid. Anything less is fundamentally a gray area that relies on the practice not having someone mad and whistleblowing on them to a RAC. Whistleblowers are entitled to a portion of the fine, so the incentive is there for a disgruntled employee just to whistleblow even on the doctors who undercharge as a kindness to their patients. When you hear doctors say the government has royally screwed up healthcare, this is fundamentally what they are talking about. I can either offer reasonable/negotiable prices on a cash basis or I can participate in the insurance game, but not both. My biggest fear is that they eventually make participation in Medicare / Medicaid a requirement of licensure, effectively making the cash pay system illegal.