I do not agree that it is never OK to bill a Medicaid patient. Certainly, if a provider is not participating, he may bill a Medicaid patient.
In your scenario, the provider bills under 1 TID (tax ID) when he is seeing patients in his private office. When he sees patients at the clinic, they have likely enrolled him under the TID of the clinic. So, your question is really whether or not Medicaid permits a provider to be both participating and non-participating at different locations under different TID. I believe that is permitted, but in researching the official rule, I found some very surprising and interesting information in the NYS EMEDNY Provider Manual.
When Medicaid Recipients Cannot be Billed
This is the policy of the Medicaid program concerning the requirements related to requesting compensation from Medicaid recipients, including Medicaid recipients who are enrolled in a managed care plan and in Family Health Plus.
Acceptance and Agreement
When a provider accepts a Medicaid recipient as a patient, the provider agrees to bill Medicaid for services provided or, in the case of Medicaid managed care enrollee, agrees to bill the recipient's managed care plan for services covered by the contract. The provider is prohibited from requesting any monetary compensation from the recipient, or his/her responsible relative, except for any applicable Medicaid co-payments. A provider may charge a Medicaid recipient, including a Medicaid recipient enrolled in a managed care plan, ONLY when both parties have agreed PRIOR to the rendering of the service that the recipient is being seen as a private pay patient. This must be a mutual and voluntary agreement. It is suggested that the provider maintain the patient's signed consent to be treated as private pay in the patient record.
A provider who participates in Medicaid fee-for-service but does not participate in the recipient's Medicaid managed care plan may not bill Medicaid fee-for-service for any services included in the managed care plan, with the exception of family planning services. Neither may such a provider bill the recipient for services that are covered by the recipient's Medicaid managed care contract unless there is prior agreement with the recipient that he/she is being seen as a private patient as described above. The provider must inform the recipient that the services may be obtained at no cost to the recipient from a provider that participates in the recipient's managed care plan. Elsewhere in the manual:
Enrollment in Medicaid does not mandate practitioners to render services to all Medicaid recipients who request care. If a private payment arrangement is made with a Medicaid recipient, the recipient should be notified in advance of the practitioner's choice not to accept Medicaid reimbursement. The Medicaid Program cannot be billed for services rendered under these circumstances. In structuring their practice, practitioners must ensure that any limitations are based on criteria which are not discriminatory and continue to comply with "Civil Rights" (see below).
I had NO idea that a provider who is definitely participating, could charge a Medicaid member. I would certainly very carefully word whatever agreement is signed and keep a copy. Based on the above, as long as the patient agrees before the service is rendered, even the surgery could be self pay. No claim should be submitted to Medicaid for services agreed to be self pay.
So, whether or not the provider is considered participating in his private office (and I think he's not), if the patient agrees, it is absolutely permitted in NY State.