Is is legal for hospitals to refuse Medicaid for payment?

My daughter has private insurance and Medicaid. In case her private insurance will not pay for WLS, we plan to self-pay the surgeon and ask Medicaid to pay the hospital bill. I have no doubt that Medicaid will pay for the surgery, but we try not to use Medicaid unless absolutely necessary. The problem is that the insurance coordinator at the surgeon's office says that the hospital may not accept Medicaid payment for the surgery. Is this legal? I know Medicaid pays at a lower rate, but can they deny their services for this reason? Since Medicaid payment will be at a lower rate than private insurance, can the patient pay the difference in cost to the hospital? Thanks for any help you can give.

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