1. The obvious question: Is the procedure neccessary, or is it optional? I would like to say I would do it either way, but in reality I can not. If a doctor did ever procedure no matter the payment, they would be a free clinic. There are obvious exception when I believe the procedure is required of the doctor as an "ethical must." If it is not done, will the patient die? Will the patient's life be drastically altered if action is not taken? In these situations the doctor MUST (not should, they must) help out. "With great power, comes great responsibility."
My father has given services in trade. One instance I can think of is an auto mechanic need glasses and exams for his family but could not pay for it. At the time we had a car with a dent in it and a squeek in the dash. The mechanic fixed the car and we gave them exams and glasses. Cash payment is not the only means of payment avalible.
2. I would not report the student the first time. Everyone makes bad choices sometimes, but I would keep an eye on the student from then on. If the student cheated a second time, I would then take action. If was a student I liked, I would probably confront them and ask what is going on. If they had no excuse, I would give them the choice to turn themselves in. If the student was a jerk, I would just talk to the prof. about it.
You could also take the position that if the student is not learning the information, they will end-up failing the boards later. So it really does not matter if you stepped in.