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Why Medicare Does Not Cover the Annual Physical Exam

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Why Medicare Does Not Cover the Annual Physical Exam

by Lucy Lamboley

A Kaiser Health News (KHN) article tells the story of Medicare beneficiary Beverly Dunn. She scheduled her annual physical exam, believing that Medicare would cover the checkup. Then Dunn received the bill and quickly learned the shocking piece of information many patients discover: Medicare does not cover annual physical exams.

This can come as a surprise — and an expensive one at that — for patients who believe Medicare will provide the same annual physical exam coverage as many private payers. While Medicare does not cover annual physical exams, it does cover a single "initial preventive physical examination," followed by exams called "annual wellness visits. 

Confused? You're not alone. The differences between traditional physicals and how Medicare approaches annual exams have created headaches for providers and beneficiaries since the Medicare annual wellness visit debuted in 2011. 

In fact, research published in JAMA found that only about 16% of Medicare beneficiaries received a wellness visit in 2014. While this figure increased significantly since 2011, it's still quite low. One contributing factor has likely been beneficiary confusion about the differences between a Medicare annual wellness exam vs. an annual physical exam. 

For providers, this confusion can lead to unhappy patients, like Beverly Dunn, and challenges collecting balances from patients. It can also contribute to coding and billing errors that trigger denials and other issues that delay reimbursement payments. 

Before we get into why "no" is the answer to the question of, "Does Medicare pay for annual physical exams?" and what providers should do to address the confusion effectively, it's helpful to define annual physical exam, annual wellness visit, and initial preventive physical examination.

Medicare Annual Wellness Visit vs. Annual Physical

Annual Physical Exam

Let's begin by discussing the concept familiar to most people: annual physical. In defining the term, Dignity Health states, "A thorough physical examination covers head to toe and usually lasts about 30 minutes. It measures important vital signs — temperature, blood pressure, and heart rate — and evaluates your body using observation, palpitation, percussion, and auscultation." In addition, the performing physician may also conduct tests (e.g., drawing blood, requesting a urine specimen).

The Centers for Medicare & Medicaid Services (CMS) notes that a "routine physical examination" is not covered by Medicare. Thus, Medicare patients will be expected to cover the entire cost of the service (unless supplementary insurance provides coverage).

Annual Wellness Visit

Now onto the annual wellness visit, sometimes referred to as an AWV, which was established by the Affordable Care Act. As Medicare.gov notes, beneficiaries with Medicare Part B for longer than a year are eligible for the service once every 12 months. During these visits, a provider develops or updates a personalized prevention plan to help reduce the likelihood of disease and disability. The visit can include a wide range of services, such as medical and family history review, developing/updating current providers and prescriptions, gathering of routine measurements, treatment options for risk factors, and development of a screening schedule. Providers also ask patients to complete a health risk assessment (HRA) and may perform a cognitive impairment assessment to look for signs of Alzheimer's disease or dementia. Medicare patients pay nothing for the annual wellness visit. 

Initial Preventive Physical Examination 

Finally, let's review the components of an initial preventive physical examination, also referred to as an IPPE or "Welcome to Medicare" preventive visit. This is a service provided to newly enrolled Medicare beneficiaries once within the first 12 months they are covered by Medicare Part B. As Medicare.gov notes, the visit includes a review of a patient's medical and social history concerning health and education and counseling about preventive services. Also included with this review: services such as health risk screenings, flu shots, and referrals for other care; routine measurements; body mass index calculation; vision test; evaluation of potential risk for depression; and a written plan outlining services needed. This visit is covered only once and only if it's performed within the 12 months of Part B enrollment.

Understanding Why Medicare Does Not Pay for Annual Physical Exams

Now that we've summarized the different services provided during these annual exams and visits, we can examine why Medicare only covers annual wellness visits (and the single initial preventive physical examination) and not annual physical exams. 

The reason becomes more apparent when we simplify the differences between an annual physical exam and an annual wellness visit. As the KHN article referenced earlier states, "An annual physical typically involves an exam by a doctor along with bloodwork or other tests. The annual wellness visit generally doesn't include a physical exam, except to check routine measurements such as height, weight and blood pressure." The UNC School of Medicine notes, "Medicare wellness visits … are designed to improve your overall health care by providing a more detailed look at your health risks based on family history and health behaviors and more."

Think of the annual physical exam as more of a "hands-on" experience, whereas the annual wellness visit takes a "hands-off" approach to evaluation. It would seem that when the federal government was debating what to cover within traditional Medicare, the decision was to cover the broader look at a beneficiary's health. In discussing the annual wellness visits, AARP states, "The visit provides a snapshot of your current health as a baseline for future yearly visits, and is intended as a preventive service — a way of catching potentially serious health issues early."

The decision to pay for annual Medicare wellness exams rather than an annual physical exam does not mean that annual physicals are unimportant. Rather, it would seem that the federal government believes annual wellness visits are more important to a Medicare beneficiary's long-term health. Medicare beneficiaries can still receive an annual physical from their primary care providers, but charges, as discussed earlier, will typically apply to this service. For those patients with a Medicare Advantage plan, an annual physical may be an included benefit.

Tips to Address the Medicare Annual Physical Confusion

As noted earlier, the confusion between an annual wellness exam vs. annual physical exam can create patient dissatisfaction and reimbursement headaches for providers. Here are five tips to help address these challenges.

1. Ensure patients understand the service they will receive.

If a Medicare patient requests the scheduling of an annual physical, staff should take the time to verify that this is what the patient desires. A discussion with the patient should cover matters such as a review of the differences between an annual wellness exam vs. annual physical exam vs. IPPE (if applicable), what the patient's insurance will and will not cover, and how much money the patient will need to pay out of pocket for the scheduled exam. 

By reviewing these distinctions before delivering the service, you will reduce the likelihood of a negative patient experience due to a surprise medical bill. When patients are unsatisfied, collecting their portion of the bill often becomes more difficult, and they may vent their frustrations, which can negatively impact a provider's reputation and online ratings.

2. Be transparent about additional services.

Whether you perform an annual wellness exam, annual physical exam, or IPPE, you may determine that it is worthwhile to provide treatments or additional preventative services not necessarily covered under these routine exams. Before proceeding with these treatments or services, explain to patients why you recommend them, and what they are likely to cost patients. Doing so will help avoid the problems previously noted.

3. Document, code, and bill correctly.

Once the service(s) is delivered, proper documentation is key. Providers should ensure they document the correct service that's being delivered, without any ambiguity. This will help ensure the service is coded correctly, which should then allow billers to bill the correct insurance(s) and collect the appropriate amount from patients. 

Education is critical to completing these steps consistently and adequately. Staff should be trained on the differences between a Medicare annual wellness visit vs. annual physical exam vs. IPPE and why those differences matter from a coding, billing, and reimbursement perspective. Consider creating a cheat sheet to help remind staff of the differences when they are completing documentation.

4. Remind Medicare patients about their annual wellness exams.

Explore ways to remind your patients about their annual wellness exam benefit effectively. Considering how many Medicare patients are not taking advantage of this covered service, improving communication with patients may help give your practice a substantial volume boost.

5. Invest in preventive services technology.

Investing in the right technology can help your practice reduce the time spent on preventive services, such as the annual wellness exam, while increasing reimbursements. One such technology is Prevounce. This customizable, holistic wellness platform improves eligibility verification, patient outreach and intake, billing and coding, documentation requirements, compliance (e.g., MIPS, MACRA), and much more. Schedule a demo today!

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