Harmony Healthcare International (HHI) Blog

Medicare No Pay Bills - Medicare Spell Of Illness: Must-Know



Medicare No Pay Bills
Medicare Spell of Illness:
Top 10 Things You Need to Know

A No Pay Bill is a bill you submit in a situation where you will not receive any money from Medicare.  No pay bills are not new, but, in 2006, CMS clarified their policy and issued instructions that all providers and fiscal intermediaries must follow.

Click Here to Download 2006 CMS No Pay Bill Clarifications

1) “Spell of Illness” or Benefit Period:  

A “Spell of Illness” or Benefit Period:  

  • Medicare Part A coverage in a skilled nursing facility (SNF) is limited to 100 days per “Spell of Illness” or “Benefit Period.”  
  • A spell of illness or benefit period starts when a patient: 
    • has an illness or injury,
    • requires a covered level of care i.e., “skilled care,” 
    • has a 3-night qualifying stay, and 
    • has days available in their benefit period. 
  • A spell of illness or benefit period ends when a patient:
    • No longer requires a “skilled level of care,” and
    • Experiences 60 consecutive days of non-skilled level of care (i.e., if home or if in a nursing home),  
    • If 60 days pass after the patient is no longer receiving a Medicare Part A covered (“skilled”) level of care, the spell of illness is “broken”, and the patient may be eligible for a new benefit period in the future (they will need a new 3-night qualifying stay). 

For CMS to track a beneficiary’s “Spell of Illness,” the provider (i.e., the nursing home), is required to communicate if the spell of illness has ended. 

The provider must submit a no pay bill when the patient is no longer receiving a Medicare Part A covered level of care.  Otherwise, CMS has no way of knowing whether the beneficiary has encountered a 60-day break of non-covered level of care.  If the spell of illness is not broken, the patient will not be entitled to a new benefit period (i.e., a new 100 days of SNF Medicare eligibility) even if that patient sustains a new illness or injury.  

No pay bills are intended to give CMS information that will determine whether or not the spell of illness has been broken.

Although the above information may seem a tiny bit complex, the real crux of this blog is to reemphasize the parameters for a skilled level of care.2) Medicare Covered Level of Care or “Skilled Care”

First and foremost, globally speaking a Medicare Covered Level of Care or “Skilled Care” requires:  

  • Nature of service requires the skills of RN, LPN,
  • Care is rendered by a licensed person.  Federal regulations define licensed person as physician, nurse and/or therapist,
  • Care is provided directly by or under general supervision of a licensed nurse to assure the safety of the patient and to achieve the medically desired result, and, 
  • “General” = initial direction and periodic inspection of the activity. 

3) Practical Matter Criterion

In addition, to above, the foundational principles of Medicare coverage include the practical matter criterion:

“As a practical matter, considering economy and efficiency, the daily skilled services can only be provided in a skilled nursing facility.”

This means that one should assess the patient’s condition and if the services can be safely rendered in another environment or continuum.

4) Presumptive Coverage

One must not also forget the May 12th, 1998 interim final rule which introduced the concept of a presumption of coverage related to the MDS produced RUG Level/CMG. The Presumptive Coverage states:

  • “When the initial Medicare 5-day Assessment results in a beneficiary being correctly coded to one of the top Nursing CMG’s, creates a “presumptive coverage” from admission up to and including ARD (Assessment Reference Date).”

The HHI Team reminds you that Lower 8 at risk for denial and audit.  Hence, it is important to always scrutinize any lower 8 levels to ensure accurate coding and appropriate rationale for skilled coverage. 

With the foundational Medicare coverage concepts reviewed, the key focus should be on the 4 Pillars of Skilled Care:

5) The Four Pillars of Skilled Nursing Care

1. Skilled Nursing Services

The below nursing services are what HHI deems skilled via the inherent complexity. Meaning, simply by rendering said services, it is automatically deemed skilled by CMS. 

• Enteral Feeding - 26% daily calorie requirements and at least 501 milliliters fluid per day

• Suprapubic Catheters - This procedure is a major vector for infection that can be fatal if improperly performed (insertion, sterile irrigation, and replacement)

• Hypodermoclysis and subcutaneous injections no longer skilled

• Daily insulin injections with 2 order changes over last 14 days


2. Management and Evaluation of a Care Plan

“Constitute skilled services when, because of the patient’s physical or mental condition, those activities require the involvement of technical or professional personnel in order to meet the patient’s needs, promote recovery and ensure medical safety.”

3. Observation and Assessment

Reasonable probability for complications or potential for further acute episodes of the patient’s changing condition

Needed to identify and evaluate the patient’s need for modification of treatment or

Additional medical procedures until his or her condition is stabilized

4. Teaching and Training

Skilled if the use of technical or professional personnel is necessary to teach a patient self-maintenance

Example #1:

“A patient who has had a recent leg amputation needs skilled rehabilitation services provided by technical or professional personnel to provide gait training and to teach prosthesis care. Similarly, a patient newly diagnosed with diabetes requires instruction from technical or professional personnel to learn the self-administration of insulin or foot-care precautions” (Final Rule 7/31/99).

6) Skilled Rehabilitation

Transmittal 262:

On a daily basis

Services rendered are reasonable and necessary

• Physician ordered

• Practical matter

An appropriately licensed or certified individual must provide or directly supervise the therapeutic service and coordinate the intervention with nursing services

  • The service must be ordered by a physician
  • The therapy intervention must relate directly and specifically to an active written treatment regimen established by the physician after any needed consultation with the qualified rehabilitation therapy professional and must be reasonable and necessary to the treatment of the beneficiary’s illness or injury necessary to the treatment of the beneficiary’s illness or injury

7) Benefits Exhausted

As discussed earlier, a patient can qualify for a maximum of 100 days of Medicare SNF coverage per spell of illness.  If a patient is receiving a covered level of care for a full 100 days that patient would exhaust their SNF benefit (used up their 100 days).  

Exhausting the 100 days does NOT break the spell of illness.

To break the spell of illness, the patient has to fall below a skilled level of care.  In other words, the patient has to have a change of condition where that patient is no longer receiving Medicare Part A covered services.  Therefore, CMS wants providers to provide information about the patients’ condition and SNF stay even after the patient has exhausted their 100 days of Medicare Part A coverage by submitting No Pay Bills.

No Pay Bills are intended to provide CMS with information about the patient’s level of care and other aspects of their SNF stay even after Medicare Part A is not paying for the care.  This information allows CMS to determine whether or not the spell of illness has been broken.  

Transmittal 930 (April 28, 2006), CMS indicates that No Pay Bills are used for:

  • “National Health Planning,”
  • “Enable CMS to track of the Beneficiary’s benefit period.”

8) No Pay Bills Required

The two situations where No Pay Bills are required are:

  • When the Beneficiary has exhausted his/her 100 days of SNF eligibility
  • When the Beneficiary no longer needs a Medicare Part A covered level of care

CMS indicates that the SNF must submit a benefits exhausted bill MONTHLY for those patients that continue to receive skilled care, and when there is a change in the level of care, even if the services are paid for by a different pay source (e.g., Medicaid, Managed Care or Private Pay).

CMS further indicates that when the level of care changes (the patient drops below the skilled level of care) after the benefits are exhausted, the SNF must submit a bill indicating that the “active care has ended” (the patient is no longer receiving covered services.

  • CMS acknowledges that different FIs have imposed different No Pay Bill requirements in the past and they indicate that the attached/downloaded instructions “shall provide a single consistent billing process to be applied to all contractors.”  
  • Transmittal 930 also states that this requirement only applies to residents who are newly admitted or in a Medicare Part A stay on or after October 1, 2006.

After Medicare Part A stops paying the bill, SNFs need to continue to send UB-04s to their:

9) Medicare Administrative Contractor

FI monthly until the patient is discharged from the Medicare certified bed and is no longer at a skilled level of care.


  • Medlearn Matters Article – Medicare Learning Network (MLN) - #MM4292
  • CMS Transmittal 930 (pub 100-04) April 28, 2006
  • Medicare Claims Processing Manual, Chapter 6 – SNF Inpatient Medicare Part A Billing
  • Medicare Benefits Policy Manual (pub 100-2), Chapter 8


Topics: CMS, Regulatory, No Pay Bill

Kris Mastrangelo, OTR/L, LNHA, MBA


Kris Mastrangelo, OTR/L, LNHA, MBA

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