OA-137: Regulatory Surcharges, Assessments, or Health-Related Taxes

What Does OA-137 Mean?

OA-137 is the only valid pairing for this code. The OA group code indicates the surcharge adjustment is an administrative matter — the regulatory charge is being adjusted outside the normal contractual payment structure. The provider should verify the surcharge's applicability and billing accuracy. If the surcharge is valid, the provider can pursue reprocessing with documentation. If it is not applicable to this payer, the amount is written off.

CARC 137 appears when a payer adjusts line items on a claim that represent regulatory surcharges, assessments, allowances, or health-related taxes. These are charges that are separate from the actual clinical service — they are typically mandated by state or federal regulation and added to the claim as a pass-through charge. When the payer denies or adjusts these amounts under CARC 137, they are saying the surcharge is either not recognized, exceeds the allowable limit, or was not billed correctly.

This code is used exclusively with Group Code OA, reflecting that these adjustments are administrative in nature rather than a contractual obligation or patient responsibility. Regulatory surcharges vary significantly by state and payer type — a surcharge that is valid for Medicaid claims in one state may not apply to commercial insurance claims, and payers have different rules about which surcharges they will reimburse as pass-through charges.

The most common trigger for CARC 137 is billing a surcharge or tax to a payer that is not required to reimburse it. For example, state provider taxes or assessments that apply to Medicaid may not be billable to commercial payers. Other causes include using incorrect revenue codes or procedure codes for the surcharge, exceeding the regulatory cap on the amount, and failing to include documentation that supports the surcharge. When regulatory changes occur, there is often a lag before payers update their systems, which can also trigger this code.

Common Causes

How to Resolve

Verify the surcharge is applicable to this payer and plan type, confirm correct coding, and resubmit with regulatory documentation if the charge is valid.

1. Verify regulatory authority Confirm the statute or regulation that authorizes the surcharge and whether it applies to claims for this payer type.
2. Check billing codes Ensure the correct revenue codes, procedure codes, and modifiers are used per the payer's guidelines for regulatory surcharges.
3. Submit documentation to the payer Provide the regulatory authority, calculation worksheets, and any required supporting documentation. Request reprocessing of the adjusted amount.
4. Write off if not applicable If the surcharge genuinely does not apply to this payer or plan type, accept the adjustment and remove the surcharge from future claims to this payer.

Common RARC Pairings

The RARC code tells you exactly what triggered the OA-137:

How to Prevent OA-137

• Maintain a reference list of which regulatory surcharges and taxes apply to each payer type and update it when regulations change
• Use correct revenue codes and modifiers for surcharges per each payer's billing guidelines
• Verify with payers whether they accept pass-through surcharges before including them on claims
• Monitor state and federal regulatory changes that affect surcharges and health-related taxes

General Prevention

• Monitor regulatory changes at the state and federal level that affect surcharges, assessments, and health-related taxes to ensure billing reflects current requirements
• Maintain a reference list of which surcharges and taxes apply to each payer type (Medicaid, Medicare, commercial) and update it when regulations change
• Use correct coding for surcharges and taxes, including the appropriate revenue codes and modifiers per payer guidelines
• Verify with each payer whether they accept pass-through surcharges and taxes before including them on claims
• Conduct regular internal audits of claims that include regulatory surcharges to ensure compliance and accuracy
• Train billing staff on the distinctions between different types of regulatory assessments and when they are billable

Related Denial Codes