CO 137 denial code

Claim adjustment reason code 137. Often reported as CO 137 or OA 137.

Regulatory surcharge, assessment or tax

Unofficial reference. This is our own plain-English explanation, not the official code text. Payer rules differ. Verify with the payer and the official X12 code list. AlphaPrefix is not affiliated with X12, CMS or any payer. Data last updated Nov 11, 2026.

What 137 means

The amount reflects a government-mandated surcharge, assessment, allowance or health-related tax applied to the claim.

Some states and programs require payers to add or withhold surcharges, assessments or taxes tied to health care claims. This code reports that amount so it is not mixed in with the normal allowed amount.

It is not a denial of the service. It explains part of the payment arithmetic. The amount and direction depend on the program, so read it together with the rest of the remittance.

Group codes seen with 137

On a remittance, 137 comes after a group code. These are the ones it is most often reported with:

• CO 137 (Contractual Obligation): The provider's side of the ledger. The reduction comes from the payer contract or a rule the provider has to follow, and the patient normally cannot be billed for it.
• OA 137 (Other Adjustment): Used for adjustments that are neither the provider's contractual write-off nor the patient's share. It often appears with coordination of benefits, for example when another payer already paid.

The payer chooses the group code for each adjustment, so the same reason code can appear with another group code on your remittance. Read the two together. More about group codes.

Common causes

• A state requires a surcharge or assessment on claims for certain services or facilities.
• A health-related tax is withheld from or added to payments under a public program.
• The payer applied a regulatory allowance as part of pricing the claim.

What to do next

1. Confirm the surcharge or tax applies to your facility and service type under your state rules.
2. Post the amount to a separate adjustment or tax account so it does not distort contractual write-offs.
3. Ask the payer for the basis of the amount if it looks wrong or was not expected.

Related codes

• 45 (reason code) Charge exceeds the allowed amount