Cahaba Government Benefit Administrators Final Administrative Cost Proposals for Depreciation for Fiscal Years 2001 Through 2004

EXECUTIVE SUMMARY:

Although Cahaba Government Benefit Administrators, LLC (Cahaba GBA) generally claimed over $14 million in depreciation expense that was reasonable, allowable, and allocable during fiscal years 2001 through 2004, it inappropriately claimed approximately $36,152 in unallowable depreciation expenses. 

Cahaba GBA's unallowable claims for depreciation expenses were caused by insufficient controls over depreciation and associated assets. During our audit period, Cahaba GBA significantly improved its controls over depreciation. However, further upgrades are necessary to integrate the system for tracking assets with the system for tracking the depreciation claimed for those assets. We recommended that Cahaba GBA reimburse the Medicare program $36,152 for unallowable depreciation expenses and establish controls that integrate depreciation costs with accountability of the assets being depreciated. Cahaba concurred with our recommendations.