These measures include increasing prison terms for healthcare fraud offenses by 20% to 50% for crimes that involve more than $1 million in losses as well as enhanced screening measures such as mandatory licensure checks, site visits, criminal background checks and fingerprinting for providers and suppliers participating or enrolling in Medicare, Medicaid, and CHIP.

Additionally, there will be an expansion of the Centers for Medicare & Medicaid Services (CMS) integrated data repository to include information from Medicaid, Veterans Administration, Department of Defense, Social Security Disability Insurance, and Indian Health Service. There will also be data matching agreements among federal agencies to make it easier for the federal government to share data, identify criminals and prevent fraud.

"Under this new law we're going to attack every single stage of the process. We're going to more thoroughly check healthcare providers who want to participate in Medicare or Medicaid. The days when you could just hang out a shingle and start submitting claims are over," Sebelius declared. "It will be harder to submit false claims, you're more likely to get caught if you do, and when you get caught you're going to face stiffer penalties."

These measures will complement the Health Care Fraud Prevention and Enforcement Action Team (HEAT), which is a 1-year-old joint initiative between DOJ, CMS, and the HHS Office of Inspector General to marshal the resources of both agencies to combat healthcare fraud.

"HEAT has elevated our joint fight against both civil and criminal health-care fraud as a cabinet level priority. We’re bringing to bear the full resources of the federal government against individuals and corporations who illegally divert taxpayer resources for their own gain," Holder said. "So far HEAT has enhanced our ability to bring abuse to light and criminals to justice and it [has] enabled the recovery of stolen funds and the return of millions of dollars to the U.S. Treasury and the Medicare trust fund."

Through HEAT initiatives DOJ and HHS have expanded Medicare fraud strike forces to several regions across the country including South Florida, Detroit, and Houston, where Medicare data showed hot spots of unexplained billing levels.

Holder said that to date, HEAT's strike prosecutors from US Attorney's offices and DOJ's criminal division have sought approximately $500 million in court ordered restitution to the Medicare program in nearly 300 healthcare fraud cases involving more than 560 defendants. "More than 300 guilty pleas have been secured and 250 defendants have been sentenced to prison with sentences ranging from two months to 30 years,” Holder said of HEAT's effectiveness. "On the civil enforcement front, our healthcare fraud recoveries last year under the False Claims Act exceeded a stunning $2.2 billion."

The report cited several instances of healthcare fraud, including the use of stolen patient data.

In one case the owner of durable medical equipment (DME) company in Florida was sentenced to 54 months in prison and ordered to pay $807,000 in restitution pursuant to his guilty plea to health care fraud and aggravated identity theft. The owner admitted that he fraudulently billed Medicare for DME which was not delivered, was not prescribed by the physicians listed on the claims, or was not medically necessary. The owner also acknowledged that he knowingly and willfully stole the identity of a Medicare beneficiary for the purpose of submitting false claims.

Secretary Sebelius said both HHS and DOJ are developing a data system to share and monitor fraud attempts in real-time. She also said both departments are looking at successful strategies from the private sector such as the way credit card companies can locate an aberrant billing pattern and immediately notify the card holder or quickly shut down an opportunity to continue the abuse.

"That's the kind of system that is very flexible, very nimble and very quick that we are actually trying to catch up with," Sebelius said.