Christi Grimm interview, Crisis at HHS, Medicare rates

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A Grimm outlook

Roughly 10 weeks ago, Christi Grimm was the inspector general and top watchdog monitoring the Department of Health and Human Services. And then overnight, President Trump fired her. Grimm found out about it the next day, as she was driving to a pottery class with her young daughter.

Since then, Grimm and seven other inspectors general who were fired have sued Trump and his cabinet officials, alleging the terminations were illegal. She views her firing not just as a violation of law, but as a litmus test of whether the executive branch chooses partisan loyalists or independent guardians to root out fraud, waste, and abuse from Medicare, Medicaid, and other health care programs. 

Grimm and I spoke for more than two hours last week. She’s a self-described “rule-follower” and explained why she is so worried about the future of inspectors general, and the important work they do. To understand that work, take a look at what Grimm and her agency did on Medicare Advantage. She outlined her stinging criticisms of Medicare Advantage — and how all administrations are not doing enough to rein in insurers’ abusive practices. Take some time to sit down and read the takeaways from our conversation.

A stepback on the 2026 rate

The Medicare Advantage industry got a massively friendly pay raise for 2026. But here’s the thing: This pay raise would have happened regardless of who was in the White House. 

This was a simple application of math to policy: Benchmark payments to Medicare Advantage plans are based on spending data in the traditional Medicare program, and updated data showed spending was a lot higher than when federal officials rolled out the proposal. 

But it raises an important question about the structure of Medicare Advantage: Should payments still be tied to traditional Medicare, when that is now the minority of the population and likely a group with more health problems? If that answer continues to be yes, then at the very least, we should acknowledge the irony of insurers that criticize the fee-for-service nature of Medicare, but lobby for higher payments based on … fee-for-service data.

The ‘existential’ upheaval within HHS

The Department of Health and Human Services is coming unglued under the Trump administration. An entire team of STAT reporters canvassed the different agencies, finding how places like the NIH have to ration equipment and supplies.  

The CDC, FDA, and NIH have been hit particularly hard. My colleague Tara Bannow and I found that CMS has been spared (it’s all relative, of course), because having operational Medicare and Medicaid programs is essential to keeping the doors open at America’s hospitals, doctors’ offices, and insurance companies. 

Medicare and Medicaid payments have not been affected, and career staff told us the thousands of pages of important payment regulations will continue to come out as intended. In the corner of CMS that negotiates drug prices with manufacturers on behalf of Medicare, a CMS staffer told Tara it’s “business as usual,” adding that “there is clearly a little halo around us for some reason.”

But there still have been cuts to functions that are unknown to the broader public but serve an important purpose. For example, CMS axed employees from the Medicare-Medicaid Coordination Office, which supports the low-income, elderly people who are enrolled in both programs. Read more to understand what’s happening across HHS.

Look ahead to earnings

UnitedHealth Group kicks off first-quarter earnings this Thursday, now the second investor call since Brian Thompson was killed. Expect UnitedHealth executives to be overjoyed with the Medicare Advantage rates for next year. 

Mark your calendars for these other upcoming earnings calls, too:

• April 22: Elevance Health (watch out for Medicaid comments)
• April 22: Intuitive Surgical (actually has a higher market cap than Elevance)
• April 24: Merck (have we reached peak Keytruda?)
• April 25: HCA Healthcare (increasingly reliant on special state Medicaid funds)

When Eylea helps upgrade your internet

Sometimes, you just need hundreds, even thousands, of dollars a month to upgrade your internet.

Regeneron Pharmaceuticals, the maker of drugs like eye injection Eylea, last week disclosed that CEO Leonard Schleifer received $11,186 for “residential internet equipment and installation/subscription services.” President and Chief Scientific Officer George Yancopoulos received $107,059 for “residential internet equipment, licensing, and installation/maintenance services.” 

“These are largely one-time costs related to upgraded internet service, reliability, and security at the doctors’ residences,” Regeneron spokesperson Alex Bowie said. “As active leaders of the company, it’s important for Len and George to be available anytime and to securely download large datasets, access critical documents, etc.”

Industry odds and ends

• Medicare released its initial 2026 payment rates for hospitals on Friday. It would be a 2.4% increase, but it will change before the final regulations come in August. We’ll be digging into this proposed rule more.
• MultiPlan — excuse me, Claritev — isn’t the only data company facing allegations of cartel-like behavior over how out-of-network prices to providers are determined. Zelis Healthcare and its big health insurance clients are facing a class action lawsuit that alleges they shared confidential information to “collusively suppress payments.”
• Medicare is now spending more on “skin substitutes” than on ambulance rides, as bandage companies and doctors have set higher prices and taken advantage of Medicare’s loose payment policy, Sarah Kliff and Katie Thomas of the New York Times report. (It’s worth noting that Medicare officials, just last week, specifically called out “synthetic skin products” for driving up Medicare spending as part of higher Medicare Advantage rates for next year.)
• During last year’s Change Healthcare cyberattack, UnitedHealth, which owns Change, provided loans to medical groups so they could still have cash and operate while the important payments clearinghouse was down. But now, UnitedHealth is demanding physicians repay those loans. The American Medical Association is asking UnitedHealth to hold off on collecting “until the physician determines that it is the appropriate time, because the physicians have relied on” UnitedHealth’s statements, an AMA letter reads.
• In 2021, Medicare Advantage insurers pulled in $33 billion by adding diagnosis codes to patients’ medical records. UnitedHealth took in 42% of that total on its own, Tara reports.
• ICYMI: Our Colossus team wrote how Republicans — usually stalwart proponents of Medicare Advantage — are increasingly calling for reforms of the program. Casey Ross spoke with Rep. Mike Kennedy of Utah, a family medicine doctor. Kennedy has firsthand experience of receiving reports from UnitedHealth’s HouseCalls programs: “I just got to the point where I didn’t even open the envelope. I just shredded all those reports.”
• Arkansas lawmakers want to prohibit pharmacy benefit managers from owning mail-order or retail pharmacies, my colleague Ed Silverman reports.
• The employee-led lawsuits that are trying to hold employers accountable for inflated drug spending have not gone well, and the attorneys representing those employees are adjusting their arguments to address judges’ concerns, Lauren Clason of Bloomberg Law reports.

The Meme Ward