Conversation with CMS Administrator Mehmet Oz & HHS Chief Counselor Chris Klomp | Global Conference

Strategic Framework & Objectives

• CMS has adopted Objectives and Key Results (OKRs) to measure performance, prioritizing the transition to value-based payment models that incentivize better health outcomes rather than task completion.
• The overarching departmental mandate, defined as "Making America Healthy Again," focuses on addressing upstream pathology (obesity, hypertension, diabetes) to reduce chronic illness, which currently drives 80% of Medicare and Medicaid costs.
• U.S. health care spending per capita is twice that of European nations and 10 times that of Japan, a disparity the administration attributes to a lack of prevention and high chronic disease rates.

Drug Affordability & "Most Favored Nation" (MFN) Policy

• Problem Scale: 27% of Americans (one in four) currently do not fill prescriptions due to cost; the administration characterizes this as a moral failure and a root cause for policy action.
• Immediate Savings: Since the launch of the "Trump Rx" (MFN) initiative, initial savings include:
  • Approximately $2,000 per cycle for fertility drugs ($6,000 per baby).
  • A 50% reduction in costs for GLP-1 medications, with prices expected to decline further.
• Policy Mechanism: The MFN model prevents the U.S. from subsidizing "global free-riding" by aligning U.S. drug prices with the lowest prices paid globally, without implementing a strict price cap.
• Timeline: Initial calculated savings for the first four months of the program will be announced in the coming weeks.

Fraud, Waste, and Abuse (Program Integrity)

• Financial Impact: The administration estimates $100 billion in annual fraud and waste across Medicare and Medicaid; eliminating Medicare fraud alone would double the life expectancy of the Medicare trust fund.
• Enforcement Actions:
  • Suspended payments for 400 hospices in California over four years due to evidence of massive fraud (notably in Los Angeles, where one-third of all U.S. hospices are located despite demographic realities).
  • Targeted enforcement in red, purple, and blue states, including Florida, New York, California, and Minnesota, citing political patronage and unionization dynamics as drivers of fraud in some jurisdictions (e.g., personal care services in NY).
• Provider Revalidation: A letter was sent to all states requiring the revalidation of providers; early data from Minnesota indicates 20% of providers have failed to respond, a metric the administration views as a significant risk indicator.
• Specific Sectors Under Scrutiny:
  • Durable medical equipment suppliers in South Florida, where supplier density is double that of McDonald's.
  • Private equity-owned autism services and hospices.

AI, Technology, and Modernization

• Legacy Systems: A priority is rebuilding the aging 1979 COBOL-based IT infrastructure at CMS, which currently lacks a sufficient talent pool of programmers.
• AI Integration: The administration aims to rapidly adopt AI to modernize care and reduce bureaucracy, noting a public concern in the U.S. regarding AI adoption that requires strategic management.
• Workforce Expansion: CMS is actively recruiting 1,000 new employees to support these modernization and enforcement efforts.

National Competitiveness & Research

• Global Threat: The U.S. faces a competitive gap with China, which shifted from producing 3% of drug molecules a decade ago to nearly 40% today and is running four times as many clinical trials.
• Institutional Strategy:
  • NIH: Focusing funding strictly on alleviating human suffering and chronic disease to ensure a return on investment.
  • FDA: Aiming to reduce the time from concept to commercialization from 15 years to under five years by leveraging AI, moving to continuous trials, and reducing the cost of bringing new molecules to market.
• Talent Retention: Efforts are underway to prevent the "bleeding" of U.S. scientists to other countries (e.g., Australia, China) due to accelerated trial environments abroad.

Prevention & Public Health Guidelines

• USPSTF Reconstitution: The U.S. Preventive Services Task Force is being reconstituted, with a scheduled meeting in July to shift focus from treating illness to upstream prevention (the "walking upstream" approach).
• CMS Reimbursement Shift: For the first time, CMS has shifted a significant portion of its budget-neutral reimbursement from specialty care to preventive care.
• Dietary Guidelines: The administration is revising food guidelines, citing the removal of fat from milk and replacement with sugar (chocolate syrup) as a negative example of past policy failures.
• Public Trust: A primary goal is restoring trust in public institutions (FDA, CDC), ensuring parents can rely on food and drug safety standards without needing to scrutinize every ingredient.

Administrative Changes & Personnel

• Leadership Roles:
  • Dr. Mehmet Oz (CMS Administrator) focuses on value-based care, fraud, and AI.
  • Chris Klump (HHS Chief Counselor) oversees day-to-day HHS operations, fraud enforcement, and drug pricing (MFN).
  • Kim Brandt serves as Chief Operating Officer, leading the rebuilt integrity program.
• Sacrifices: Senior leadership, including Dr. Oz and Chris Klump, have been required to divest personal assets to comply with government ethics standards.