I believe that herein lies the main reason Michigan dropped so much:
"Research Activity (weighted by 0.40 in the research medical school model only, an increase from 0.30 last year; not used in the primary care medical school ranking model)
This year for the first time, based on suggestions from medical school deans, U.S. News added four new indicators of research activity to account for all the research conducted at medical schools: total non-NIH federal research activity, average non-NIH federal research activity per faculty member, total nonfederal research activity and average nonfederal research activity per faculty member. Each of these indicators was weighted at 0.025.
This altered informational point represents 40 percent of the ranking. Perhaps Michigan relies more on NIH funding than other top schools and it’s reflected in its numbers. With a recent concern by medical schools over the possible reduction in this type of funding, USNWR appears to have changed its criterion to reflect this possibility. If they did it for this reason, and ahead of actual cutting, then USNWR has done Michigan a great disservice.