The U.S. Department of Health and Human Services (HHS) announced it will reverse a set of child care regulations from the Biden administration that allowed states to pay providers before verifying attendance and delivering care. The rollback affects provisions in the 2024 Child Care and Development Fund rule, which HHS says weakened oversight and increased risks of waste, fraud, and abuse in state-run, federally funded child care programs.
“Congress appropriated this funding to support working families and ensure children have safe places to grow and learn,” said Health and Human Services Secretary Robert F. Kennedy, Jr. “Loopholes and fraud diverted that money to bad actors instead. Today, we are correcting that failure and returning these funds to the working families they were meant to serve.”
Under the previous rules, states were required to make payments based on enrollment rather than verified attendance, pay providers before services were delivered, and prioritize guaranteed contract slots with providers over parent-directed vouchers.
With the new changes:
- States may require payment based on verified attendance instead of enrollment alone.
- Upfront payments will no longer be mandatory; states can pay after care is provided.
- States are not required to favor contracts over parent-directed vouchers, restoring more choice for parents.
“Paying providers upfront based on paper enrollment instead of actual attendance invites abuse,” said Health and Human Services Deputy Secretary Jim O’Neill. “In Minnesota, we’ve seen credible and widespread allegations of fraudulent daycare providers who were not caring for children at all. The reforms we are enacting will make fraud harder to perpetrate.”
“When controls are not in place, bad actors can bill for children who aren’t there,” said Assistant Secretary for Family Support Alex Adams. “Families and taxpayers deserve proof that services are being delivered to children. These rule changes emphasize the critical role federal investments in child care play for the American workforce.”
The proposed rule changes will undergo a 30-day public comment period.
HHS also reported ongoing efforts to improve oversight nationwide by activating a national Defend the Spend system, increasing verification requirements for all states, and launching a dedicated fraud-reporting hotline through childcare.gov. Since its launch on December 30, 2025, more than 245 reports of potential fraud have been received by the Administration for Children and Families.
HHS stated it remains committed to working with states so that child care programs protect children, serve eligible families, and use taxpayer resources responsibly.
