Washington, D.C. — The U.S. Department of Health and Human Services announced Monday that it is rescinding a series of Biden-era child care regulations that required states to pay providers before verifying attendance or delivery of care.
The changes, implemented through the department’s Administration for Children and Families, roll back provisions of the 2024 Child Care and Development Fund rule that critics say weakened oversight and increased the risk of waste, fraud, and abuse in federally funded state child care programs. The move comes as several programs, including those in Minnesota, face ongoing fraud investigations.
“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 Biden-era rules, states were required to base payments on enrollment rather than verified attendance, issue payments in advance of services, and prioritize guaranteed provider contracts over parent-directed vouchers. HHS officials said those policies reduced accountability and limited parental choice.
Under the revised rules:
Attendance-based billing may again be required, allowing states to pay based on verified attendance rather than enrollment alone.
Upfront payments will no longer be mandatory, permitting states to pay providers after care is delivered.
States are no longer steered toward provider contracts over vouchers, restoring greater flexibility and parental choice.
“Paying providers upfront based on paper enrollment instead of actual attendance invites abuse,” said Jim O’Neill, Deputy Secretary of Health and Human Services. “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.”
Assistant Secretary for Family Support Alex Adams said the changes reinforce accountability. “When controls are not in place, bad actors can bill for children who aren’t there. Families and taxpayers deserve proof that services are being delivered to children.”
The rule changes are subject to a 30-day public comment period.
HHS also announced additional enforcement steps, including activation of a national “Defend the Spend” system, expanded verification requirements for states, and the launch of a fraud-reporting hotline and email address at childcare.gov. Since the tip line opened on December 30, 2025, ACF has received more than 245 reports of potential fraud.
Federal officials said HHS will continue working with states to ensure child care programs protect children, serve eligible families, and responsibly steward taxpayer resources.
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