The United States Department of Health and Human Services (HHS), also known as the Department of Health, announced on Monday, January 5, that it is revoking a series of child care regulations set by the previous administration through its subsidiary, the Administration for Children and Families (ACF). This action aims to close loopholes that allow states to pay childcare service providers without verifying attendance rates.
This adjustment will revoke certain provisions in the 2024 Child Care and Development Fund rules. These provisions required states to first pay childcare providers and then verify the attendance of children and the actual care services provided by these facilities.
The 2024 rules required states to pay based on enrollment numbers rather than verified attendance rates, and to prepay childcare providers based on contracted slots rather than vouchers held by parents, prioritizing guaranteed slots over parental choice.
These rules weakened oversight, increased risks, and led to misuse, fraud, and waste in federally funded state-level child care programs, including those currently under investigation in Minnesota.
Jim O’Neill, Deputy Secretary of Health, stated, “Prepaying providers based on enrollment rather than actual attendance records can facilitate abuse. In Minnesota, we have seen numerous credible allegations of fraud where childcare facilities have not actually cared for children.”
Assistant Secretary for Family Support Alex Adams added, “Inadequate oversight can allow bad actors to inflate costs for non-existent children.”
Citing Health Secretary Robert F. Kennedy, Jr., the announcement emphasized that congressional funding is meant to support working families, ensuring children have safe learning environments. However, loopholes and fraudulent activities diverted funds to criminals, which is now being corrected to serve deserving working families.
The Department of Health announced rule changes to revert to billing based on attendance. States may now be required to pay based on verified attendance, eliminating the need for prepayment.
States can return to the practice of billing providers after care services have been rendered. The voucher system will become more flexible, restoring parental choice in selecting childcare facilities.
The Department of Health will continue to enhance oversight of nationwide child care programs, launching the national “Defend the Spend” system to impose additional verification requirements on all states. A dedicated fraud reporting hotline and email address have been set up on childcare.gov.
Since the fraud hotline opened on December 30, 2025, the Administration for Children and Families has received over 245 potential fraud reports.
The announcement concluded by stating that the Department of Health will continue to collaborate with states to ensure child care programs protect children, serve eligible families, and responsibly manage taxpayer resources.