Ensuring Accountability: HHS Revokes Child Care Rules to Prevent Fraud and Misuse of Federal Funds
The U.S. Department of Health and Human Services (HHS) is taking action to revoke certain child care rules implemented during the Biden administration. These rules required states to pay child care providers before verifying attendance or delivering services, potentially leading to misuse of federal funds. Health and Human Services Secretary Robert F. Kennedy, Jr. emphasized the importance of ensuring funds are used to support families and children, rather than being diverted to fraudulent activities.
The changes aim to address loopholes that allowed for misuse of funds and strengthen oversight of federally-funded state child care programs. The new rules will require states to verify attendance before making payments to providers, shifting away from the previous practice of paying based on enrollment. This change is intended to prevent fraudulent activities, such as billing for children who are not actually receiving care.
Health and Human Services Deputy Secretary Jim O’Neill highlighted the need to prevent abuse in child care programs, citing instances of fraudulent daycare providers in Minnesota. The reforms seek to make it more difficult for bad actors to exploit the system and ensure that federal investments in child care benefit working families and the American workforce. The rule changes are open for public comment for 30 days to gather feedback from stakeholders.
HHS is committed to enhancing oversight of child care programs nationwide to protect children, support eligible families, and safeguard taxpayer resources. Initiatives such as the Defend the Spend system, additional verification requirements for states, and a fraud-reporting hotline and email address have been implemented to detect and address potential fraud in child care programs. The agency has already received numerous reports of potential fraud since the launch of the tip line in late 2025.
Moving forward, HHS will collaborate with states to ensure that child care programs operate effectively, serve those in need, and uphold responsible financial management practices. By implementing these rule changes and strengthening oversight measures, the department aims to promote transparency, accountability, and the proper use of federal funds in child care programs.