HHS Revises Childcare Payment Rules, Restoring Attendance-Based Billing

Key Clinical Summary

• The US Department of Health and Human Services (HHS) is rescinding the  Child Care and Development Fund (CCDF) rules that allowed states to pay providers without verifying attendance.
• New federal changes restore attendance-based billing, end required upfront payments, and reintroduce parent-directed voucher flexibility.
• HHS officials cite concerns regarding fraud risks  and ongoing investigations, including cases in Minnesota, as key drivers of the policy reversal.

The US Department of Health and Human Services (HHS), through its Administration for Children and Families (ACF), announced it will roll back childcare payment rules finalized in 2024. According to HHS, the changes aim to strengthen oversight, reduce fraud, and ensure federal childcare funds support eligible working families and children as intended.

Main News

Under the CCDF rule, states were required to base childcare payments on enrollment rather than verified attendance, issue payments in advance, and favor provider contracts over parent-directed vouchers. HHS officials stated these provisions reduced  financial controls and increased the risk of waste, fraud, and abuse in federally funded childcare programs.

The revised HHS policy supports several pre-2024 practices. States may again require attendance-based billing, allowing payment only after children are verified as receiving care. Upfront payments to providers will no longer be required, permitting reimbursement after services are delivered. In addition, states are no longer encouraged to prioritize guaranteed provider contracts over parent-directed vouchers, restoring greater parental choice.

Deputy Secretary Jim O’Neill emphasized the potential real-world consequences of the earlier rules. “Paying providers upfront based on paper enrollment instead of actual attendance invites abuse,” he said, citing allegations of fraudulent daycare providers in Minnesota.

HHS also highlighted enhanced enforcement efforts. Since launching a national fraud-reporting hotline and email address at childcare.gov on December 30, 2025, ACF has received more than 245 reports alleging  potential fraud. The agency has also activated a national Defend the Spend system and imposed additional verification requirements on states.

The rescission of the CCDF rules will undergo a 30-day public comment period before finalization.

Clinical Implications

Although the policy change focuses on childcare financing, it has indirect implications for health care professionals, particularly those serving low-income families. Reliable access to childcare is closely tied to parental employment, insurance continuity, and the ability to attend medical appointments. Fraud-related disruptions to childcare programs may undermine family stability and access to preventive and ongoing care.

By reinforcing accountability and ensuring funds reach legitimate providers, HHS aims to stabilize childcare infrastructure that supports the broader social determinants of health. Clinicians working with pediatric and family populations may see downstream effects if reforms improve access to safe, dependable childcare, which can influence developmental outcomes, caregiver stress, and adherence to health care plans.

Conclusion

HHS’s revision of childcare payment rules reflects a shift in federal oversight and payment policy for US childcare programs. Federal officials say the changes will better protect children, families, and taxpayer resources while reinforcing the integrity of federally funded childcare nationwide.

Reference

HHS to close Biden-era loophole that let states pay child care providers without counting attendance. HHS.gov. News release. Published January 5, 2026. Accessed January 5, 2026. https://www.hhs.gov/press-room/hhs-close-biden-era-loophole-states-pay-child-care-providers-without-counting-attendance.html