GOP Senators Propose Bill to Curb Childcare Fraud After $9B Minnesota Scandal

The Payment Integrity Act would require proof of attendance before federal childcare funds are disbursed, reversing a 2024 Biden administration rule.

Published on Feb. 12, 2026

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Senators Ted Cruz, Mike Lee, and Rick Scott are introducing the Payment Integrity Act, legislation that would require states to distribute federally funded childcare dollars based on verified attendance rather than enrollment claims. This comes after alleged $9 billion in childcare fraud uncovered in Minnesota, where providers were paid before attendance was confirmed.

Why it matters

The proposed legislation aims to address widespread fraud in federal childcare programs, where funds intended to support vulnerable children were allegedly misused by unscrupulous providers. By shifting to an attendance-based payment model, the senators hope to ensure taxpayer money is used for its intended purpose.

The details

The Payment Integrity Act would reverse a 2024 Biden administration rule that required states to pay childcare providers before attendance verification. Under the new proposal, providers would only be paid after services are confirmed, shifting from enrollment-based payments to attendance-based billing. The bill also codifies a January rule from the Department of Health and Human Services establishing attendance-based billing procedures.

  • In February 2026, Senators Cruz, Lee, and Scott introduced the Payment Integrity Act.
  • In January 2026, the Department of Health and Human Services established attendance-based billing procedures for childcare providers.

The players

Ted Cruz

A Republican senator from Texas who is introducing the Payment Integrity Act.

Mike Lee

A Republican senator from Utah who is co-sponsoring the Payment Integrity Act.

Rick Scott

A Republican senator from Florida who is co-sponsoring the Payment Integrity Act.

Robert F. Kennedy

The Secretary of Health and Human Services, whose deputy Jim O'Neill announced reforms to address fraudulent daycare providers.

Jim O'Neill

The deputy to Health and Human Services Secretary Robert F. Kennedy, who announced reforms to address fraudulent daycare providers.

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What they’re saying

“Programs in Minnesota for welfare and childcare were designed to channel resources into protecting vulnerable children, but were treated like an open ATM by criminals.”

— Ted Cruz, U.S. Senator (Fox News)

“Fake childcare operations are stealing funding from the ones who are actually taking care of America's children in need. Our bill will address this massive fraud by granting funding based on actual attendance rather than reported enrollment, and allowing states to pay retroactively instead of in advance.”

— Mike Lee, U.S. Senator (Fox News)

“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.”

— Jim O'Neill, Deputy to HHS Secretary (Fox News)

What’s next

The Payment Integrity Act will now move through the legislative process, with the Senate Judiciary Subcommittee expected to hold further hearings on the issue of childcare fraud.

The takeaway

This legislation aims to close loopholes that allowed widespread fraud in federal childcare programs, ensuring taxpayer money is used to support vulnerable children rather than being exploited by unscrupulous providers. The shift to attendance-based billing is intended to make it harder for fraudulent operations to misuse funds intended for legitimate childcare services.