American daycare centers will no longer receive federal funds before verifying that services to children have actually been provided. The rule change from the Department of Health and Human Services follows allegations that several daycare centers in Minnesota received government funds but had no children in attendance.

Last week, HHS froze childcare payments to Minnesota after a YouTuber, Nick Shirley, posted a roughly 40-minute-long video that appeared to show several government-funded daycare centers run by Somali Americans were not providing services to children. 

A division of HHS, the Administration for Children and Families, responded Monday by saying it has rescinded a Biden-era rule that required states to pay daycare centers before they verified child attendance. 

The HHS secretary, Robert F. Kennedy Jr., said in a statement, “Congress appropriated this funding to support working families and ensure children have safe places to grow and learn.”

“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,” he said. 

The deputy HHS secretary, Jim O’Neill, said that paying daycare centers “based on paper enrollment” instead of verifying child attendance “invites abuse.”

“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,” he said. 

Mr. Shirley’s video helped intensify scrutiny around widespread fraud in Minnesota. Last month, federal prosecutors estimated that more than half of the $18 billion in federal Medicaid funds sent to the state since 2018 — the year Governor Tim Walz was elected governor — may have been stolen. At least 92 people have been charged with fraud schemes in Minnesota, 89 percent of them Somali Americans. The assistant U.S. attorney for the District of Minnesota, Joe Thompson, told reporters that the “magnitude” of the fraud “cannot be overstated.” 

Some of the centers have claimed that Mr. Shirley visited them outside of operating hours. He has pushed back on those claims, saying that he visited at least one in the morning and the afternoon. He also said he had difficulty getting answers from some centers when he called them. A CNN reporter, Whitney Wild, also said last week that only one of the daycare centers Mr. Shirley visited answered her phone call. 

Mr. Walz has tried to cast doubt on Mr. Shirley’s video. He wrote in a post on X that his “opponents” have celebrated Mr. Shirley as a “groundbreaking journalist,” but that he is a “delusional conspiracy theorist.”

While allegations of fraud in Minnesota have captured the attention of Republican lawmakers in Congress, President Trump says that fraud in other blue states is “worse.”

The Trump administration is cutting off more than $10 billion in social services and childcare funding to other Democrat-led states due to concerns about fraud. On Monday, HHS said it will freeze funding from the Child Care Development Fund, the Temporary Assistance for Needy Families Fund, and the Social Services Block Grant program. 

The freeze will affect states like California, New York, and Illinois.

Senator Kirsten Gillibrand said in a statement on X, “This has nothing to do with fraud and everything to do with political retribution that punishes poor children in need of assistance.”

Several outlets, such as CNN and the New York Times, said no evidence has been presented that those states have seen widespread fraud. 

A spokesman for HHS, Andrew Nixon, said in a statement, “Democrat-led states and governors have been complicit in allowing massive amounts of fraud to occur under their watch.”

“We are ensuring that federal taxpayer dollars are being used for legitimate purposes. We will ensure these states are following the law and protecting hard-earned taxpayer money,” Mr. Nixon said.