Care home fees for residents funded by a local authority or the NHS are invoiced against a rate set out in a contract or placement agreement, usually four-weekly or monthly and often in arrears. Errors come from the split: one resident's fee may be paid by the council, by the NHS, and by a family top-up, each with its own rate, start date, purchase order and invoice. Get the split, the dates and the pence right and most of the disputes disappear.
Who pays for a care home placement?
- Self-funders. The person or their attorney pays the full fee under a private contract with the home.
- Local authority. Following a Care Act needs assessment and a financial assessment, the council pays the agreed rate. The resident usually contributes from their income, and that contribution is either collected by the council or by the home, depending on the contract.
- Third-party top-ups. Where a family chooses a home costing more than the council's rate, a third party pays the difference under a separate written agreement. The resident normally cannot pay their own top-up, with limited exceptions.
- NHS Continuing Healthcare. Where the person's primary need is a health need, the integrated care board pays the full fee.
- NHS-funded Nursing Care. In nursing homes, a flat weekly contribution towards the nursing element, paid by the NHS alongside the council or the self-funder.
- Section 117 aftercare. People detained under certain sections of the Mental Health Act are entitled to free aftercare, funded jointly by the council and the NHS. Nobody should be charged for section 117 accommodation, including top-ups. Mental health homes need to know exactly who is on section 117.
- Joint funding. Any mix of the above, with agreed percentages or fixed amounts from each funder.
How local authority invoicing works
Councils typically pay on a four-weekly cycle, thirteen periods a year, in arrears, though some pay monthly or in advance. Each placement has a weekly rate in the placement agreement, and the council's finance system expects an invoice for each period that matches its own record of the placement. Many councils now use self-billing or a provider portal, where they tell you what they will pay and you check it. Either way, the reconciliation is yours to do.
The things to hold for every funded resident:
- The placement agreement or contract, with the start date and the weekly rate.
- The purchase order number, if the council uses them. Invoices without one are rejected automatically.
- The funder split, with each funder's rate and start date.
- The date of every rate change, usually the annual April uplift, and whether it is backdated.
- Any agreed contribution collected by the home.
- The contract terms for hospital stays, absences and the period after death.
The invoicing errors that cause disputes
| Error | Why it happens | Fix |
|---|---|---|
| Wrong rate | Uplift applied late, or applied to the wrong funder | Rate history per funder with effective dates |
| Wrong start or end date | Admission, discharge or death date entered differently by home and council | Confirm dates in writing at each change and invoice from the record |
| Partial weeks miscalculated | Weekly rate divided inconsistently, or rounded per funder so the split does not add up | Daily rate as weekly divided by seven, calculated in pence, split before rounding |
| Charging during hospital stays or after death | Contract terms not applied | Check the contract; most pay a defined number of days after death or absence |
| Top-up not invoiced separately | Top-up rolled into the council invoice or forgotten | Separate agreement, separate invoice, same period |
| Missing purchase order | Council changed the PO and nobody told finance | PO on the resident's funding record, checked each run |
| Invoicing the wrong body | Funding moved from council to CHC and invoices kept going to the council | Funding change recorded with an effective date |
| Section 117 charged | Status not recorded on admission | Legal status captured in the care record and the finance record |
Prorating partial periods correctly
A resident admitted on the Wednesday of a four-week period, with the council paying most of the fee and a family top-up covering the rest, is where spreadsheets go wrong. The method that avoids arguments:
- Convert the weekly rate to a daily rate in pence: weekly rate multiplied by 100, divided by seven.
- Count the chargeable days from the admission date using the contract's rule on whether the admission day and discharge day are charged.
- Calculate each funder's share for the period in pence before rounding, then round each to whole pence.
- Check that the funder amounts add up to the total. If rounding leaves a penny out, allocate it by a fixed rule and apply the same rule every time.
Doing this by hand across twenty residents and three funders every four weeks is where errors creep in. Finance tools that hold the funder split against the resident and prorate in whole pence automatically remove the arithmetic, and the audit trail shows how each figure was reached when a council queries it.
Annual uplifts
Councils and the NHS announce fee uplifts around April, often after the new financial year has started, and often backdated. Keep the old rate and the new rate both on record with effective dates, raise a separate adjustment invoice for the backdated difference rather than altering past invoices, and check that the top-up agreement says what happens to the top-up when the council rate changes.
Reconciliation and chasing
Every remittance advice from a funder should be matched to invoices line by line. Short payments are common and usually mean a date or rate mismatch on their side; an unresolved short payment becomes an aged debt the council will later dispute on the grounds it was never raised. Run an aged debt report monthly, chase anything over sixty days with the placement reference and PO quoted, and escalate through the commissioning contact rather than the accounts payable inbox.
Monthly invoice-run checklist
- Admissions, discharges and deaths in the period confirmed against the care records.
- Funding changes and new placement agreements entered with effective dates.
- Rate changes applied to the correct funder from the correct date.
- Hospital stays and absences checked against contract terms.
- Partial periods prorated in pence, splits checked to add up.
- Purchase order numbers current on every council invoice.
- Top-ups invoiced separately for the same period.
- Section 117 residents not charged.
- Previous remittances matched, short payments queried, aged debt reviewed.
None of this is difficult. It is repetitive, date-sensitive arithmetic that has to be right every period, and it depends on the finance record and the care record agreeing on who was in the home, on which days, under which funding. Kiwi keeps those on one record per resident, with the multi-funder split and the prorating done for you, and it is included in the £300 per home per month rather than sold as a separate module.
Frequently asked
How often do local authorities pay care home fees?
Most councils pay on a four-weekly cycle, thirteen periods a year, usually in arrears, though some pay monthly or in advance. The placement agreement sets the cycle and the rate. Many councils use self-billing or a portal, so check their figures against your own record every period.
Can a care home charge a top-up for a section 117 placement?
No. Section 117 aftercare under the Mental Health Act is free to the person, funded jointly by the council and the NHS, and that includes accommodation costs. Record section 117 status on admission so it flows into the funding record.
How should partial weeks be prorated on a care home invoice?
Convert the weekly rate to a daily rate in pence, count chargeable days under the contract's rules, calculate each funder's share before rounding, then round to whole pence and check the shares add up to the total. Apply the same rounding rule every time.
