Local authority fee negotiation for care homes: making the case with your own data

You make the case for a higher fee by showing the council what it costs to meet a specific person's assessed needs, with your own records as evidence. Councils set standard weekly rates by care type and uplift them annually, but individual placements are negotiated on need, and a home that arrives with data on hours, incidents, staffing and training gets a better answer than one that arrives with a letter about inflation.

The short answer

Local authority care home fees work on two levels. The council sets a standard rate for each care type, usually reviewed each April with an uplift, after some consultation with providers. Then, for people whose assessed needs exceed the standard, which is most learning disability and mental health placements and a good number of nursing and dementia placements, the fee for that person is negotiated individually against their needs. The standard rate conversation is a market conversation you have once a year with everyone else. The individual placement conversation is the one you can win, and you win it with evidence: direct support hours actually delivered, incident frequency and severity, the PBS or risk plan, night support, the real staffing ratio, specialist training, agency cost the placement has forced, and a cost breakdown that ties them together. This article explains how fees are set, what evidence moves a fee, a template for the case, when to ask, what not to do, and how to keep fee versions straight once you have won.

How local authority fees actually work

Most councils publish or at least hold a standard weekly rate by care type: residential, residential dementia, nursing, and often separate bands for learning disability, mental health and complex needs. That rate is set by the council, uplifted each April, and is meant to reflect the local cost of care. Under the Care Act statutory guidance, councils must have regard to the actual cost of care in their area when setting rates and must promote a sustainable market. The fair cost of care exercise a few years ago made many councils publish what they think that cost is, which is useful reading before any negotiation.

The standard rate is a starting point, not a ceiling. Where a person's assessed needs cannot be met at the standard rate, the council commissions the placement individually, and the fee is negotiated between the home and the commissioning or brokerage team on the basis of the care and support plan. For nursing placements, NHS-funded nursing care is paid on top at a national rate. For people who meet the threshold, NHS Continuing Healthcare replaces the council altogether. For people detained under certain sections of the Mental Health Act, section 117 aftercare is funded jointly and cannot be charged to the person.

Two separate conversations

It helps to be clear about which conversation you are in, because they need different evidence and different tone.

The annual uplift is a market conversation. The council writes to all providers, usually in the spring, proposing an uplift. You respond with your cost pressures: the National Living Wage, employer's National Insurance, pension, energy, insurance, food, agency premiums, and the rise in complexity of the people you support. Provider associations often coordinate this. The outcome applies to everyone on the standard rate and to the base of most individual fees. Your leverage is limited but not nil: a well-evidenced provider response, especially one that shows the council's own fair cost figure against the rate offered, does move outcomes in some areas.

The individual placement fee is a needs conversation. It concerns one person, their care and support plan, and what it costs your home to meet it. Your leverage here is your evidence, and it is much greater, because the council has a duty to meet the person's needs and often has no alternative placement at the price it would prefer.

At a glance: who pays for what

The evidence that moves an individual fee

Commissioners respond to specifics from records, not to adjectives. The evidence that moves a fee, in rough order of weight:

• Direct support hours actually delivered to the person over a defined period, by shift, including one-to-one and two-to-one time, taken from the rota and the daily record.
• Incident frequency, severity and type over the same period, with what each one required in staff time and follow-up.
• The PBS plan, risk plan or clinical plan, showing what the assessed need demands day to day.
• Night support: waking or sleeping, how often the person needed staff overnight, from the night records.
• The actual staffing ratio on the unit and what this person’s needs add to it.
• Specialist training the placement requires, with dates and costs.
• Agency cost the placement has forced, where you had to cover hours you could not recruit for.
• Professional input: MDT meetings, psychology, SALT, OT, and the staff time to implement their recommendations.
• Outcomes: what the support has achieved, because a placement that is working is worth keeping funded.

All of it from your own records for a defined period, usually the last three months. Which is why the quality of your daily records, incident records and rota decides the quality of your fee case.

Building the case: a template outline

Keep the case short and evidence-led. Commissioners read dozens. This outline works.

1. Who the person is and what the placement is for, in two sentences, with the care and support plan referenced.
2. What has changed since the fee was set, or why the standard rate does not meet the assessed need, in plain terms.
3. Support hours delivered over the period, by shift, with one-to-one and night hours separated, from the rota and record.
4. Incidents over the period: number, type, severity, staff time and follow-up, from the incident log.
5. The plan that drives the support: PBS, risk or clinical plan, with the specific requirements that cost money.
6. Staffing and training: the ratio, the qualifications and training required, agency cost incurred.
7. The cost breakdown: hours multiplied by fully loaded hourly cost, plus the placement’s share of overheads, plus specialist costs.
8. The fee requested, the date from which it should apply, and the review period proposed.
9. Outcomes so far and the risk to the person if the placement cannot be sustained.

Attach the evidence as appendices: the hours report, the incident report, the plan, the training records, the agency invoices. Keep the letter to two pages and let the appendices carry the weight.

The cost breakdown that gets taken seriously

A commissioner will not accept a round number. Show how the fee is built. Start with the direct support hours per week for the person, split into shared and one-to-one. Multiply by the fully loaded hourly cost of a care worker: pay, employer's National Insurance, pension, holiday, sickness, training time, and the supervision and management time that supports the role. Add night cover at the rate for waking or sleeping nights. Add the person's share of the home's overheads: premises, utilities, food, insurance, registration, management, administration, records systems, maintenance. Add specialist costs: training, professional input, equipment, transport. Add a margin that allows for reinvestment, and say so; a home with no margin closes, and the council knows it.

Then compare the total to the fee currently paid. The gap, not the total, is the number the commissioner needs to defend to their own manager. Give it to them in a form they can lift straight into their report. Where the council has published a fair cost of care figure, reference it, especially where the rate offered sits below it.

Timing and tactics

The best time to negotiate an individual fee is at admission, before the person moves in, when the council has a need it must meet and you have not yet agreed to meet it. The second best time is at the first review, usually six weeks in, when the real need has become clear and you have data. The worst time is eighteen months later, when the fee has drifted below cost and the home has been absorbing the difference. Set a review date in the placement agreement at admission and use it.

Ask early, in writing, with the evidence attached. Ask for a meeting rather than an exchange of letters; a commissioner who has seen the person's records and heard the keyworker talk about the support changes their view faster than one reading a letter. Be clear about the date the new fee should apply from and ask for it to be backdated to the review or the date of the change in need. Be prepared to say what happens if the fee is not agreed: a notice period, a request for reassessment, a placement that cannot continue. Say it calmly, once, and only if you mean it.

Using the rota, the record and the incident log

The three records that carry most fee cases are the rota, the daily record and the incident log, and they need to agree with each other. If the rota shows two-to-one for a person and the daily record shows one worker, the case fails. If the incident log shows twelve incidents and the daily notes mention three, the case fails. Before you build a case, audit the three against each other for the period.

Homes that record one-to-one hours against the person in the daily log as the hours happen, rather than assuming the rota was delivered, have the strongest evidence, because they can show delivered hours, not planned hours. Homes whose care record holds the PBS plan, the incidents and the notes against the person can produce the three-month report in minutes. On paper, the same report is a week's work for the deputy, which is why most paper homes never make the case at all.

Learning disability and autism placements

Most learning disability and autism placements are individually commissioned, and many are funded jointly with health where the person came through a Transforming Care or Building the Right Support pathway. The fee case is almost always about hours and about the plan. Show the PBS plan and the functional assessment behind it, the one-to-one and two-to-one hours it requires and when, the staff training the plan demands, and the ABC data showing incidents by time and type. Show what the support has achieved: fewer incidents, more community access, a job, a relationship, fewer hospital admissions. A placement that is working is a placement the council wants to keep funded, and outcomes data from your own records is the strongest argument you have. Our PBS plan example shows the kind of plan that carries a case.

Mental health placements and section 117

Mental health care home placements are often funded under section 117 aftercare, jointly by the council and the integrated care board, which means two commissioners and two sets of paperwork. The case is built the same way: hours, incidents, the risk plan, night support, the staff training required. Add the mental health specific evidence: crisis episodes and what the home did, engagement with the community team, medication support, and the risk plan showing positive risk taking decisions and the staff time they need. Keep the section 117 status in the person's record with the date and the responsible bodies, because it cannot be charged to the person and because it determines who you are negotiating with. If the council and the ICB disagree about the split, that is their problem to resolve; your fee case is about the total.

Nursing placements, FNC and CHC

For nursing placements, the council fee is paid alongside NHS-funded nursing care at a national rate, and neither is meant to cover the other. Where the person's needs are primarily health needs, an NHS Continuing Healthcare assessment may move the whole cost to the integrated care board. A home that suspects a person is eligible should ask for a checklist and a full assessment, because CHC is not a fee negotiation in the usual sense but it changes who pays and often how much. For council-funded nursing placements with needs above the standard, the case is built on nursing hours, clinical complexity, equipment, and the care staff time the clinical plan requires, with the nurse's records as evidence.

Third party top-ups and self-funders

Where a family chooses a more expensive placement than the council would fund for the person's assessed needs, the difference can be paid as a third party top-up under a written agreement involving the council, the family and the home. The top-up is for preference, not for need. If the person's needs rise and the home asks for more, the increase is a matter for the council, not the family, and the top-up should not quietly grow to fill a gap the council should be paying. Keep the top-up agreement, its amount and its review date in the person's finance record, separate from the council fee.

Self-funders pay the home's published fees under the home's contract. When a self-funder's capital falls towards the threshold, start the conversation with the council early, because the transition to council funding is where fees drop and homes lose money if the assessed need has not been documented in time.

The annual uplift response: what to put in it

The uplift letter arrives in the spring and most homes answer it with a paragraph about costs going up. A response that moves the number is specific. Set out your pay settlement for the year, the National Living Wage and employer's National Insurance changes with the actual cost per hour, pension, the rise in your energy and insurance premiums with figures, food inflation, and the agency premium you have paid over the year. Show the change in complexity: average dependency score now against a year ago, one-to-one hours as a share of total hours, the number of individually commissioned placements. Reference the council's own fair cost of care figure and the gap between it and the proposed rate. Keep it to two pages with a table. Coordinate with your provider association where there is one, because a consistent message from twenty homes carries more weight than twenty different letters, and keep your response on file, because the next year's response starts from it.

Reassessments and rising needs

A fee negotiated on a care and support plan is only right while the plan is right. When a person's needs rise, ask the council for a reassessment under the Care Act as soon as the change is evident and sustained, not when the home has been absorbing the cost for a year. The trigger points are predictable: a change in mobility or continence, a new diagnosis, a run of incidents, a hospital admission, a new one-to-one requirement, a change in night needs. Record the change in the care plan with dates, gather the evidence for the period since it started, and write to the social worker and the commissioner together. Ask for the reassessment date in writing. If the reassessment confirms the higher need, the fee should follow from the date the need changed, and you should ask for that. A home that keeps its incident log and its incident reviews current has the evidence ready the day the need changes; one that does not will be arguing from memory.

Keeping track of fee versions

A fee that has been renegotiated three times has three versions, each with a start date, possibly a backdate, and possibly a different split between funders. If you do not keep each version with its dates, you will invoice the wrong amount, miss the backdated difference, or be unable to answer a finance officer who asks what was agreed in March. Record each fee as a version: the amount, the funders and the split, the start date, the end date if any, who agreed it and the reference. When the council backdates, raise a separate invoice for the difference with the period shown. A finance module that holds multi-funder splits and fee versions against the person does this without a spreadsheet; on a spreadsheet, one person has to remember. Our guide to invoicing local authorities for care home fees covers the mechanics.

What to do when the council says no

Councils say no for three reasons: they do not accept the evidence, they do not have the budget, or they think another placement could meet the need for less. Ask which. If the evidence is disputed, offer the records and a meeting with the keyworker. If it is budget, ask for a review date and a partial increase now, and put your position in writing. If it is an alternative placement, ask them to name it, because often there is not one. Escalate politely: the commissioning manager, then the head of service. Where the person's needs are not being met at the fee, the council's duty under the Care Act is engaged and you can say so. Keep the person and family informed in a way that does not make them the bargaining chip. And if the placement is genuinely unsustainable, give notice properly, with the notice period in the contract, and record why.

The council's own scrutiny

CQC now assesses local authorities on how they discharge their Care Act duties, including market shaping and commissioning, and publishes reports. Read your council's assessment report. Where it says the council needs to improve how it works with providers, or how it sets fees, that is a sentence you can quote in a market response. Councils also publish market position statements and, in many areas, the fair cost of care exercise results. Knowing what the council has said about itself is useful context for both the uplift conversation and the individual case.

Working with commissioners over the long term

Fee negotiation goes better with a commissioner who knows your home. Invite them to visit. Send a short quarterly update on the people they fund: what has changed, what has been achieved, any concerns. Answer their data requests quickly and accurately. Tell them early when a person's needs are rising, not when the fee is already below cost. A commissioner who trusts your records will accept your evidence faster and argue for you internally. One who has been surprised by a home's invoicing or has caught a home overstating hours will scrutinise everything. Your records are your reputation.

Common mistakes

• Writing to the council about inflation when the case is about one person’s needs.
• Asking for a round number with no cost breakdown.
• Claiming hours the rota and the daily record do not support.
• Waiting eighteen months while the fee drifts below cost.
• Letting a third party top-up grow to cover a need the council should fund.
• Losing track of fee versions and backdates, so the invoices are wrong.
• Threatening notice without meaning it.
• Making the family the messenger.

What good looks like in a fee review meeting

The commissioner arrives for the six-week review of a learning disability placement. The manager has a two-page letter and five appendices. The hours report shows delivered one-to-one hours by shift for the six weeks, from the daily record, with two-to-one on Tuesday afternoons for the day service transition. The incident report shows nine incidents, seven in the first three weeks and two since the PBS plan was revised, with staff time for each. The PBS plan is attached with the functional assessment. The training record shows the team completed the specific training the plan requires and what it cost. The agency report shows the hours that had to be covered while a vacancy was filled. The cost breakdown builds the fee from those numbers, references the council's published fair cost figure, and shows the gap against the current fee. The keyworker talks about what has changed for the person. The commissioner asks for the report in a form she can lift into her own paper, and the manager exports it. The fee is agreed from the review date, the backdated difference is invoiced separately, and the new version is recorded with its dates. That took the manager an hour to prepare, because the records were already there. It is what a system such as Kiwi, with one-to-one hours, incidents and fee versions against the person, is meant to make routine; if you want to see the hours and incident reports a commissioner would receive, book a demo.

Final conclusion

Local authority fees are set by the council and uplifted each year, but the fee for a specific person is negotiated on their assessed need, and that is the negotiation you can win. Win it with your own records: delivered hours, incidents, the plan, night support, staffing, training, agency cost, and a cost breakdown that ties them together. Ask early, in writing, with a meeting and a review date. Keep every fee version with its dates so the invoices are right. And keep the records good every day, because the quality of your fee case is decided long before you write it.

Frequently asked

How are local authority care home fees decided?

Councils set a standard weekly rate by care type, uplifted each April, usually after consultation with providers, and they must have regard to the actual cost of care in their area under the Care Act guidance. Placements with needs above the standard assessment, which is most learning disability and mental health placements, are negotiated individually on assessed need.

What evidence do I need to negotiate a higher fee for one person?

Delivered support hours by shift including one-to-one and night hours, incident frequency and severity with staff time, the PBS, risk or clinical plan, the actual staffing ratio, specialist training, any agency cost the placement has forced, and a cost breakdown built from those numbers. All from your own records for a defined period, usually three months.

When is the best time to negotiate a placement fee?

At admission, before the person moves in, and again at the first review around six weeks in when the real need is clear and you have data. Set a review date in the placement agreement and use it. Waiting until the fee has drifted below cost is the weakest position.

Can a care home charge a family a top-up to cover a fee shortfall?

Only for preference beyond assessed need, under a written third party top-up agreement involving the council. If the person’s needs rise, the increase is for the council to fund, not the family. Keep the top-up agreement and its review date in the finance record separately from the council fee.

How is NHS Continuing Healthcare different from a council fee?

NHS Continuing Healthcare is funded by the integrated care board for people whose needs are primarily health needs, following a checklist and full assessment. It replaces the council fee rather than topping it up. NHS-funded nursing care is a separate national rate paid for the nursing element in nursing homes.

What is section 117 aftercare and who pays?

Section 117 of the Mental Health Act requires the council and the integrated care board jointly to provide aftercare for people who have been detained under certain sections. It cannot be charged to the person. Fee negotiation for a section 117 placement is with both bodies, and the split between them is for them to resolve.

How do I keep track of fee changes and backdated payments?

Record each fee as a version with the amount, the funders and their split, the start and end dates, who agreed it and the reference. Raise a separate invoice for any backdated difference showing the period. A finance system that holds multi-funder splits and fee versions against each person removes the spreadsheet risk.

What should I do if the council refuses a fee increase?

Ask why: disputed evidence, budget or an alternative placement. Offer the records and a meeting, ask for a review date and a partial increase, or ask them to name the alternative. Escalate politely through the commissioning manager and head of service, put your position in writing, and only give notice if the placement is genuinely unsustainable.

Sources

• GOV.UK: Care Act 2014 statutory guidance
• DHSC: Market Sustainability and Fair Cost of Care Fund guidance
• NHS England: National Framework for NHS Continuing Healthcare and NHS-funded Nursing Care
• Mental Health Act 1983: section 117 aftercare
• CQC: assessment of local authorities under the Care Act
• NHS England: Building the Right Support action plan
• LGA and ADASS: care and support commissioning guidance
• Skills for Care: The state of the adult social care sector and workforce in England