Fair Cost of Care

During 2022 the Government's Department of Health and Social Care (DHSC) asked local authorities with responsibility for adult social care to survey care providers about the costs of providing services in their area.  This was applicable to home care services for those aged over 18 and older people care homes.  The aim of the exercise was to establish the median cost of care, which was reflective of providers’ April 2022 cost pressures, and could be used to establish a “fair fee rate” for these services.  The authority is publishing the Fair Cost of Care “Annex B” part of the exercise as required by DHSC.

The information was required in preparation for changes to the statutory framework (Section 18(3) of the Care Act) for adult social care which would entitle anyone needing care home accommodation to ask the local authority to contract for this, regardless of their financial circumstances.  Since the council submitted its Fair Cost of Care information the DHSC has announced that these reforms will be deferred until 2025.  Authorities are expected to detail how they will move towards a fair cost of care over the next three years.  With the deferral of implementation of Section 18(3) of the Care Act it is not clear how much funding the DHSC will make available in the longer term to enable authorities to move to paying the fair cost of care fee rate.

It is important to highlight some issues with the Fair Cost of Care exercise:

• Whilst a long-term intention, in line with this cost of care exercise may be to work towards an estimated median Fair Cost of Care, in the context of specific rates for care paid, DHSC guidance states that “fair means what is sustainable for the local market”. The council will continue to monitor the pressure in the market (both staffing and business operating costs) through the fee exercise.  
• Achieving this median is not an indicator of a sustainable market; the ability to purchase the volume of care required in a timely manner is a primary indicator of how the market is performing. It is important to note that the council’s ability to move towards this rate will be dependent upon the future allocation of the Fair Cost of Care fund by the DHSC. It is also important to have a vibrant local market that can meet the local need and demand.  
• No single exercise at any point in time becomes the “end” point for this assessment of market sustainability. It is an iterative process, and it is the duty of the council’s commissioning function is to continually review and adapt its understanding of costs and contracting practices regularly.
• It is important to note the inherent and practical limitations of such an exercise and reflect particularly on what the outputs from any cost modelling exercise aims to achieve.  Any single cost median or model will not reflect the diversity within a whole market due to the number of variables to take into consideration. In addition, this means that any attempt to include all variables would result in an unusably large range of outputs in any practical sense.  Furthermore, as the DHSC requirement was to generate median, upper and lower quartiles for each respective cost line, the sum total will never add up to an individual provider.
• It should also be clearly understood that a cost exercise is not an absolute formula that will set a “single” or “minimum”, or “best” market price for all providers.  The realistic expectation in this project is that the model simply outputs a set of figures that are indicative of costs incurred by providers (based on data that some have provided) at a point in time.  The model can then help to highlight different costs and cost drivers and this in turn can promote a greater level of understanding, particularly for commissioners, when the commissioners come to consider future pricing.
• Although the many efforts undertaken to engage with the market the level of participation from the providers was lower than expected due to time constraints, availability of information and the willingness of smaller providers to engage in a burdensome process.

For home care the council has a robust annual fee setting process, which includes modelling.  This is based on the National Home Care Association’s fee model and is accompanied by sample checks of rotas to determine accurate average travel time.  For care homes this the council undertakes modelling which is usually checked back to provider data which is supplied during the fee setting process to check for accuracy of uplift and identify other cost pressures.

The council’s fee setting process for 2023/24 will take into account the data collected in this Fair Cost of Care exercise, whilst broadly reflecting the normal annual fee setting process noting that the council has already gathered the provider information.  However, we intend to further enhance our approach to provider engagement. 

These documents were prepared to meet a tight timetable for the submission, and include some minor editing errors and typos, which we have corrected since submission. 

The Annex B publications for Bolton are available here:

• Annex B Homecare - Cost of Care Report
• Annex B Care Homes - Cost of Care Report

Further Information

• The DHSC guidance on Fair Cost of Care .
• People at the Heart of Care: adult social care reform white paper 

If you have queries about any of these documents, please let us know by email to Commissioning@bolton.gov.uk