How to Prepare for a Fee Review

Most supported living providers accept the fee their local authority offers. Not because they are satisfied with it. Because they do not know how to challenge it effectively. That acceptance, year after year, is one of the primary reasons margins have been declining steadily across the sector.

A fee review is not a confrontation. It is a professional exchange of evidence. The providers who get meaningful rate increases are not the loudest or the most persistent. They are the ones who arrive with the right information, presented in the right way.

Why Most Fee Reviews Fail Before They Start

The typical fee review approach goes something like this: a provider writes to the LA in advance of the contract renewal, states that costs have increased significantly, and asks for a higher rate. The LA responds with a standard offer — usually CPI or a fixed percentage — and the provider accepts it, because they have no evidence to counter with.

This is not a negotiation. It is a request for a favour. And commissioners, under their own budget pressures, do not grant favours. They respond to evidence.

The three most common mistakes providers make in fee reviews are: not preparing the evidence in advance, not quantifying the gap between their current rate and their actual cost of delivery, and not understanding the commissioner’s own framework for setting rates. All three are correctable — but they need to be addressed before you enter the conversation, not during it.

The Cost of Care Model: Your Central Document

The foundation of any effective fee review is a cost of care model: a clear, transparent breakdown of what it actually costs you to deliver each hour of commissioned support.

This document shows: the fully loaded employment cost per hour of care — including the NLW-based wage, employer NI at 15%, pension at minimum 3%, supervision and management overhead allocated to that service, training costs, and DBS renewal. It shows the property cost allocated to that service. It shows a proportionate share of central overhead. And it shows the result: your actual cost per hour, compared to the rate the LA is currently paying you.

If the LA rate was set before the April 2025 NLW uplift and the NI increase, that comparison will be striking.

A support worker earning £12.21 per hour costs you £15.50 to £16.50 per hour in total employment costs. If your commissioned rate is below that fully loaded figure before property and overhead are added, the conversation with the commissioner is no longer about asking for more money — it is about demonstrating a factual underfunding position.

What Commissioners Respond To

Local authority commissioning teams are not unsympathetic to provider viability. They understand the funding pressures in the sector. What they need — and what most providers do not give them — is evidence that withstands scrutiny.

The evidence that works in a fee review is precise, specific to your services, and grounded in real figures. Not a reference to sector averages. Not a general statement about NLW increases. Your actual cost per hour for your specific services, with the methodology explained clearly.

Commissioners also respond to acuity data. If you support people with complex needs that require higher staff ratios — two-to-one support, waking night cover, specialist training requirements — that acuity should be documented and presented. A commissioner cannot fund complexity they cannot see. If your acuity data is not captured, you are almost certainly being funded as if all placements were equivalent, when some are significantly more costly to deliver.

Timing Your Fee Review Correctly

The ideal time to begin preparing for a fee review is twelve months before your contract rate is due for renewal — not one month before. This gives you time to build the cost of care model properly, update it as NLW and NI changes occur, and gather the acuity data that supports a tiered rate argument.

It also gives you time to build a relationship with the commissioning team before you need something from them. Providers who engage their LA commissioning contacts proactively — sharing data, attending market position statement consultations, providing feedback on tender terms — are in a materially better position when the fee negotiation arrives than those who only make contact when they want a rate increase.

The Minimum Viable Evidence Pack

If you are approaching a fee review in the near term and do not have a full cost of care model built, the minimum viable evidence pack is: your current management accounts showing your cost structure; a calculation of your fully loaded employment cost per hour for the services being reviewed; and a written statement from your accountant or financial adviser confirming the figures and their basis.

This is not as strong as a fully developed cost of care model. But it is materially better than a letter asking for more money. It signals to the commissioner that you are approaching this professionally and with evidence — and that changes the conversation.

What to Demand in Your Contract Terms

Beyond the rate itself, the contract terms that protect your position going forward are: an indexation mechanism tied to NLW increases, not just CPI; a minimum annual review date; an acuity top-up clause that allows the rate to increase when the assessed complexity of a placement changes; and a clawback clause that is capped at a reasonable percentage of the monthly fee, not open-ended.

If your current contracts do not contain these protections, the next renewal is the time to negotiate for them — not as a favour, but as a standard for sustainable commissioning.

How RDA Helps

We build cost of care models for supported living providers, help prepare the evidence pack for fee review submissions, and advise on the contract terms that protect margin over time. We have helped providers secure meaningful rate increases in situations where they previously accepted the LA’s standard offer without challenge.

If you have a fee review coming up in the next six to twelve months, book a call with Dan Daly at supportedlivingfinancials.co.uk or email ddaly@rdaaccountants.co.uk to start the preparation process now.