EIGHT million pounds will be spent by Derbyshire County Council on backdating increased payments to private care homes.
The move was approved at a council cabinet meeting yesterday.
It will be funded from the authority's reserves and cover the period back to 2011.
Since that time, the council has increased the rates it pays to the county's private care homes for resident placements by 2% per year.
The Derbyshire Care Providers Association, which was formerly the Derbyshire Care Homes Association, wrote to the council in 2011 on behalf of its members who believed the increase should be higher.
The association said the rate being paid by the council for care home residents did not take into account the "actual costs of care" and did not allow for a reasonable amount of profit to be made.
Following discussions, the council agreed to carry out a full review of actual costs of providing care.
It sent out questionnaires to all Derbyshire care homes asking for information and evidence of the actual costs involved in running their businesses.
The council analysed the data it received, while also looking at the rates paid by other local authorities and taking in to consideration the cost of running its own care homes before reaching a proposed new fee rate.
The increased fee agreed by the council's cabinet yesterday represents a rise of £28.21 per residential placement, per week, being paid to care homes.
Council cabinet member for adult social care councillor Clare Neill said: "We inherited this issue from the previous [Conservative] administration. It had been going on for far too long and needed sorting out.
"We believe the increased fees we have agreed are fair and have set aside the money in council reserves to cover the backdated payments.
"A great deal of work, time and effort has gone in to looking at the costs of care and consulting with care homes across the county.
"The fee levels we have now agreed compare well with the fees paid by surrounding similar authorities and we would hope that care home providers will find this increase acceptable."
