Privately run homes in Wakefield are paid the same amount of money for looking after a resident placed with them by the local council, regardless of how complex their needs are.
A meeting on Thursday was told that some providers have declined to take some elderly patients with serious problems because they feel they're not paid enough to cover the running costs of their care.
The National Care Association, which represents providers, were being left "underfunded" by local authorities across the UK.
Wakefield Council and NHS chiefs are plotting a new strategy for working with local care homes, amid the rising cost of social care for the public purse.
That may include more cash for providers looking after those with serious degenerative conditions.
As the council is ultimately responsible for the wellbeing of local people, they sometimes have to pay for care home places where individuals are unable to afford it themselves.
Speaking to councillors at a health scrutiny committee, Nicola Esmond, from the council's adults and social care department, said: "We currently pay a care home the same rate for somebody who doesn’t have any problematic behaviours, as we do for somebody who might be more difficult to manage, through dementia for example, or another reason.
"That’s part of the reason why they might say, "No, we don’t want to take those people, because we don’t get any extra funding to support their care"."
She added: "Little things like that we might be able to tweak."
The chair of the National Care Association, Nadra Ahmed, said: "The reality is that many providers are struggling with recruitment and retention in addition to the financial challenges of underfunding by local authorities.
"It is sometimes therefore a strategic decision to evaluate whether another new resident with high levels of need can be embedded into the service.
Councillors in Wakefield have repeatedly condemned the government for delaying a new bill on social care funding, which was first expected in 2016.
Labour member Olivia Rowley glibly suggested that "pigs will fly" before the bill goes before Parliament.
There are 62 registered nursing and residential homes in the Wakefield district, the majority of which are currently rated as 'good' by the health watchdog.
However, more than a dozen have been placed in special measures at one time or another by the Care Quality Commission (CQC), over the last few years, leading to concerns about the general standard of support for elderly people.
In a stinging critique, committee member Mavis Harrison, a former assessor of care homes, said: "I'd go to Switzerland before I go to a care home around here.
"I'll tell you of one instance I know about at a home quite near to where I lived.
"The residents were absolutely perished (cold). They were all sitting under blankets on their knees.
A relative who’d gone to visit another relative went to the management and said, “What’s happened to the heating system?”
"They said, “Oh well we can’t get anyone in until Monday.”
He said: "You get somebody in now.”
"That’s the kind of thing that happens.
"A lot of these residents are on their own. They have no friends or relatives visiting them.
"They don’t want to make complaints because they’re in fear of reprisals.”
Local Democracy Reporting Service