Shropshire and Telford & Wrekin Councils have joined nine other West Midlands councils in writing to Jeremy Hunt, expressing their concern over "unrealistic targets" for cutting bed blocking in hospitals.
The target is for the number of NHS beds taken up by delayed discharges to be reduced to 3.5 per cent by this month. If the target is not met then some money from the Better Care Fund will not be transferred to councils for adult social care.
The 11 councils say they could lose out on £150 million as a result.
Councillor Shaun Davies, leader of Telford & Wrekin Council, said the targets are "unrealistic" and would result have a "catastrophic impact".
He said: "The letter that has been sent to the Secretary of State for Health Jeremy Hunt has been signed by the leader of 11 West Midlands councils. This reflects the very real concerns that we have about the Better Care Fund, including unrealistic targets meaning there is a likelihood of funding being withheld from local authorities that cannot meet those targets.
"This in turn will have a catastrophic impact on the ability of local authorities affected to deliver essential services including reablement, home care and residential/nursing care. The threat of funding being withdrawn has also damaged relationships.
"We are therefore urging Mr Hunt to provide assurances as a matter of extreme urgency that all local authorities will receive their funding in full."
The letter sent to Mr Hunt says the councils have concerns about how the targets are assessed.
It states: "The Better Care Fund (BCF) guidance released in July includes a national target to reduce the number of NHS beds occupied by delayed discharges to 3.5 per cent. We recognise the importance of ensuring that people do not remain in acute hospitals longer than necessary, however we do have some serious concerns about the target.
"First of all we are not confident that the data is accurate. We see regular examples in parts of the region where acute trusts record delays as attributable to adult social care without following the national guidance. This artificially inflates the figures and gives an erroneous impression of where the barriers to discharge actually lie.
"We are also concerned about the disproportionate emphasis placed on delayed transfers of care: we know that acute trusts in many areas are failing to hit the four hour waiting time target and this is due to issues with internal capacity and operational processes more than issues with the ‘back door’.
"Secondly the target was set towards the end of July with a requirement that it be met by September. For many CCGs and local authorities, including over half in the West Midlands, this is simply unachievable. These local authorities have instead submitted trajectories to meet the target over a longer timescale."
The letter also warns of the potential impact of the loss of funding.
It states: "NHS England’s position is that those local authorities who cannot meet the target will not have their BCF approved and will therefore not receive the cash transfer from the NHS to protect adult social care. This is funding of around £150 million in the West Midlands that has been transferred to local authorities for the last few years and on which we depend to fund a range of essential services including reablement, home care and residential/nursing care, all of which directly support the NHS."