Frontline wage hikes boost odds of higher Five-Star quality marks by up to 53%

Paying registered nurses just a dollar per hour more gives nursing homes a 2.4% higher chance of earning a 5-star quality rating, according to a new study. That would be as little as a $56 weekly investment in some buildings. 

But for a more certain bet, skilled nursing providers should consider going bigger, according to a new study. 

The study calculated the odds of achieving better quality ratings with a 10% increase in frontline staff wages — a not-unheard-of amount in recent years. That translated to $3.76 more for RNs, $2.91 more for LPNs and $1.76 more for CNAs.  

For RNs, that investment produced a 53% higher chance of a quality star rating increase, followed by a 32% jump in the odds when LPN pay went up and 15% better odds for higher CNA pay. 

“Given the importance of CMS star ratings for public reporting and regulatory compliance, NH leaders should carefully consider wage strategies not only as a tool for ensuring workforce stability, but also as a means of attracting a more favorable payer mix and strengthening the financial stability of their facilities,” wrote Rohit Pradhan, PhD, associate professor at the College of Health Professions at Texas State University. 

Pradhan and colleagues studied Payroll Based Journal data from 2020 to 2022 to see how wage increases at the RN, licensed practical nurse and certified nurse assistant levels influenced facilities’ quality ratings.  

An analysis of pay across nearly 12,000 nursing homes per year showed found similar, though less significant, ties to quality improvement when pay increased $1 an hour for LPNs (2% better odds of a 5-star rating) and CNAs too (1.8%). 

Pradhan wrote that leaders shouldn’t focus on RN wages at the expense of other caregivers.  

“CNAs provide the most direct care and their jobs are really hard and not well compensated,” he wrote in a report. “Facilities that focus only on RN compensation while ignoring CNA and LPN pay risk creating wage compression and internal resentment, which can drive turnover (already a huge issue in nursing homes) and undermine team cohesion. In the real world, quality care depends on a stable, well-supported frontline team across all levels.” 

His team reported several possible reasons for the causal link. 

“Higher wages can attract more qualified and experienced nursing staff, as compensation is a key consideration for qualified professions,” the team wrote. “Facilities offering higher wages would be better positioned to recruit staff with advanced clinical expertise, which can directly enhance the quality of care provided to residents.” 

They explained that could be especially true for RNs, where competitive competition is essential to attracting employees who might otherwise work for higher-paying hospitals. 

The paper, published online ahead of print in the Journal of the American Medical Directors Association June 5, also theorized that higher pay improves retention and lowers turnover, which previously has been shown to contribute to better continuity of care. 

But earlier U.S. research had not weighed whether higher wages drove success in the Centers for Medicare & Medicaid Services’ Five-Star system. 

Realizing that providers with more financial resources might naturally offer higher wages — rather than raising wages to drive quality — the researchers included calculations to account for that and other factors that could introduce bias. 

The authors said their findings could inform wage decisions and provide policymakers with a “clearer understanding of the potential benefits of supporting wage increases in the NH industry.”  

“However, the financial constraints faced by many nursing homes, particularly those heavily reliant on Medicaid reimbursement, present significant challenges to implement wage increases,” they concluded. “Policymakers and industry leaders should address these barriers through targeted reimbursement reforms and funding allocations that prioritize direct care staffing investments.” 

Pradhan said the message is “pretty clear” that trying to improve quality while limiting wage increases “probably won’t work.” He called for a mix of nursing home investment and some policy support to defray the cost.  

“For policymakers, this means creating real support for wage investment. Some states, like New Jersey, Minnesota and Massachusetts, already require part of Medicaid rate increases to go directly to staff pay,” he noted. “And NASEM [National Academies of Science, Engineering and Medicine] has gone further, recommending that a set portion of Medicaid and Medicare funds be earmarked for direct care wages.”