The Deparment of Social and Health Services settled a case that involved children suffering from certain mental health needs, according to Northwest Public Radio.
In 2009, the state was sued by advocates representing children on Medicaid and argued that DSHS wasn't providing sufficient home-based services to help keep them stable.
On Thursday, two sides involved in the case reached a consensus.
"We will have, in place, in the community for the youth and their families, intensive, community based services, so that we can avoid a youth having to be placed out of home; either in a foster care or in a hospital setting, or hopefully that, we would be avoiding also, any kind of involvement with the juvenile justice system," said Jane Beyer, assistant secretary of the DSHS.
Beyer also said that the community-based services will include a mobile response team that will be able to respond to a youth in crisis.
For instance, if a child is experiencing severe problems coping with anger, a specialist may be called for help instead of a police.
Officials said that the new system can potentially help as many as six thousand children each year.