A new mental health crisis center in Lynnwood lacks operator, can't open

Feb. 4—At a brand-new mental health crisis center in Lynnwood, 16 padded green recliners are ready for people who need urgent care. On the floor below, 16 beds where people can stay for a few days to stabilize sit empty.

The new center is ready to open, and leaders hope it will provide an alternative to emergency rooms or jails for people who need urgent mental health or substance use treatment.

There's just one problem: The planned provider to run the center dropped out in the fall, saying running the center is not financially sustainable because of the way Washington has structured funding and billing. Now, officials are scrambling to figure out who will run the center and open it as quickly as possible.

State and local officials view crisis care centers, where anyone can walk in regardless of insurance status or ability to pay, as a promising option to build out a behavioral health system that's stretched thin. A center opened in Kirkland in August, King County voters approved a tax levy to fund several more, and plans are underway around the state to open similar centers in the future.

But unless the funding challenges seen in Lynnwood — and at similar facilities in Pierce County — are solved, it could put the model in jeopardy statewide, officials said.

Every day, first responders encounter people in crisis and have nowhere to take them except the emergency room, Lynnwood Deputy Chief of Police Chuck Steichen said. South Snohomish County "desperately needs a facility," he said.

"I have a finished, beautiful, done, painted, furnished behavioral health facility for crisis services in my district, and a behavioral health crisis raging outside, and it's empty," state Rep. Lauren Davis said.

How the Lynnwood center came to be

The idea of a crisis center in Lynnwood gained momentum in 2021, after Tirhas Tesfatsion died by suicide in the Lynnwood jail. Tesfatsion's family sued the city, alleging the actions of jail staff led to her suicide, and eventually settled for $1.75 million.

The city was already planning a new jail, but amid protests over Tesfatsion's death, a working group proposed a plan to the city council: What if part of the space was used for a mental health crisis center?

The council approved the plan, and the state and Snohomish County together provided $20 million for construction. The city began construction on the new facility, close to Interstate 5 and just west of Lynnwood's Alderwood Mall, in 2022.

Crisis center awaits a provider

A mental health crisis center in Lynnwood, completed in the fall, is sitting empty after the planned provider said running the center would not be financially sustainable. The new center shares a building with the city's jail and Police Department headquarters.

Sources: ESRI, Google, City of Lynnwood (Chris Kaeser / The Seattle Times)

While developing the plans, city leaders visited Pierce County centers run by Recovery Innovations, International, an Arizona-based mental health provider. At the time, RI ran Pierce County's Crisis Recovery Center and an evaluation and treatment center in Fife that also included crisis care.

The Lynnwood center is set up to provide multiple levels of care: behavioral health urgent care and 23-hour observation on one floor, 16 beds for short-term overnight stays on another. The design is based on RI's facilities, and the company was a partner in the design process, said Steichen, who has served as project manager for the center.

RI never signed a contract with the city, but "it was certainly assumed they had a really good shot at being that provider," Steichen said.

In summer 2024, the facility was nearing completion. The state was still developing rules and billing models for the 23-hour crisis observation portion, a new model for Washington.

Even as furniture was ordered and staff toured the new building, RI International started raising financial concerns with the city, email conversations obtained by public records request show. "In short, it appears there is going to be a delay in their opening," Lynnwood Police Chief Coleman Langdon wrote to Mayor Christine Frizzell on Oct. 10, following a conversation with the company.

In November, RI's Chief Operating Officer Joy Brunson-Nsubuga emailed Davis and said to move forward with the project, the company would need a two-year operational contract "with all associated expenses fully covered."

"Unfortunately, RI has faced significant financial challenges in Washington State, assuming substantial financial risks on six separate occasions since 2020, each resulting in considerable losses," Brunson-Nsubuga wrote. "The landscape for provider organizations in Washington has shifted dramatically in the last several years, marked by ongoing workforce shortages and an erosion of capacity, making it increasingly difficult to achieve sustainable success despite our persistent efforts to provide high quality services to the Washington communities."

Conversations with RI fizzled out over time, Davis said. "I felt really disappointed and let down that I was sort of left holding the bag, with the idea we were going to be walking together on this facility," she said.

Brunson-Nsubuga did not respond to requests over phone or email for comment for this story. Reached by phone, RI's Washington state director declined to comment.

Now, as the center sits empty, a new request for proposals is needed to find a new provider, officials say. Snohomish County has provided an additional $3 million in startup funding to get the doors open.

There's been interest from providers, North Sound BH-ASO Executive Director JanRose Ottaway Martin said, but it will hinge on finding a financial model that works.

"At the moment, you're not going to get any provider with any amount of business savvy to be willing to take on one of these when they're going to lose money," Davis said. "It's not a profit machine, but you have to be able to sustain yourself and pay your staff."

How centers are funded

To be financially sustainable, the crisis care centers must resolve funding from patients in three different buckets: those using Medicaid, those using commercial insurance, and those using neither, which includes people who are uninsured, use Medicare or the military health insurance Tricare.

A center in Kirkland that opened in August has served as a guinea pig of sorts — and it's found that each of these three groups has a funding shortfall.

People enrolled in Medicaid have been the largest portion of the Kirkland center's patients, just over half, Behavioral Health and Recovery Division Director Susan McLaughlin said. Washington contracts with five insurers, called managed care organizations, for the Medicaid population.

When a new facility is built, the monthly rate these insurers receive for each enrolled person generally increases based on utilization — but those rates are only adjusted every six months. The Kirkland facility opened in August, but rates weren't adjusted until January, and in the meantime, King County has had to fill in the gap.

Getting commercial insurers to pay has presented another challenge. Legislation passed in 2022 with the support of the state Office of the Insurance Commissioner requires commercial insurers to pay for behavioral health crisis services. But compliance with the requirement has been poor, Davis said.

About 11% of the Kirkland center's patients in the first three months were enrolled in commercial plans, McLaughlin said, but King County hasn't been able to bill the insurers for any of those patients' services. The county only has contracts with one commercial insurer and is negotiating with several others.

The third bucket includes people without any health insurance, or enrolled in Medicare or Tricare. In Kirkland, 38% of patients in the first three months were in that group.

Draft guidance from the Health Care Authority says the state's general fund will pay for this third group. Those funds would typically be managed by the state's Behavioral Health Administrative Service Organizations, which split up the state geographically, but their budgets aren't being increased, Ottaway Martin said.

"We work with our BH-ASO partners very closely and offer opportunities for them to submit spending plans that can shift funding around as needed," HCA spokesperson Katie Pope said. "BH-ASOs have opportunities to ensure that these services are covered within available resources."

The state funding gaps from these three groups combined cost King County $14 million between August and December. The county is now asking the state for reimbursement.

Connections Health Solutions, which operates the Kirkland center, declined to answer questions about the state's billing and funding mechanisms.

"As we continue to expand access to care, we're working closely with the state to ensure the system supports the long-term success of these innovative facilities," Chief Growth Officer Matt Miller said in a written statement.

As King County plans to open five centers, it will be able to use funding from a significant property tax levy it passed in 2023 to fill in some gaps. But that approach won't be sustainable as more centers open, McLaughlin said — or replicable to counties that don't have a $1.25 billion levy.

"If we can't get (the Lynnwood center) across the finish line, this becomes a model that will not work in Washington outside King County," Ottaway Martin said.

Potential fixes

A center in Pierce County is also sitting unused as lawmakers consider what a fix to financial challenges would look like.

RI ran Pierce County's Crisis Recovery Center in Parkland until March 2024, when it ceased operations of the center and the crisis relief component of a separate evaluation and treatment center. It continues to operate an evaluation and treatment center in Fife.

The company said it was no longer financially sustainable to operate the two Pierce County crisis centers, said Richard VanCleave, the Pierce County account director for BH-ASO Carelon.

Connections Health Solutions, which operates the Kirkland center, was selected to operate a 23-hour crisis center in the Parkland facility, Miller said. But now, Pierce County is "taking a step back to determine the best and highest use of the facility that has housed the Crisis Recovery Center," county spokesperson Libby Catalinich said.

"The state is in a tough budgetary situation," Ottaway Martin said. "I wonder, did anyone at the state level know how expensive these models were? It's not the creation that's expensive, it's the operation."

Increasing a telecom fee used to pay for the 988 crisis hotline is the "lowest-hanging fruit" to create additional funding for the crisis system, Davis said. Right now, cellphone users pay 40 cents each month to fund the suicide prevention line and other crisis services. Because the fee already exists, the state could increase it and collect additional funds relatively quickly.

There are also potential improvements in all three of the buckets of payment required for the centers to operate sustainably.

The state could decide to adjust Medicaid rates more quickly as new crisis facilities open, preventing the six-month lag, McLaughlin said. Additional funding to the BH-ASOs would also help them pay for non-Medicaid clients. And the state has the power to penalize commercial insurers who don't follow laws requiring them to provide equitable coverage for mental and physical health conditions.

A longer-term solution could simplify the way these centers bill for services, Ottaway Martin said, so they don't have to negotiate contracts with managed care organizations, commercial insurers and the BH-ASO.

Cities and counties around the state are hoping to open similar centers, and some already have plans underway. But until the funding is sorted out, new centers will face the same uphill battle.

"There's a real belief that this is a promising solution," Davis said. "If all those open, they're going to have the exact same problem."

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