The federal government has disallowed $4.1 million of charity care that George Washington University Hospital gave in the last four years and has criticized the way that it and Capitol Hill Hospital have been running their free care programs.

The government complained that the hospitals retroactively assigned patients to the program and did not properly notify patients about the program through signs and individual notices.

George Washington University Hospital also was cited for not publishing a list of the services, such as births and psychiatric care, that its program would not cover. The hospital was directed to give refunds to all eligible people who were turned away for these services.

"We are appealing the entire amount," Irene Haske, a spokeswoman for the George Washington University facility, said of the charity care. She said no one from the hospital would comment about the specific charges.

If George Washington University Hospital loses on appeal, according to Ceil Frank, a spokeswoman for the federal department's regional office, "the hospital will just have to step up the amount of free care it must provide" in future years.

Randall Rolfe, administrator of Capitol Hill Hospital, said the hospital already has changed its admission procedures and notices about the program to follow the federal guidelines.

The hospitals are required to operate free-care programs as part of a 20-year obligation to repay money given for hospital construction under the federal Hill-Burton Act of 1946.

More than 4,500 hospitals, nursing homes and other health facilities accepted federal money to build or expand facilities, but had to agree to give a certain amount of charity care to the poor in their community.

More than 60 percent of the nation's hospitals are required to give free care under the program.

George Washington University Hospital received $6.4 million in federal funds under the program and is responsible for providing about $500,000 a year in free care until February 1998.

Capitol Hill Hospital accepted $3.5 million and is to provide about $400,000 yearly until June 1992.

Federal auditors from the program found that both District hospitals did not take applications from patients for the program, but retroactively assigned accounts of poor patients toward their federal obligation.

"Maybe we were in error in not taking a formal application for each Hill-Burton patient," said Rolfe, "but we thought we had approval to do it that way."

Cheryl Fish, director of the Coalition of Financial Accountability, a District citizens group that filed complaints with the U.S. Department of Health and Human Services about the way some local hospitals handled their free-care programs, said, "In many cases, bills are going to patients, or to a collection agency, for a long time before the hospital ever notifies them that they're eligible for Hill-Burton."

Fish also said people who are covered by the city's Medical Charities program, which covers some hospital care for the poor, have been turned away from local hospitals without being told there is a federal program that could help pay for their care.

"Hospitals say you can't be admitted as a Medical Charities patient because the program doesn't cover the tests you need, or whatever," she said.

"The hospitals don't let patients know that there's another program that could help them. They just get sent to D.C. General."

D.C. General, the city's public hospital, in the last four years recorded a 374 percent increase in the number of patients transferred there from other local hospitals.

Some local hospitals use admission deposits to discourage patients without private or government insurance because of the increasing numbers of patients unable to pay their hospital bills.

District hospitals "go far beyond the legal requirement of providing three percent charity care," said Steve Lipson, president of the D.C. Hospital Association, referring to the Hill-Burton and city requirement that three percent of hospitals' operating costs go to free care.

Fish said the hospitals have an obligation to give the care according to the federal guidelines "so that patients know to apply for the care."

Frank said none of the eight other District hospitals in the Hill-Burton program were cited for deficiencies.

Patients are eligible for Hill-Burton care if their income is under $4,960 a year. The income cutoff for a family of four is $10,200.