Spring Grove Hospital Center in Catonsville, the second-largest mental hospital in Maryland, faces the loss of about $2.4 million in annual Medicare funds for failure to maintain required records on drug dispensing and patient therapy, officials said yesterday.

The Health Care Financing Administration, the federal agency that monitors hospitals for compliance with Medicare rules, will meet today to decide whether its agreement to provide Medicare funds to Spring Grove should be renewed, according to HCFA branch chief Dillard Mills. That decision, Mills said, will be based on whether federal officials are willing to accept the state hospital's plan to correct the record-keeping problems cited by HCFA in a March survey.

The current certification agreement with the hospital expires today, Mills said. Spring Grove admits patients from Prince George's, Harford and Baltimore counties.

Hospital Superintendent Dr. Dennis Kutzer said that the loss of Medicare certification and Medicare funds would be a "crisis, in a way" for Spring Grove, "but not that big a crisis."

The estimated 100 patients in the 590-bed hospital who now receive Medicare assistance would not be affected by the loss of certification or funding, Kutzer said.

"We will continue to treat them Medicare patients as we always have; their care wouldn't change," he said.

Spring Grove, which has an annual operating budget of about $27 million, received $2.4 million in Medicare funding during fiscal 1985, Kutzer said.

Medicare funds, he said, are channeled from the federal government into the state treasury, based on the number of qualifying Medicare patients receiving care at Spring Grove. The state then includes that Medicare money when it sets the hospital's budget, he said.

Kutzer said state officials would have to decide what to do in the event that Medicare funds for the hospital are terminated.

HCFA officials said Spring Grove's failure to comply with Medicare record-keeping requirements doesn't place patients in any immediate jeopardy. "But if it continued," Mills said, "it could create a problem, in our opinion."

Under the Medicare rules, Spring Grove is supposed to maintain medical records reflecting therapeutic efforts such as therapy and drug treatments.

"They weren't doing that," he said.

And Spring Grove hasn't maintained required records on drugs that are dispensed, Mills said. As a result, the records for about 75 percent of all drug orders are inadequate, he said.

At present, the hospital pharmacy sends medicine in bulk to a ward, where a nurse measures out what the doctor has prescribed for a patient, Kutzer said.

The ideal is to have a pack of medication for each patient and a cart with a drawer for each patient's pack, Kutzer said.

"That is the system we want to go to and that is what the feds want us to do," he said, "but you are talking about a very expensive system, and it will be June 1986 before we can have it in place.

"If we don't have it done by next year," he said, "then there would be grounds to decertify . . . but I feel now that we are in substantial compliance and we shouldn't have our certification terminated."