The government official was known to be dignified and bright, a man in a "position of responsibility" in Washington.But one day his neigbors found him in his apartment building nude, mute and huddled in the fetal position.

He went to see a psychiatrist under a uniquely broad health insurance program available only to federal workers.

His psychiatrist, Dorothy Starr, didn't tell the insurance company the patient had "regressed" so seriously he could neither walk, talk or dress himself, she said. Instead, she wrote on the bill a much milder and more general diagnosis-"depression."

Starr and other professionals state candidly that this is a common practice, aimed at ensuring the privacy of the patient.

This conflict between patient privacy and insurance accountability has become a major sticking point in federal government's mental health insurance program-the broadest such program in the nation-and has discouraged, mental health officials say, development of similar programs by other insurance companies and employers.

"The [insurance comapnies] are constantly harassing us for more information. I resent having to put a diagnosis on a bill," said Starr, who is president-elect of the D.C. Medical Society.

The notion of Strangelovian lunacy behind the levers of state has had a certain fascination, as periodically demonstrated in book-length dissections of the psyche of Richard M. Nixon or such filmed fancies as "The President's Analyst." But when madness itself becomes an element in a tax-subsidized government program, paranoia spills over onto those neat forms in triplicate.

The federal government has pioneered in providing its employes access to the broadest coverage for mental treatment available to any group in the nation.

However, routine falsification of insurance billihng and other peculiarities of the mental health profession have caused acute anxiety among insurance companies that administer the program and now think they have little control over what they are paying for.

Perhaps more significant in a day when a touch of madness is often considered an appropriate response to reality, the administrators diagree with mental health professions about what constitutes "legitimate" mental illness.

they suspect that the bills disguise not only schizophrenia, they say, but unknown quantities of frivolous abuse by "Me Generation" introspection addicts, as well as some outright fraud.

Skeletal studies on federal employes and their subsidized program disclose some intriguing patters:

Foreign Service officers and their families seek treatment for mental illness more than employes at other federal agencies, but FBI agents virtually never go in for psychoanalysis.

No matter what federal agency they work for, federal employes in the Washington area get their heads examined at a higher rate than federal workers elsewhere in the nation.

But these fragments of insight float in a sea of questions marks, benefits administrators say.

Setting standards and controlling costs for mental health benefits is more mysterious than in physical medicine, said James N. Gillman, vice president of the federal employes program for Blue Cross/Blue Shield. "It's you've got a scar and even the appendix itself if you want to see it."

Federal employes can choose from among more than 80 different federal health plans, all of which include some degree of mental health coverage. The government pays from about half to 75 percent of the premiums.

But it is the Blue Cross/Blue Shield plans that set federal workers in the country. Blue Cross offers them the broadest coverage for mental treatment available, experts say, and has attracted the bulk of the federal employes who want such care-about 80,000 in 1978.

Although only 27 percent of federal employes and their dependents under Blue Cross plans live in the Washington area, they account for more than 36 percent of the mental illness costs, according to a 1973 federal study reinforced by a current study sponsored by the American Psychiatric Association.

The most popular theories attribute this phenomenon to the sheer availability of mental care facilities here-more psychiatrists per capita thany any place except New York City, for instance-combined with the special characteristics of a population that is well-educated, transient, often lonely and under stress.

"We have enormous numbers of chronically psychotherapy, who can function" because of the care available here, said psychiatrist Starr. On the other hand, in a town with only one terrible mental hospital, she said, "nobody ever 'goes crazy'.".

People who seem quite normal to their colleagues at work may be taking drugs to keep them from hearing voices or seeing things that aren't there, or believing those very co-workers are plotting against them, Starr said.

Some have obvious phobias, or fears, such as the employe at the Library of Congress who wouldn't touch money. "Ehen he got to the end of the cafeteria line, he would just hold out his pocket so that someone could take the money out," she daid. Others won't touch doorknobs, or ride on escalators. But they can do their jobs.

Starr recalled one woman who spent her nights at St. Elizabeth's Hospital as a mentally ill in-patient and continued report for work daily at CIA headquarters in Langley.

An analyst at the Defense Intelligence Agency apparently believed he was a car and used to attract attention there by shuffling down the corridors making right or left turn signals with his outstretched arms, according to a former employe. He was sent to mental health professionals and later returned to his job, the source said.

Such cases, of course, have their counterparts elsewhere in the country where, said Dr. Steven S. Sharfstein of the National Institute of Mental Health, "there is a tremendous unmet need" for mental treatment.

But in Washington, large number of sophiscated professionals-for whom psychotherapy has little social stigma-become natural consumers of mental treatment "just as if all the federal plumbers were stationed in San Diego, there would be a higher usage of lead pipe there.

Why do Foreign Service employes (under their own agency benefits plan) seem to have a higher record of mental problems than the FBI, as shown in the American Psychiatric Association study?

"My hunch is that the FBI sees some stigma in going to a psychiatrist, sort of a macho thing," said John Krizay, a California health economist, and former Foreign Service officer conducting the study to be published later this year.

"The travel and separation problems in the Foreign Service are probably a factor there, a lot of the treatment goes to dependent children," he said.

State Department sources familiar with Foreign Service families' mental problems described one case in which a diplomat's child was born in Cyprus and raised by a German-speaking nurse. "When he was two years old, he spoke English, German and Greek. Then suddenly the family was shifted to Argentina, and the child woke up one day hearing Spanish. He became mute for six months." The child eventually recovered and became a psychiatrist, the sources said.

Marital problems, the delegation of child-rearing to sometimes inept hired women in a host country, feelings of being remote, primitive facilites ever fear of terrorism, are part of the broad mix of factors that may cause problems in some Foreign Service children, the sources said.

The Foreign Service statistics probably include a few undercover CIA agents as well, Krizay said, though most of the work force at the CIA's Langley headquarters is covered by Blue Cross or some othe rplan and are not identifiable by agency.

Krizay's study also shows that National Security Agency Employes-whatever their rank-are relatively high users of mental health benefits, while those under the plan for civilian employes and dependents of the armed services (CHAMPUS) use them relatively little, he said.

While many mental health professionls say they would like more insurance coverage of their services, they maintain that the solutions to the conflict must lie in their own internal policing of members.

The insurance carriers, they say, cannot guarantee the privacy of the records-and the patients know it.

"I have one patient who, because she is paranoid, won't let me write down the word 'paranoid' on her form, because she is afraid her office supervisor will find out and ignore her compalints on the grounds that she's paranoid," said one Washington psychiatrist.

Psychiatrists and others argue that by providing mental health care at early stages of illness, they are averting the need for more costly and extreme measures later on, and saving on the cost of possibly unnecessary physical treatments as well-treatment for an ulcer that is really a symptom of anxiety, for instance.

Those who use psychiatrist benefits subsequently use far fewer medical beneftis of any kind, according to Dr. John McGrath, president-elect of the Washington Pyschiatric Society.

Psychiatrists say the billing and diagnosis process is nowhere near as blind as the insurance administrators say. Whenever a case is questioned, they say, the records are reviewed by a committee of psychiatrists after the names of patients and doctors are removed.

"We have hundreds of such cases a year [in the Washington area] and in 17 or 18 percent we rule on the side of the companies." said McGrath.

In some instances, he said, the process had uncovered patterns of care at entire institution below the standards of the profession, and denied to those institutions insurance reimbursement for that care.

In addition to this peer review system, Washington area psychiatrists are about to launch a voluntary "quality control" pilot project involving random selection of cases to be reviewed, without waiting until some raises a specific question about them, McGrath said.

This and other efforts under way to reduce tensions over the issue should keep the Blue Cross benefits undiminished, Gillman said, at least for the foreseeable future.

But for most of those who do not work for the federal government, experts agreed that until a feasible system is found to assure accountability to insurance companies, such liberal mental health benefits will remain out of reach.