Federal officials have rescinded the accreditation of Forest Haven, the District's facility for the mentally retarded, cutting off about $6 million in annual Medicaid payments to the facility it does not meet U.S. standards for patient care.

In recent years, federal officials often have threatened to eliminate Medicaid funding at D.C. facilities. But the cutoff at Forest Haven apparently is only the second time that they have carried out their threats to stop paying for the health care of indigent, elderly and disabled patients.

D.C. Village, the city's home for the elderly, lost its Medicaid funding four years ago, but has become eligible again since then.

Dr. Gerald F. Szucs, the Department of Health and Human Services' regional director of health standards, said he informed the city on Dec. 29 that Forest Haven no longer will receive Medicaid funds to subsidize treatment of the 400 patients at the faclity in Laurel.

The cut-off came after Szucs repeatedly warned D.C. officials that a federal inspector who had made a tour of the facility in August had found numerous deficiencies that could result in funds being withheld. In the past, the District has received periodic Medicaid payments at Forest Haven depending on how frequently the city bills the federal government for the health care it has provided. The city has not received any of the money since Aug. 31.

According to a report of the tour, the inspector saw force-feeding of a patient, a lack of supervision and rehabilitative programs in some units and conditions that appeared to be unsanitary, including insects in many areas and "what appeared to be a puddle of urine" on the floor of one dormitory.

"The report speaks for itself and does not reflect . . . compliance with the regulations governing institutions for the mentally retarded," Szucs wrote to James E. Buford, director of the city's Department of Human Services, in a Sept. 5 letter threatening the cut-off of Medical accreditation and funds.

"Our position is that we're in compliance," said Buford. "We believe we have taken care of Dr. Szucs' concerns." He said the improvements were made after the August tour.

In his letter, Szucs asked the District to respond with whatever evidence it had to counter the report's allegations. Szucs said this week that he sent Buford another letter in November stating that he still had received no response from the city and that funds would be withheld until one was forthcoming.

He said the city finally delivered its response on Dec. 1. His staff reviewed the information, Szucs said, and concluded that the city still had not corrected the deficiencies cited by the federal inspector.

On Dec. 29, Szucs said, he sent a final letter to Buford "stating that our review indicated that substantial progress had not been made, and that since the deficiencies had not been removed, funds would be terminated."

In order to receive Medicaid funds at Forest Haven again, according to Szucs, the city will have to file a new application to certify the facility as a Medicaid provider. "The paper work really doesn't take long," Szucs said, "but the thing is that they will still have to correct the deficiencies we identified."

Over the years, federal officials have charged repeatedly that there are inadequacies at the troubled Forest Haven complex. In 1976, the federal government termed conditions at the facility "improper, inconsistent and inadequate," and threatened but did not follow through with a cut-off of funds. i

Later that year, the parents of a 6-year-old mentally retarded girl who died at the complex sued the District for providing inadequate care, and a federal judge subsequently ordered that the city upgrade patient care and gradually obolish the complex, placing all patients in community-based facilities by 1987. At the time of the 1977 court ruling, there were more than 1,000 residents at Forest Haven.

While some of the worst conditions observed in previous years have been corrected, the report of the informal inspection last August was particularly critical of an apparent lack of supervision and programs for residents.

"Not all residents are gotten up out of bed, because there are not enough wheelchairs," the federal observer wrote. In a room where 12 residents were spending the day, the observer found that the only rehabilitative materials available were two shoes to be laced and un-laced, two jigsaw puzzles with pieces missing and one coloring book and crayons. The observer noted that there was a new swimming pool on the grounds, but that it was empty "because there is no lifeguard."