One of the great bread-and-butter issues on Capitol Hill these days is whether the Reagan administration's proposal to eliminate 17,000 employes of the Social Security Administration by 1990 is hiding a plan to reduce services and close up to half of the agency's 1,350 regional offices.

Members of Congress, who receive more constituent requests for help on Social Security problems than on anything else, dread both possibilities. Local 1923 of the American Federation of Government Employes, which represents the workers, has inflamed the controversy by compiling a list of 770 offices that the union contends may already be designated for cuts or elimination.

Acting SSA Commissioner Martha McSteen walked into the lion's den this week and told a House Appropriations subcommittee that the agency can make the personnel cuts without disrupting services.

She said the agency routinely reviews the efficiency of its offices and the services they provide, and some might be closed or consolidated. But there is "no predesigned plan" to eliminate a specific number.

She added that the agency would be able to absorb the personnel cuts by increasing computerization, improving systems and eliminating manual handling of records. She said 4,000 to 5,000 employes leave each year and thus the cuts can be accomplished simply by not replacing them.

But subcommittee Chairman William H. Natcher (D-Ky.) was not convinced. "This is not going to work, it's not going to work, Mrs. McSteen," he said. He demanded to know whether she had set the 17,000-employe goal or whether it had been imposed by the Office of Management and Budget.

McSteen responded that she had not proposed the cut but that OMB's budget instructions had ordered a cut of 19,000 workers. Health and Human Services Department officials bargained that down to 17,000.

Reps. Silvio O. Conte (R-Mass.), Edward R. Roybal (D-Calif.) and several other committee members kept up the attack. Roybal cited an internal SSA document saying that regional SSA commissioners, in reviewing "service delivery" facilities, should use certain "screening criteria."

It suggested that district and branch offices with fewer than 10 employes "should be consolidated, closed or converted" to offices with fewer services "unless other considerations are overriding." Offices with staffs of between 11 and 16 "should be reviewed for conversion, consolidation or closing." The document did not name any specific offices, but after Local 1923 obtained the memo it estimated that up to 770 offices could be affected.

McSteen said the document was only a draft prepared by subordinates and was "totally misunderstood." She gave unequivocal assurances that "there is no predesigned plan to do anything detrimental" and that no office would be closed unless the same services were still provided nearby.

"If you get any offices you want to close in my district, you'd better talk to me first," Conte replied. He wondered aloud whether these ideas originated with McSteen's agency or with "the young slasher," an apparent reference to OMB director David A. Stockman. A PRO FOR THE PROS . . .

Medicare officials want to create a national "super peer review organization" to keep an eye on the local peer review organizations that monitor the medical practices of hospitals and doctors receiving Medicare payments. HHS is seeking bids from any group that wants the job.

A generation ago, Congress set up hundreds of independent professional review organizations to make sure doctors and hospitals weren't admitting Medicare patients unnecessarily or keeping them in hospitals too long.

Although the Reagan administration wanted to abolish the groups, arguing that they weren't cost-effective, Congress reauthorized the program. Now there is only one PRO in each state. The proposed Super-PRO would resample some of the cases that the local PROs reviewed to see if the admission procedures, length of stay, tests used and diagnosis category for billing Medicare were correct. If not, it would tell the teacher. MEDICAID FRAUD . . .

In the first such case to be decided on the appeals level, a federal administrative law judge has upheld a civil penalty of $156,136 levied by HHS inspector general Richard P. Kusserow against Harold A. Chapman and Autumn Manor Inc. of Yates, Kan., for filing false Medicaid claims. Kusserow charged that reports filed with the state misrepresented costs at four nursing homes formerly operated by Chapman and Autumn Manor.

A 1981 law empowers the inspector general to assess civil penalties directly to avoid protracted legal proceedings, and so far, according to HHS, about $10 million has been recovered. Chapman and Autumn Manor could still appeal to the undersecretary of HHS and then to the courts. The law judge's opinion said Chapman previously had been convicted by a Kansas court, fined $20,000, and agreed to divest the nursing homes.