A major struggle has developed over federal government policy to provide care for the nation's growing population of elderly, pitting two influential aging advocacy groups against each other and even drawing in the U.S. Administration on Aging, officials said yesterday.

The battle already has resulted in what one congressional staffer described as a "Hatfield and McCoy" split between the two groups and created confusion and concern throughout the network of hundreds of local and state aging agencies.

At odds in this dispute are the National Association of Area Agencies on Aging, established in 1973 to give 670 local agencies a voice in federal policy-making, and the National Association of State Units on Aging, founded in 1964 as an advocate for the 57 state and U.S. territory departments on aging.

Last week the federal commissioner on aging, Carol Fraser Fisk, informed area agency group that she wouldn't attend its annual conference, opening here tomorrow, because she didn't like its leadership's proposal for "care management" -- a process that begins with an assessment of an elderly person's needs and evolves into a program of local public and private services, such as home health attendants, volunteer visitors or visiting nurses.

"The brouhaha has been building," said Richard Kirschner, deputy director of the Maryland Office on Aging. He said that "it probably is accurate to say this is a struggle over the direction of policy" of care management of the elderly.

The turmoil over care management, which could threaten the delivery of services to the elderly, has erupted just as Congress is preparing to reauthorize the Older Americans Act, the landmark law enacted in 1965 to provide financing for a range of services for the elderly. More than $1 billion was appropriated for act programs for 1987. The money traditionally is funneled to states, which have apportioned it among the local agencies.

That has enabled state officials in Richmond to decide on the funding for elderly programs in Northern Virginia and elsewhere around the state, while Maryland officials in Annapolis have controlled the spending for elderly services in communities around the state.

Local agencies throughout the country now typically provide information and referral services for the elderly. The controversial proposal by the financially troubled area agency group would expand the local agency's role as the broker between older persons and service providers, and included the possibility of a sliding scale of fees for services.

But the proposal has been challenged by state unit group on the grounds that it would "subvert the role of state units on aging," according to an April 27 statement issued by the state unit group's board of directors.

Fisk indicated yesterday that her opposition to the area agency group's proposal stems from federal law that requires states to designate area agencies on aging and outline the responsibilities of those agencies. "Any change in their role and their responsibility must be something that the governor of that state addresses," she said.

Raymond Mastalish, executive director of the area agency group, defended the association's proposal for care management, saying that the concept is "a natural extension of what the area agencies have been doing."

Concern over care for the elderly has been increasing as a result of the rapid growth of the elderly population. The 85-plus population, which needs health and social services the most, is expected to triple between 1980 and 2020.

Limited federal financing has made it difficult for government at all levels to keep up with the expanding needs, officials said. And that gap may increase if the aged population continues to grow and government financing remains static.

Members of the House Aging Committee are monitoring the dispute and hope it is resolved before it can affect services for the elderly, a committee staff worker said. He said the panel worries that the struggle might intensify because "there is so much money involved and so much {power} at stake."

The present problems apparently grew out of recent actions taken by the area agency group, including an agreement with Southwestern Bell Media Publications to produce the Silver Pages, a telephone directory of information about local senior discount programs and the local agency on aging. State unit group officials objected to area agency involvement in a revenue-raising endeavor with the private-sector.

But the final straw, officials said, was an area agency task force report completed April 20 on the potential for care management.

The split between the two groups is poignant given that they traditionally have worked together to further the cause of services for the elderly. They have even shared letterhead and office space at 600 Maryland Ave. SW in the National Center on Aging.

But on April 27, the state group issued a statement resolving to "demonstrate its separate and distinct character by altering its current unique relationship" with the area group. Among other things, the state group said it would discontinue the use of joint stationery and was moving its offices. It also said it was withdrawing from the joint conference because of evidence that the area group would use the meeting to advance care management.