The House approved a bill yesterday that would return billions of dollars previously trimmed from Medicare payments to hospitals, nursing homes and other caregivers.

The legislation responds to lobbying by the health care industry, which has complained it is struggling financially because of 1997 Medicare cuts, even as government surpluses grow.

"We have heard that some of the changes we made went a little too far," said Commerce Committee Chairman Rep. Thomas J. Bliley Jr. (R-Va.).

The Medicare cash relief, $11.5 billion over five years, passed the House with broad bipartisan support by a vote of 388 to 25.

Most of the money in the House bill would go to hospitals, especially teaching hospitals, those located in rural areas, and those that care for large numbers of uninsured patients.

Nursing homes and home health care companies also would get a boost in their fees.

HMOs, which have quit serving Medicare beneficiaries in many counties during the past two years, would get bigger payments and additional cash bonuses if they venture back into unserved areas.

Among changes that would affect Medicare beneficiaries most directly:

* A cap that has limited coverage for speech and physical therapy--a combination often needed by people recovering from a stroke--to $1,500 per year would be raised to $1,500 for each type of therapy.

* Patient co-payments for hospital outpatient care, which vary widely and often exceed Medicare's standard 20 percent co-pay, would be limited to the same amount as the deductible for inpatient care, $776 in 2000.

* Retirees who lose their HMOs would have more flexibility to enroll in another one or buy Medigap insurance. Or they could choose to stay in an HMO that withdraws from their county if it still serves other nearby areas and they are willing to travel to use network doctors.

* Medicare payments for Pap smears would rise to ensure access to the latest technology.

Some differences must be resolved among the House bill, legislation pending in the Senate and the Clinton administration. "We feel confident that we'll be able to work out an agreement," said White House domestic policy adviser Chris Jennings.