Medicare Hospital and Physician Timely Payment Amendments of 1986 - Amends parts A (Hospital Insurance) and B (Supplementary Medical Insurance) of title XVIII (Medicare) of the Social Security Act to require intermediaries and carriers to pay the claims of Medicare providers and beneficiaries, and give such providers and beneficiaries notice of improperly submitted claims, within 22 days of receiving such claims (unless payment is made on a periodic interim payment basis). Requires the Federal Government to pay the interest accruing on such claims for the period during which the payment or notice is past due.

Prohibits the Secretary of Health and Human Services from modifying certain regulations relating to the periodic interim payment method of reimbursing providers. Directs the Secretary to develop an optional interim periodic payment system for participating physicians who have at least one year of claims experience.