The federal budget, handed down in May, contains a $5000 annual limit on allied health services which comes into effect from July 2027.
It has prompted independent senator Jacqui Lambie to share her own experience with a significant medical issue in an emotional address.
The former army member on Wednesday told the Senate about the struggle other female veterans faced in accessing healthcare due to the low prices paid by the Department of Veterans' Affairs (DVA).
The coalition has called on Mr Keogh to step down after he initially declined to meet with veteran advocates at Parliament House over the cap, citing diary issues.
He has since conceded it was a mistake not to meet with the veteran groups straight away, before eventually backflipping on the decision.
Senator Lambie said she began experiencing vaginal prolapse about six months ago, which was connected to back injuries incurred during her military service, but paid $7000 to have the operation in Canberra due to limited availability of gynaecologists in rural and regional Tasmania.
"If I was like the majority of female veterans, I would have had to wait for DVA to approve my claim and then I would have had to search and hope—hope like hell—that there would be a gynaecologist who would accept the low rate that was paid by the Department of Veterans' Affairs," she told parliament.
"That's how much they care about our vaginas."
Senator Lambie used her speech to urge the government to get rid of the cap.
"I would like to ask the prime minister, (Defence Minister Richard) Marles and (Veterans' Affairs Minister Matt) Keogh what they would do if their penises were hanging by a thread, and what would they do if treatment for that injury directly connected to their military service was denied by the Department of Veterans' Affairs?" she said.
"Would they say, 'OK, no worries. I don't really need my penis'? I don't think so.
"I'm begging you, prime minister. We are already suffering enough. Drop the bloody cap. Drop it, mate. It is so unfair."
The federal budget has $779 million in cuts over the next four years, as the government tries to find savings and responds to what it says is overcharging by providers.
Opposition defence spokesman James Paterson said the coalition did not support the cap.
"The government needs to save money, but .... not with veterans healthcare," he told reporters in Canberra.
"These are people who served our country who may have been harmed as a result of their service."
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