Government bows to pressure to scrap allied health cap for veterans

The Albanese government has bowed to pressure, scrapping a plan to cap allied health services for veterans at $5,000 a year.

The proposal would have imposed an "annual monetary limit" for services like physiotherapy and dentistry, with veterans able to access more funding if they "demonstrated clinical need".

The May budget showed the measure would have saved the government roughly $750 million over three years but was rubbished by both the Coalition and veteran advocacy groups for making health services harder to access.

Minister for Veterans' Affairs Matt Keogh released a statement today confirming the threshold measure was "off the table".

"We have been consulting on this measure, and we have heard from veterans there are concerns about this approach," he said.

Mr Keogh had initially been under pressure after the Coalition accused him of declining to meet with veterans or properly understand their needs.

He later told the parliament he "got it wrong," with some government sources confirming the issue was being considered at the highest levels including the prime minister's office.

Independent senator Jacqui Lambie, who is herself a veteran, made an emotional speech in the Senate last month about healthcare access after recent surgery for vaginal prolapse.

She turned to the Department of Veterans' Affairs (DVA) to pay for the surgery, but eventually footed the bill herself after facing serious administrative hurdles.

Senator Lambie linked her personal experience to the concerns being expressed by other veterans about looming changes to how the DVA manages access to allied healthcare.

Today, she said scrapping the cap was a win that belonged to "every veteran".

"They knew what would happen to our most vulnerable veterans if this cap went ahead and they fought like hell to make sure it didn't," she said.

"This cap was cruel, it was dangerous and it should never have been announced in the first place. I'm relieved that the government has finally listened and scrapped it and I thank them for doing it."

Opposition Leader Angus Taylor said the government had taken "too long" to drop the policy and called on Mr Keogh to step down.

"It has taken too long to scrap this cap. It should never have happened, and frankly, it's time for this minister to go," he said.

But advocacy group Fair Care for Veterans, which had pushed the government to drop the changes, said the minister had "made it right".

"This is what happens when a government listens to veterans," spokesman John Armfield, a former navy clearance diver, said.

"Veterans, families and doctors came from all over the country to say one thing: this cap would only ever hurt the most badly injured.

"The minister made the right call, and he deserves credit for it."

Government still wants to find a fix

The government had said it wanted to introduce the limit to stamp out "over servicing" of veterans who were being charged for support they did not need.

Department figures suggest about 10 per cent of veteran cardholders spend more than $5,000 on allied health services each year.

A Senate estimates hearing in June heard examples of overcharging, including one case where a single patient was charged $101,000 in a single year by a dietitian, equating to 19 appointments a week.

The policy also aimed to reduce the administrative burden on veterans under the current system, which requires them to go back to a GP every 12 allied health visits for a new referral.

Mr Keogh said he would continue to engage the veteran and provider community to address those goals and "deliver on the objective of achieving better veteran wellbeing outcomes while ensuring integrity of the system".

"We will not change our commitment to improving access to allied health care through the fee increase to allied health providers," he said.

Mr Armfield said Fair Care to Veterans was open to further conversations.

"We welcome that, and we'll be there," he said.

"We'll also make sure whatever comes next doesn't bring the cap back under another name."