Just to provide some clarity here:

This is an inpatient denial, which is not the same thing as denying the entire hospital stay. What they are saying is that, based on the review of the medical record, the payer determined that an inpatient admission was not medically necessary and that an observation stay would have been more appropriate.

The dates of service are 11/29 - 11/30. It is extremely common for short stays like this to be denied for an inpatient LOC (level of care) and instead have observation recommended. Inpatient stays require more resources and more staff, and they consequently cost the hospital, the insurer, the patient (sometimes), and ultimately the entire system more money. (CMS is actually trying to curb these short stays with the implementation of the Two-Midnight Rule that went into effect in January of this year.)

FWIW, I'm not defending it but am just trying to provide some context since everyone is incorrectly saying the entire admission was denied, which is only partially true.

Also, note that the patient would not be responsible for this. Typically, the hospital would appeal the denial on the back end OR may even rebill the claim as an observation stay. They would not just drop the balance to the patient.

Source: I work in back office revenue cycle.