Green’s Dictionary of Slang

1. understanding.

1914

Jackson & Hellyer Vocab. Criminal Sl. 43: hep [...] Sapiency; understanding; ‘next’; ‘on.’.

2. (US) someone who is aware of the situation, esp. within non-establishment circles.

1939		Howsley Argot: Dict. of Und. Sl.
1953		‘William Lee’ Junkie (1966) 155: Hep or Hip . . . Someone who knows the score. Someone who understands ‘jive talk.’ Someone who is ‘with it.’ The expression is not subject to definition because, if you don’t ‘dig’ what it means, no one can ever tell you.