SNIP 5 HIPAA External Code Set Testing

The healthcare EDI specification allows for the inclusion of code values that may be pertinent to the transaction set, such as a claim or encounter. These code values can represent a data point as widespread as a postal or zip code, or as complex as diagnosis and procedure codes.

The Workgroup for Electronic Data Interchange (WEDI) describes seven types of validation, referred to as SNIP 1-7. We covered SNIP 3 Balancing of Claims and SNIP 3 EDI 835 Payments Balancing in our recent blog posts. SNIP 5 – HIPAA External Code Set Testing is the validation of code values against the external code sets they represent.


The SNIP 5 validation level states that code value should exist within an external code list. For example, if a postal (zip) code is present in a subscriber’s address, then it should align with an actual postal code in as determined by the USPS, the external entity maintaining postal codes. Additionally, the code within the transaction set must match the appropriate external code list, a postal code match with the postal code lists.



International Classification of Diseases 10th Revision (ICD-10) defines two sets of codes, ICD-10-CM for use for coding a diagnosis, while ICD-10-PCS is used for coding a hospital procedure. For this example, we will focus on ICD-10-CM (Clinical Modification), used within the HI segment of the 2300 claim loop. The below image shows a sample claim opened in this FREE EDI Editor Download, showing the HI segment and two diagnosis codes adhering to the ICD-10 format.

HIPAA External Code Set Testing

The diagnosis code segment in this example represents two diagnoses, the primary diagnosis ‘ABK:E039’, and secondary diagnosis ‘ABF:T8741’. ABK and ABF serve as qualifiers to the code values, indicating that the first and second code values represent the primary and secondary diagnosis, respectively, both using the ICD-10 code list. The E039 and T8741 values are the codes that must correspond to an actual value in the external code list, as dictated by SNIP 5.

Both code lists are maintained by the Centers for Medicare & Medicaid Services (CMS) and the National Center for Health Statistics (NCHS), who also provide guidelines and the ICD-10 code lists.


The Health Care Common Procedure Coding System (HCPS) is a multi-level set of code lists to standardize the reporting of procedures and services within claims. Level 1 uses CPT codes governed by the AMA and Level II uses HCPCS codes covering services and procedures not covered by CPT codes.

The below screenshot from EDI Editor that shows two services lines within a single patient visit with the first service line and code 99213 pertaining to the initial patient visit.


The second service line details a strep test code 87070.

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Postal Codes

Postal (Zip) Codes define postal address zones. Postal codes are represented by within the N403 element of every N4 segment in a transaction set. An 837 Professional Claim has postal codes presenting Billing Provider Postal Zone (2010AA), Subscriber Postal Zone (2010BA), Payer Postal Zone (2010BB), and Patient Postal Zone (2010CA), to name a few.

Below are postal codes as they may appear in a professional claim.

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Postal codes must be present in the N403 element if the address is in the US or Canada or a Country in N404 contains a postal code.

The external code list itself is maintained by the United States Postal Service (USPS) via the Address Information System (AIS). The postal code (and state and county codes) are updated on a monthly basis. The USPS also provides a free API for postal code lookup.

And more!

The difficulty in conforming to WEDI SNIP 5 is in the number of external code lists that are included within the rule, each of which presents its own host of barriers to implementation. Having the right Healthcare EDI Software makes this process significantly easier. The above examples represent a few of the external code lists present in an 837 P claim. Other transaction set types may utilize some of the same code lists but in conjunction with their own lists.

Code lists are often maintained by entities that may require membership for access to the code lists, some may require a paid subscriptions as well. Beyond access to the code list, the effort is expended on incorporating the code lists into the system performing the validations. This is effort is compounded by code lists that may be updated regularly.

SNIP 5 Validation with T-Connect EDI Software

The T-Connect EDI Gateway software provides a rule management framework which lessons the overhead of applying rules against in-flight EDI transactions. WEDI SNIP rules are supported, as well as your own custom rules and validations, all of which can be applied to specific transactions sets, trading partners or any combination of the two.


We Can Help With SNIP 5

We make tasks like Validating and Retrieving 999 Acknowledgements easy. EDI healthcare transactions require a solution that’s tailored to your unique payment, claim, or enrollment processing challenges. Contact us today to discuss how we can help your organization become EDI capable.

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