b. Customer acknowledges and agrees that: (a) it has had the opportunity to review tax,
wage withholding and reporting laws and regulations applicable to the Incentive Reward
Payments under the SmartShopper Program; and (b) assumes full legal responsibility for
compliance with such laws and regulations regardless of whether Sapphire Digital is the
payer of the Incentive Reward Payments and shall be solely responsible for determining the
form and method of any income tax reporting and withholding applicable to Incentive
Reward Payments. Based on Customer’s decision to report the income for Members related
to the Incentive Reward Payments under an IRS Form 1099-MISC, Sapphire Digital shall
perform such tax reporting to the Members for those Members that earn more than the 1099-
MISC applicable threshold in any given calendar year under the tax identification number of
Sapphire Digital. Sapphire Digital shall be responsible for performing the 1099-MISC
reporting in an accurate and timely manner. Notwithstanding the foregoing services being
performed by Sapphire Digital, Sapphire Digital shall not be responsible for Customer’s
decision to report the income for Members related to Incentive Reward Payments under IRS
Form 1099-MISC. Customer shall indemnify and hold Anthem and Sapphire Digital
harmless with respect to any tax issues or claims related to the Program.
5. Fees; Incentive Fund.
a.
Fees.
i.The administrative fee payable to Sapphire Digital for the Initial Term to administer the
SmartShopper program shall be based on a hybrid arrangement with a fixed cost of $0.20 Per
Member Per Month (PMPM) paid by Anthem to Sapphire Digital for the three years of this
agreement, and a fee payable to Sapphire Digital by Customer equal to Thirty Percent (30%) of
the Claims Savings portion for the Smart Shopper Program. The thirty percent (30%) percent of
Claim Savings portion of the compensation_shall be Sapphire Digital’s sole compensation payable
by Customer under this Agreement with the Customer.
ii. The fees for any Renewal Term shall be mutually agreed upon by the Parties. All invoices shall
be paid within thirty (30) days of receipt by the Customer.
For purposes herein, Gross Savings shall be calculated in accordance with the standard
methodology for calculating savings under the Anthem Vendor Contract dated January 1, 2014 as
amended between Sapphire Digital and Anthem, Inc.
Claims Savings means Gross Savings less the Incentive Reward Payments paid under the
Program. Should a Member use the SmartShopper Program and intend to use a provider prior to
shopping that happens to be a Cost Effective Provider and receives an incentive eligible
procedure at such provider (i.e. Gross Savings between Point A - Point B = $0), the
SmartShopper Member would still carn an Incentive Reward Payment and the Claims Savings
calculation would result in a savings amount of $0.00.
b. Incentive Fund.
i. Sapphire Digital shall invoice Customer an amount equal to $10,000 (“Initial Incentive Fund
Amount”) for the purpose of establishing the working Incentive Fund to be used for providing
Incentive Reward Payments to Members. The Initial Incentive Fund Amount shall be due to
Sapphire Digital within ten (10) days after the Effective Date of the Agreement.
ii. Incentive Reward Payments shall be invoiced monthly to Customer by Sapphire Digital and
shall be paid by Customer within thirty (30) days of receipt of an invoice.
iii. The sufficiency of the amount of the Incentive Fund shall be reviewed periodically by the
Parties. The Parties mutually agree to increase the Incentive Fund upon determination that the
initial up-front funding amount is insufficient based on the volume of Incentive Reward Payments
