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 earn 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.
li. 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 shail be reviewed periodically by
