OBJECTIVES:   Various studies have sought to determine the impact of medication adherence on medical expenditure among the elderly with chronic conditions. To date, none have looked explicitly at adherence to treatment in cardiac failure, a common condition in the elderly. This study had two aims: 1) to measure adherence to treatment for recommended heart failure medications, and 2) to assess whether better adherence is associated with lower spending among Medicare beneficiaries. METHODS: We used data from the 1997-2005 Medicare Current Beneficiary Survey to track utilization rates for cardiac failure medications over three years in a nationally-representative sample of Medicare beneficiaries. The relationship between MPR and Medicare costs was tested in a sequence of multivariate models with extensive behavioral variables to control for healthy adherer bias and reverse causality. RESULTS:   Over 3 years, median MPR values were 0.77 for ACE-I/ARB users, 0.74 for beta blockers, 0.82 for diuretics and 0.74 for cardiac glycosides. Higher adherence rates were consistently associated with lower Medicare spending in every model tested. The estimated marginal effect of a 10 point increase in MPR for an ACE-I or ARB was a reduction in cumulative 3-year Medicare spending of $390 (p<0.05) in 2006 dollars.  Similar increases in MPRs for beta blocker, diuretics, and cardiac glycosides were associated with $861 (p<0.01), $520 (p<0.01) and $2318 (p<0.01) in lower Medicare costs respectively over three years. CONCLUSIONS: Higher levels of adherence to recommended CHF regimens by Medicare beneficiaries were associated with lower cumulative Medicare spending over three years, with savings generally exceeding the cost of the drugs.