OBJECTIVES: Although medication advice is a key component in cardiac rehabilitation (CR) program, little is known about its effectiveness on patient medication use behaviors. This project aimed to assess the cost-effectiveness of CR program on patient adherence to cardiac medication and the number of hospitalization avoided. METHODS: Using MarketScan® Medicaid database, patients with acute myocardial infarction (AMI) were targeted. By using propensity scores, 471 patients receiving CR programs during 2003- 2007 were 1:1 matched with 471 controls (without CR) on patient demographics, comorbidities and healthcare costs before the CR started. The economic perspective was that of third-payer sector so only direct medical costs were included (costs attributed to CR program and the use of cardiac specific medical services and medications). Main outcomes were patient adherence to cardiac medication measured by Medication Possession Ratio and the number of cardiac related hospitalization. The cardiac medications studied were β1 selective-blockers, angiotensin converting enzyme inhibitors and angiotensin receptor blockers. The outcomes were estimated every 4 months during 1-year follow-up. Cost-effectiveness of CR program was determined by the incremental cost-effectiveness ratio (ICER). Bootstrapping technique was applied for assessing uncertainty in cost-effectiveness analyses. The robustness of findings was tested in sensitivity analyses.  RESULTS: Although there were no significant differences in medication adherence and hospitalization outcomes between two groups, patients in CR programs had a gradually improved medication adherence and lower hospitalization over time. Mean annual costs (2003 value) were $3172 and $2092 per patient for CR group and control group, respectively. The ICER was $538 for 1% improvement in medication adherence and $1080 for an additional hospitalization avoided.   CONCLUSIONS: CR programs offered benefits of improving medication adherence and reducing hospitalization over time although it was costly in the beginning of its provision. Trade-off of increase in costs for the increase in benefits should be considered.