Context: Patients with heart conditions in rural areas may have different responses to health promotion-disease Self-management interventions compared to their urban counterparts. Purpose: To estimate the impact of a multi-component health promotion nurse intervention on physical function and total health care expenditures among elderly adults with heart conditions and to examine the impact of rural residence on the intervention effect. Methods: We analyzed data on 281 community-living Medicare beneficiaries with heart conditions from the Medicare Primary and Consumer-Directed Care Demonstration (a randomized controlled trial). We estimated ordinary least squares (OLS) models to determine the effect of the intervention on the change in functional status and log-linear models to determine the impact of the intervention on total health care expenditures over a 2-year period. Results: The OLS models showed that the nurse intervention resulted in fewer impairments in Activities of Daily Living (ADL) (-0.307 on 0-6 scale, P = 0.055) at the end of 2 years. The effect of the intervention on ADL appeared to be stronger for rural than for urban participants (-0.490 vs -0.162, respectively). However, the difference was not statistically significant (P = 0.150). The effect of the intervention on Instrumental Activities of Daily Living (IADL) was not significant (P = 0.321). Average total health care expenditures were 6.5% ($1,981, 95% CI: -$8,048, $4,087) lower in the nurse group. Conclusions: The nurse intervention led to better physical functioning and has potential to reduce total health care expenditures among high-risk Medicare beneficiaries with heart conditions.