The issue of community based health insurance is an emerging and promising concept to accessrnaffordable and effective health care in low and middle income countries. Introduction of CBHIrnscheme aims to mobilize additional resources to the health sector. More importantly,rnsubstantially pooling risks between the poor and the better off as well as the sick and healthyrnthat improve equity, quality and access in health service delivery. In addition, as a healthrninsurance scheme removes or considerably reduce cash requirement at the point of gettingrnservices, members will be encouraged to seek service when it is needed which ultimatelyrnincrease the demand for seeking care and utilization of the service. However, CBHI is limited inrnmost developing countries and out of pocket health care expenditure still impoverishesrnhouseholds especially in rural and people in informal sector. So far, little has been donernregarding the role of CBHI on health care seeking behavior, access and quality of services inrndeveloping countries in general and in Ethiopia in particular. Accordingly, the main objective ofrnthis study was to examine services provision of health care providers and health care seekingrnbehavior of households in response to the introduction of CBHI scheme in rural Ethiopia:rnparticularly in Tehuledere District, South Wollo Zone. To conduct this study, mixed researchrnapproach employed concurrently to gather data from 344 respondents (70% male and 30%rnfemale) for household survey and informants of IDIs, KIIs and FGDs. The quantitative data werernanalyzed using descriptive statistics such as table, percentage and graph on one hand, andrninferential statistics like, T-Test, one way ANOVA and correlation on the other hand were usedrnto verify the group difference and relationship across variables. Qualitative data were analyzedrnusing thematic analysis. The sampling design of this study used both probability (multistagernstage proportional sampling) and non-probability (purposive based on conveniences andrnjudgmental sampling until saturation achieved). The study finding disclosed that in somernparameters there were gaps in design and implementation of CBHI scheme. In addition, overallrnquality of service improved though there were limitations in some quality indicator. Healthrnservices utilization improved from 0.33 visits of individual per year in 2011 to 1.44 visits inrn2016; more than four times from the previous visits. Majority of the respondents (93.3%) dornhave positive or favorable attitude towards CBHI scheme and its role in promoting healthrncondition of the community. Furthermore, CBHI enable health care providers to prescribe thernappropriate diagnostic test and drugs without any uncertainties about the ability of the CBHIrnmember to pay. However, work load increases without increasing incentives; that resulted effectrnon moral hazards and mistreatment of members. This study has a significant role in fillingrnresearch gaps, policy implication and sources of information within the limited literature on thernissue at hand