In this paper a reversible data hiding (RDH) algorithm for medical images is proposed. This algorithm specifically based on histogram modification in hybrid domain. The idea of this algorithm is that a histogram is created from the differences between each pixel and its neighbours. A 2D DWT haar transform is performed to convert cover image into a transform domain to select appropriate frequencies for embedding the payload. The selected DWT coefficients bit planes are used to carry the secret message. The experimental result demonstrates that our proposed method outperforms the traditional state of art methods in terms Peak Signal to Noise Ratio (PSNR), Structural Similarity Index (SSI) and the algorithm guarantees the reversibility of the host image. The proposed method avoids overflow and underflow of the pixel values and achieves highest embedding capacity