I work as a transcriptionist in a urology office. We see lots of people referred for blood in the urine. This can be caused by many things: kidney stones, urinary tract infections, trauma as well as more serious problems.
Do you know if your doctor did a "dipstick" reading or looked at your urine under the microscope? Sometimes we'll have a positive dipstick reading but a negative microscopic reading. If the strips are exposed to air or are about to expire, they can sometimes show false readings as well.
Usually if someone has blood in the urine, we will do a renal u/s to check for presence of stones, cysts, masses or other abnormalities. We will also often do a cystoscopy, where we look into the bladder with a small camera to see if there are any abnormalities.
If your family doctor found this, often they will have you come back in a couple of weeks to see if you are still showing blood in the urine, if so, usually they will send you to a urologist for further workup.
As for protein, its not something diabetics want to see, as it can signal a filtering problem in the kidneys. It may be that your doctor will order a 24 hr urine collection for protein to see how much your are "spilling" in a 24 hr period.
Main thing is not to panic. Most of the time, there's a simple reason for blood in the urine and it generally resolves on its own or with a course of antibiotics if you have an infection.
Keep us posted.