Diabetic nephropathy is kidney damage due to diabetes. The tiny blood vessels in the kidneys filter wastes from the blood. These vessels can be damaged due to high blood sugar levels, thereby leading to improper functioning of kidneys. Sometimes, it can also lead to kidney failure. The condition can be diagnosed with a simple albumin test. Generally, there are no proteins in the urine. But, during early stages of kidney failure, some proteins may be found in the urine due to improper filtration by the kidneys.