There is a condition called "Breastmilk Jaundice" similiar to what you doctor described... Here is a National Institute of Health article about it....
http://www.nlm.nih.gov/medlineplus/ency/article/000995.htm
I went through Jaundice with 2 of my children... some important things to note. Your baby is in danger if the levels are rising and begin to exceed 16 17 18 and up..... The BEST thing to do is take her off the breast and offer pumped breastmilk in a bottle or formula in a bottle. BUT you will HAVE to pump too at least 12 times every 24 hours with a hospital grade pump.... Medela Lactina's are the most popular rental pumps... I would recommend an Ameda Hollister though....
after 24-48 hours you should be able to return baby to breast and if you have to use a nipple shield that is OK. I breast fed 3 of my 4 children with a niple shield for up to 6 months.
Was your baby born early? my 3rd child was 4 weeks early. She would not latch. I tried everyday but I ended up pumping for her. she was also on a billi bed at our house for SEVEN days straight. Her billi counts too that long to get down. after she got off the bed she was fine though and at about 4 weeks of age, she magically latched onto the nipple shield and successfully breast fed for 3 months.
The MOST IMPORTANT THING when it comes to breastfeeding, your helath and happiness and babies health and happiness is that you are all happy healthy and stress free..... bab can sense that you are stressed about breastfeeding and it makes it harder for baby..... do whatever makes you all happy.
Right now your bay needs to expell bilirubin and take in lots of calories, whether from formula or breastmilk.
If you need a breastpump - I have a Medela Pump in style backpack breastpump that you can have for free.