Neonatal hyperbilirubinemia (NH) is a common condition in newborns, with elevated bilirubin levels potentially causing neurological damage or death. Accurate and timely measurements of total serum bilirubin are essential to prevent these outcomes. Direct spectrophotometry, a reliable method for measuring bilirubin, is particularly useful in constrained settings due to its potential for portable low-cost instrumentation. However, this method is susceptible to interference from hemoglobin, often present due to hemolysis. Typically, this interference is reduced using complex optical filters, reagents, multiple wavelengths, or combinations thereof, which increase costs and complexity while reducing usability. This study presents a hemoglobin compensation algorithm applied to a simple, portable, two-wavelength (465 and 590 nm) reflectance photometer designed to receive 30 µL of plasma or whole blood samples and perform the measurement without any reagents. Testing across five bilirubin and hemoglobin levels (4.96 to 28 mg/dL and 0.06 to 0.99 g/dL, respectively) demonstrated that the algorithm effectively reduces hemoglobin interference and overestimation errors. The overall root mean square error was reduced from 4.86 to 1.45 mg/dL, while the measurement bias decreased from -4.46 to -0.10 mg/dL. This substantial reduction in overestimation errors supports future clinical trials with neonatal blood samples.