A system and computer-implemented method for grouping medical records implements a multi-level analysis of the records. The level of analysis for each record is determined based upon the time proximity of each record to the defining medical procedure or service (anchor procedure) to be analyzed. Once an anchor procedure is identified, claim records are processed to determine whether any of the records should be grouped with the anchor procedure into a procedure episode group (PEG). First, the date of service for each claim record is identified to determine whether the claim record falls within time window. The claim records falling within the window then are assessed to determine whether each claim record is sufficiently related to the anchor procedure (for example, by determining whether the diagnostic, procedure, or episode treatment group coding of each claim record is associated with the anchor procedure). The requisite level of relationship between the claim records and the anchor procedure depends upon the position of the records within the time window. Only those claim records having the requisite relationship level associated with the portion of the time window in which they fall are included in the PEG.