A system and computer-implemented method for grouping medical records implements a multi-level analysis of the records. The level of analysis is based upon the time proximity of each record to the defining medical procedure or service (anchor procedure) to be analyzed. Claim records are processed to determine whether any of the records should be grouped with the anchor procedure into a procedure episode group (PEG) using the date of service for each claim record and a level of relationship between the claim records and 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. Claim records having the requisite relationship level associated with the portion of the time window in which they fall are included in the PEG.