Objective Clinical narrative provides a unique window into provider reasoning and attribution, but use has been limited by resource requirements and extensive fine-tuning, and LLMs in particular have traditionally not performed well at medical coding. We optimize and evaluate a reproducible method for automated diagnosis assignment using LLMs in clinical notes and compare with EHR structured diagnoses. Methods We used GPT-OSS for prompt engineering and task segmentation to create a model that extracts ICD-10-CM diagnoses, with estimates of severity, currency, and importance, from progress notes. We assessed performance across multiple cohorts of patients aged 0-21 years. For each, 100 outpatient provider notes were selected across levels of severity, along with coded diagnoses from that visit (EHR); a subset of 130 notes were subjected to clinical expert review. Results Comparison showed 18.7% exact code and 33.3% ICD-10-CM category match between EHR and LLM, but semantic similarity of 0.93 at the category level. Compared to expert review, LLM precision was 0.84 and recall 0.49 for exact matches, and 0.92 and 0.62, respectively, for category-level matching. In contrast, EHR coded diagnoses showed slightly higher precision (0.94 for both cases) and substantially lower recall (0.27 and 0.43) versus expert review. Codes not identified by the LLM were more often rated by the reviewer as lower importance or certainty. Conclusion We demonstrate a reusable approach to optimizing a pretrained LLM for use in diagnosis extraction from clinical notes, facilitating large-scale diagnosis screening by LLMs without the need for expensive study-specific model refinement.