Pizza Mac and Cheese

Name: Pizza Mac and Cheese
Ingredients: 3 1/2 cups uncooked elbow macaroni (16 oz); 1 lb bulk mild or spicy pork sausage; 1 large green bell pepper, chopped; 1 large onion, chopped (1 cup); 1/3 cup butter or margarine; 1/3 cup all-purpose flour; 1 teaspoon salt; 1 1/2 teaspoons crushed red pepper flakes; 2 cups milk; 3/4 cup water; 4 cups shredded white Cheddar cheese (16 oz); 1 1/2 cups shredded mozzarella cheese (6 oz); 1/2 cup grated Parmesan cheese; 20 slices pepperoni (from 3-oz package); Small fresh basil leaves, if desired