PREHEAT oven to 400°F. Cook meat, onions and peppers in large nonstick skillet on medium-high heat until meat is browned and vegetables are tender, stirring occasionally. Add pasta sauce, water, 1-1/2 cups of the shredded cheese and the Parmesan cheese; mix well.
LAYER meat sauce and noodles alternately in 13x9-inch baking pan, ending with a layer of sauce. Sprinkle with remaining 1/2 cup shredded cheese.
BAKE 30 min. or until heated through (160ºF).