Preheat oven to 350°F. Coat 9×13-inch baking dish with butter.
In large skillet over medium-high heat, warm olive oil. Add onion and sauté 3 minutes or until softened. Add sausage and cook for 8-10 minutes or until browned all over and no longer pink. Add red bell pepper and cook 2 minutes until softened.
Cook pasta in salted water, about 2 minutes short of being fully cooked; it will finish cooking in oven. Drain cooked pasta, but do not rinse.
Meanwhile, melt butter in medium saucepan over medium-high heat. Whisk in flour. Gradually add milk, whisking continuously until it reaches boil. Reduce heat and simmer for 5-7 minutes, or until thick and bubbly.
Add cooked sausage and pepper mixture, Italico cheese, crushed red pepper flakes, salt, black pepper, basil and parsley to cream sauce. Stir well. Pour into prepared baking dish. Bake 30 to 35 minutes or until top is golden brown and cheese sauce is bubbling around edges.