Preheat oven to 350 degrees F.
Cook pasta according to package directions; drain.
In a large saucepan, combine the meatballs, marinara sauce and water; bring to a boil. Reduce heat; simmer uncovered for 20 minutes or until meatballs are heated through, stirring occasionally.
Stir in pasta and basil.
Transfer to a greased 13-in. x 9-in. baking dish. Sprinkle with mozzarella and Parmesan cheese.
Bake, uncovered, for 20-25 minutes or until cheese is melted.