Prepare pasta according to directions on package. Once it has cooked and been drained, immediately add 1 Tbsp butter and stir until butter is melted to prevent pasta from sticking together while the other ingredients are prepared.
Preheat oven to 400F.
In large skillet, fry bacon until crispy.
Transfer bacon to paper-towel lined plate, pat dry with additional paper towels, and set aside.
Drain all but 1 Tbsp of the bacon grease (do not pour directly down your drain, pour into a disposable container and dispose of at a later time), return skillet with remaining 1 Tbsp bacon grease to stove over medium-heat and add pepper, onion, and garlic.
Cook, stirring frequently, until vegetables soften (about 3-5 minutes).
Add salt and pepper to taste (about 1/4 tsp each)
Sprinkle the Tbsp of flour over vegetables and stir until no dry flour remains.
Add heavy cream and milk and bring mixture to a boil, stirring frequently and quickly for 3 minutes.
Remove from heat and stir in cheese, stirring until completely melted.
Add in cooked pasta and bacon, stir until well-combined.
Transfer mixture to 13x9 pan.
In small bowl, whisk together panko, grated parmesan, and paprika.
Sprinkle over the macaroni in the pan.
Bake (uncovered) on 400F for 15 minutes (until begins to bubble).