Bring large pot of salted water to boil. Cook ziti according to package directions. Drain and set aside.
In another pot or deep skillet with high sides, heat pan over medium heat. Brown sausage, breaking apart as it cooks. Drain if desired. Replace back in the pan. To the cooked sausage, add olive oil, onion, and garlic and saute until mostly tender, about 3 minutes.
Stir in diced tomatoes, marinara sauce, water, basil, oregano, bay leaves, salt, pepper. Stir well. Cover and simmer 30 minutes. Taste sauce and adjust seasonings. Remove bay leaves.
Add cooked ziti to sauce and stir to coat. Add in fresh mozzarella and parmesan cheese. Stir to melt slightly. Pour into lightly greased 9x13 pan. Sprinkle with 1 cup shredded mozzarella cheese, cover with lightly greased foil and bake at 350 degrees for 20-30 minutes. Top with chopped parsley (optional) and serve hot.