Preheat the oven to 350 degrees. Finely chop the bell pepper and celery.
Combine the ground beef, bell pepper, celery, rice, salt, pepper and egg in a large bowl; mix with your hands until well mixed. Divide into 12 equal portions and roll each into a ball. Place the meatballs in a greased 2-qt casserole dish.
Combine the mushroom soup, buttermilk, and the liquid from the jar of mushrooms. Beat until smooth.
Sprinkle mushrooms over meatballs. Pour the sauce over all. Bake at 350 degrees for 1 hour.