In a skillet over medium heat, add butter. When it sizzles, add onions and peppers; sauté for 2 minutes. Add garlic and sauté for 1 minute. Add the hot Italian sausage and cook for 7-8 minutes, breaking up the meat into small pieces.
Add flour to the meat mixture, one tablespoons at a time, mixing well between each addition. Cook for 3 minutes.
Pour in half the milk and whisk until the mixture starts to thicken, about 1 minute, before adding the remaining milk. Whisk continuously for 5 minutes; season with salt, pepper and smoked paprika.
Reduce the heat to medium-low and simmer for 10 minutes. Halfway through cooking, add ½ tablespoons chopped parsley; stir well. When ready to serve, spoon over biscuits and sprinkle on the remaining parsley.