Bring water, milk, and pasta to a boil in a large saucepan over high heat. Lower heat to a simmer and cook, stirring often, until the pasta is tender and the liquid is slightly thickened, 9 to 12 minutes. Stir in mustard, hot sauce, chicken, cheddar, and 2 oz Parmesan cheese.
Continue to simmer until the cheeses have melted, adding the remaining milk as needed to adjust the consistency of the sauce. Season with salt and pepper to taste.
Pour mac and cheese into an oven-safe casserole dish. In a small bowl, mix together panko and the remaining 2 oz of Parmesan cheese. Sprinkle the mixture evenly over the mac and cheese and bake until topping turns golden brown, 15 to 20 minutes. Serve immediately.
Notes
*Feel free to scale back on the hot sauce in case your heat tolerance is low.