Heat oven to 350°F. Grease 8-inch square (2-quart) baking dish. In medium skillet, brown sausage with onion and bell pepper. Drain.
Arrange potatoes in bottom of greased baking dish. Top with 1/2 of the cheese, all of the sausage mixture and the remaining cheese.
In small bowl, beat eggs slightly. Beat in milk. Pour over mixture in dish. Cover with foil.
Bake at 350°F. for 1 hour. Uncover; bake an additional 10 to 15 minutes or until knife inserted near center comes out clean. Let stand 5 minutes before serving. Serve topped with salsa.