Coat a large baking dish with olive oil and pour 1 cup of marinara to coat entire baking dish.
Heat the olive oil in a skillet over medium heat. Once hot, add the sausage. Cook for 4-5 minutes, crumbling the sausage with a spatula.
Add the onions and mushrooms then continue to cook for 5-6 minutes. Season with salt and pepper. Once the meat is cooked through, crumbled and well-browned and the onions are tender, add the minced garlic and cook, stirring constantly for 1 minute. Remove from heat and let cool.
Cook the manicotti noodles per instructions and set aside to cool. Make sure to leave noodles al dente as they will cook more in the oven and will be easier to stuff if more firm.
In a large bowl, add the cooled meat mixture, ricotta cheese, grated nutmeg, parsley, basil, ¼ cup mozzarella cheese, 2 tablespoons of Parmesan cheese and mix thoroughly. Place the mixture into a large Ziploc bag and cut a hole in the corner of the bag. Pipe the filling into each manicotti shell (I pipe a bit into each side) then place into the baking dish. Continue process until you are out of filling and shells. Pour the remaining marinara sauce on top of the manicotti then top with the remaining mozzarella cheese and Parmesan cheese.
Cover the baking dish with a piece of tin foil and place in the oven to bake for 30 minutes. Remove tin foil and cook for an additional 5-10 minutes. Remove from oven and let cool for 7-10 minutes.Top with julienned basil and serve.