In a large Dutch oven or soup pot, combine milk, macaroni, salt, mustard, onion powder, nutmeg, and water. Cook over medium-high heat, stirring constantly, until small bubbles begin to form around edges, about 3 minutes; reduce heat to medium-low (do not let mixture boil).

Continue to cook, stirring frequently, until pasta is almost tender and liquid is the consistency of sauce, about 14 minutes total time. Stir in squash; cook, stirring, 1 minute more.

Remove from heat; add cheese, a handful at a time, stirring until fully melted before adding more. Serve garnished with chives.

Service size: 1 cup