Place bread in small bowl; drizzle evenly with milk. Let stand 2 min. Mix with meat, Parmesan, garlic and egg in separate bowl just until blended. Shape into 12 meatballs.
Cut 2 oz. VELVEETA into 12 small pieces. Insert 1 VELVEETA piece into center of each meatball, pressing meat mixture around VELVEETA to completely enclose VELVEETA.
Heat oil in large nonstick skillet on medium-high heat. Add meatballs; cook 10 to 12 min. or evenly browned, stirring occasionally. Remove from heat.
Toss potatoes with dressing mix; place on sheet of foil sprayed with cooking spray. Drizzle with water. Fold foil to make packet. Place meatballs and potato packet, seam side up, in slow cooker; cover with lid.
Cook on LOW 4 to 5 hours (or on HIGH 2 to 3 hours). Cut remaining VELVEETA into small pieces. Partially open foil packet; top potatoes with VELVEETA. Close packet. Cover slow cooker with lid. Cook 5 min. or until VELVEETA is melted.
Serve potatoes with meatballs.