When you enable the option "reset suppression counter upon change of severity", the count doesn't get reset if the "escalate_level" auto operator's action was used.
Release :
DX UIM 20.4 CU5
This is by design because technically it is a new instance of the same alarm, just one that has a higher severity than the original instance, it is not actually a new alarm.
POSSIBLE WORKAROUND:
You might use the LUA script instead of escalate_level, adding a suppcount change too.
a = alarm.get ()
a.severity = "minor"
a.level = "3"
a.suppcount = "0"
alarm.set(a)